{"id":31775,"date":"2018-10-29T11:11:23","date_gmt":"2018-10-29T05:41:23","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=31775"},"modified":"2021-01-06T17:49:25","modified_gmt":"2021-01-06T12:19:25","slug":"capital-adequacy-ratio-to-rise-44bps","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/capital-adequacy-ratio-to-rise-44bps\/","title":{"rendered":"Capital adequacy ratio to rise 44bps\u00a0"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/business\/Industry\/capital-adequacy-ratio-will-go-up-by-44-bps\/article22514704.ece\"><span style=\"font-weight: 400;\">Capital adequacy ratio to rise 44bps<\/span><\/a><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><b>Context:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Capital adequacy ratio will go up by 44 bps.<\/span><\/li>\n<\/ul>\n<p><b>Introduction:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The state-run banks that will receive capital from the government will use it to meet provisioning requirement for accounts that facing bankruptcy proceedings.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This was mandated by the banking regulator, State Bank of India (SBI)- the country\u2019s largest lender.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">SBI will receive \u20b98,800 crore capital from the government this financial year out of \u20b988,139 crore allocated to 20 banks.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">SBI\u2019s capital adequacy ratio was 13.56% as on 30 September, 2017.<\/span><\/li>\n<\/ul>\n<p><b>What was the main objective of this capital infusion?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The purpose of funding credit growth is to secure capital for next financial year. This will help in taking care of further growth capital requirement.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> This capital is not for regulatory purpose but for growth.<\/span><\/li>\n<\/ul>\n<p><b>What will be the impact on capital adequacy post this fund infusion?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> The impact on capital adequacy ratio is about 44 bps points.<\/span><\/li>\n<\/ul>\n<p><b>Capital adequacy ratio:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Capital Adequacy Ratio (CAR) is also known as <\/span><b><i>Capital to Risk (Weighted) Assets Ratio<\/i><\/b><b> (CRAR),<\/b><span style=\"font-weight: 400;\"> is the ratio of a bank&#8217;s capital to its risk.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> It is a measure of a bank&#8217;s capital.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> It is expressed as a percentage of a bank&#8217;s risk weighted credit exposures<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This ratio is used to protect depositors and promote stability and efficiency of financial systems around the world.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Two types of capital are measured: <\/span><b>tier one capital,<\/b><span style=\"font-weight: 400;\"> which can absorb losses without a bank being required to cease trading, and <\/span><b>tier two capital,<\/b><span style=\"font-weight: 400;\"> which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Capital adequacy ratio is the ratio which determines the bank&#8217;s capacity to meet the time liabilities and other risks such as credit risk, operational risk etc.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Capital adequacy ratio to rise 44bps\u00a0 Context: Capital adequacy ratio will go up by 44 bps. Introduction: The state-run banks that will receive capital from the government will use it to meet provisioning requirement for accounts that facing bankruptcy proceedings. This was mandated by the banking regulator, State Bank of India (SBI)- the country\u2019s largest&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/capital-adequacy-ratio-to-rise-44bps\/\">Continue reading <span class=\"screen-reader-text\">Capital adequacy ratio to rise 44bps\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-31775","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":13,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=31775"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31775\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=31775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=31775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=31775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}