Question

the financial stability of commercial bank is based on what
a) capital available ratio
b) capital adequacy ratio
c) capital availability rate​

Answer 1

Answer:

Capital Adequacy ratio is the correct option.

Explanation:

The capital adequacy ratio (CAR) is a measure of how much a bank has a large amount of money, which is reported as a percentage of the credit risk of a bank risk. The aim is to ensure that banks have sufficient funds set aside to deal with a certain amount of losses, before they are at risk of becoming insolvent.

Answer 2

Option b) capital adequacy ratio on which financial stability of commercial bank is based.

About capital adequacy ratio:

• CAR (About capital adequacy ratio) resembles the capacity of the bank to absorb the risks and to bear the losses.
• It is termed as the percentage of risk-weighted credit exposures of a bank.
• The depositor's money is protected as every bank has maintained this ratio.

In depth explanation:

• Formula is $(Tier 1 Capital + Tier 2 Capital) / Risk-Weighted Assets$
• Bureau of Indian Standards has passed strict rules in the last decade

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