Question

capital adequacy norms helps to​

Answer 1

Answer:

Definition: Capital Adequacy Ratio (CAR) is the ratio of a bank's capital in relation to its risk weighted assets and current liabilities. ... However, as per RBI norms, Indian scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12%.

Explanation:

The capital adequacy ratios ensure the efficiency and stability of a nation's financial system by lowering the risk of banks becoming insolvent. ... Thus the higher the bank's capital adequacy ratio, the higher the degree of protection of depositor's assets.

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