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What Is The Meaning Of Capital Adequacy Ratio (car)? |
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Answer» Percentage ratio of a financial institution's primary capital to its assets (loans and investments), used as a measure of its financial strength and stability. According to the Capital Adequacy Standard set by BANK for International Settlements (BIS), banks must have a primary capital base equal at least to eight PERCENT of their assets: a bank that LENDS 12 DOLLARS for every dollar of its capital is within the prescribed limits. Percentage ratio of a financial institution's primary capital to its assets (loans and investments), used as a measure of its financial strength and stability. According to the Capital Adequacy Standard set by Bank for International Settlements (BIS), banks must have a primary capital base equal at least to eight percent of their assets: a bank that lends 12 dollars for every dollar of its capital is within the prescribed limits. |
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