CRAR: Capital Adequacy Ratio - Budget & Economic Survey

Q.  CRAR which stands for ‘capital to risk weighted assets ratio’, is also known as
- Published on 06 Aug 15

a. Capital Buffer Stock
b. Capital Weighted Ratio
c. Capital At Risk
d. Capital Adequacy Ratio

ANSWER: Capital Adequacy Ratio
 
CRAR is a standard metric to measure balance sheet strength of banks. BASEL I and BASEL II are global capital adequacy rules that prescribe a minimum amount of capital a bank has to hold given the size of its risk weighted assets. Capital Adequacy can indicate the capacity of the Bank's ability to absorb the possible losses.

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