{"id":226818,"date":"2025-09-26T11:43:21","date_gmt":"2025-09-26T06:13:21","guid":{"rendered":"https:\/\/www.oliveboard.in\/blog\/?p=226818"},"modified":"2025-09-26T11:43:24","modified_gmt":"2025-09-26T06:13:24","slug":"capital-adequacy-ratio","status":"publish","type":"post","link":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/","title":{"rendered":"Capital Adequacy Ratio (CAR) Meaning, Formula &#038; Basel Norms 2025"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_77 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of content<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#What_is_Capital_Adequacy_Ratio\" >What is Capital Adequacy Ratio?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#Why_Is_the_Capital_Adequacy_Ratio_Useful_for_Bank_Exam_Aspirants\" >Why Is the Capital Adequacy Ratio Useful for Bank Exam Aspirants?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#Components_of_Capital_Adequacy_Ratio\" >Components of Capital Adequacy Ratio<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#Risk-Weighted_Assets_RWA\" >Risk-Weighted Assets (RWA)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#Minimum_CAR_Requirements_under_Basel_Norms\" >Minimum CAR Requirements under Basel Norms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#Why_Does_CAR_Matter_in_Banking\" >Why Does CAR Matter in Banking?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#CAR_vs_Solvency_Ratio\" >CAR vs Solvency Ratio<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#10_Practice_Questions_on_CAR_with_Answers\" >10 Practice Questions on CAR (with Answers)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>The Capital Adequacy Ratio (CAR) is one of the most important topics in banking and financial awareness for exams like IBPS PO, IBPS RRB, SBI PO, RBI Grade B, NABARD, LIC AAO and other regulatory exams. It measures the ability of a bank to absorb risks and remain solvent. A higher CAR indicates that the bank is financially strong and can withstand unexpected losses. Regulators like the Reserve Bank of India (RBI) and the Basel Committee on Banking Supervision (BCBS) set minimum CAR requirements to ensure banks maintain stability and protect depositors\u2019 money.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Capital_Adequacy_Ratio\"><\/span>What is Capital Adequacy Ratio?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong>Capital Adequacy Ratio (CAR)<\/strong>, also called the <strong>Capital to Risk (Weighted) Assets Ratio (CRAR)<\/strong>, is the ratio of a bank\u2019s capital to its <strong>risk-weighted assets<\/strong>. It ensures that banks have enough capital cushion to absorb a reasonable amount of losses and prevents insolvency.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1005\" height=\"160\" src=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/image-4.png\" alt=\"\" class=\"wp-image-226829\"\/><figcaption>Capital Adequacy Ratio Formula<\/figcaption><\/figure><\/div>\n\n\n<p>Here:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Tier 1 Capital<\/strong> = Core capital (equity, reserves, retained earnings).<\/li><li><strong>Tier 2 Capital<\/strong> = Supplementary capital (subordinated debt, hybrid instruments).<\/li><li><strong>Risk-Weighted Assets (RWA)<\/strong> = Assets weighted according to their credit, market, and operational risks.<\/li><\/ul>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.oliveboard.in\/courses\/\" target=\"_blank\" rel=\"noreferrer noopener\">Looking for expert guidance to prepare for bank exams? click here<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Is_the_Capital_Adequacy_Ratio_Useful_for_Bank_Exam_Aspirants\"><\/span>Why Is the Capital Adequacy Ratio Useful for Bank Exam Aspirants?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For exam preparation, CAR is a repeatedly asked concept in both objective MCQs and descriptive finance-related questions. Understanding CAR helps aspirants:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Link it with Basel Norms (Basel I, II, and III).<\/li><li>Understand RBI\u2019s role in financial stability.<\/li><li>Prepare for questions on banking regulations, NPAs, and financial risks.<\/li><li>Write better descriptive answers in exams like RBI Grade B.<\/li><\/ul>\n\n\n\n<p>So, mastering CAR not only improves your conceptual clarity but also boosts your scoring ability in GA &amp; <strong><a href=\"https:\/\/www.oliveboard.in\/blog\/important-banking-abbreviations\/\" target=\"_blank\" rel=\"noreferrer noopener\">Terms in Banking Awareness<\/a><\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Components_of_Capital_Adequacy_Ratio\"><\/span>Components of Capital Adequacy Ratio<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>CAR is calculated using two major types of capital. Let\u2019s break them down:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tier 1 Capital \u2013 Core Capital<\/h3>\n\n\n\n<p>This is the most reliable form of capital available to absorb losses without stopping operations.<\/p>\n\n\n\n<p><strong>Examples of Tier 1 Capital:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Paid-up equity capital<\/li><li>Statutory reserves<\/li><li>Retained earnings<\/li><li>Free reserves disclosed in the balance sheet<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Tier 2 Capital \u2013 Supplementary Capital<\/h3>\n\n\n\n<p>This is less reliable than Tier 1 but still supports the bank in crisis situations.<\/p>\n\n\n\n<p><strong>Examples of Tier 2 Capital:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Subordinated debt<\/li><li>Hybrid instruments<\/li><li>Revaluation reserves<\/li><li>General loan-loss reserves<\/li><\/ul>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.oliveboard.in\/test-series\/\" target=\"_blank\" rel=\"noreferrer noopener\">Planning to prepare for bank exams? take a free mock test now to test exam level<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Risk-Weighted_Assets_RWA\"><\/span>Risk-Weighted Assets (RWA)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Not all assets carry the same level of risk. To calculate CAR, assets are adjusted using <strong>risk weights<\/strong>.<\/p>\n\n\n\n<p>For example:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Loans to Government \u2192 <strong>0% risk weight<\/strong> (safe)<\/li><li>Loans to Public Sector Undertakings \u2192 <strong>100% risk weight<\/strong><\/li><li>Housing Loans (secured by property) \u2192 <strong>50% risk weight<\/strong><\/li><\/ul>\n\n\n\n<p>This risk-based classification ensures that banks maintain capital according to the <strong>riskiness of their lending portfolio<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Minimum_CAR_Requirements_under_Basel_Norms\"><\/span>Minimum CAR Requirements under Basel Norms<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong>Basel Committee<\/strong> has set international standards for banks. RBI follows these guidelines while regulating Indian banks.<\/p>\n\n\n\n<p>Here\u2019s a summary:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Requirement<\/strong><\/td><td><strong>Basel Norms (Minimum)<\/strong><\/td><td><strong>RBI (India \u2013 Basel III)<\/strong><\/td><\/tr><tr><td>CET 1 (Common Equity Tier 1)<\/td><td>4.5%<\/td><td>5.5%<\/td><\/tr><tr><td>Tier 1 Capital<\/td><td>6%<\/td><td>7%<\/td><\/tr><tr><td>Total Capital (CAR)<\/td><td>8%<\/td><td>9%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Does_CAR_Matter_in_Banking\"><\/span>Why Does CAR Matter in Banking?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before moving to examples, let\u2019s understand why CAR is significant:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Protects Depositors<\/strong> \u2192 Ensures customer deposits remain safe even if the bank suffers losses.<\/li><li><strong>Financial Stability<\/strong> \u2192 A strong CAR prevents banking failures and systemic crises.<\/li><li><strong>Regulatory Compliance<\/strong> \u2192 RBI checks CAR to decide if a bank is healthy.<\/li><li><strong>Encourages Responsible Lending<\/strong> \u2192 Banks cannot lend excessively without keeping adequate capital.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Example Calculation of CAR<\/h3>\n\n\n\n<p>Suppose a bank has the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Tier 1 Capital = \u20b920 crore<\/li><li>Tier 2 Capital = \u20b95 crore<\/li><li>Risk-Weighted Assets (RWA) = \u20b965 crore<\/li><\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"987\" height=\"248\" src=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/image-5.png\" alt=\"\" class=\"wp-image-226830\"\/><\/figure><\/div>\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button aligncenter\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.oliveboard.in\/blog\/cash-reserve-ratio\/\" target=\"_blank\" rel=\"noreferrer noopener\">also read about What is CRR? Why is it important for Banking Aspirants<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CAR_vs_Solvency_Ratio\"><\/span>CAR vs Solvency Ratio<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Students often confuse CAR with Solvency Ratio. Here\u2019s the difference:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Basis<\/strong><\/td><td><strong>Capital Adequacy Ratio (CAR\/CRAR)<\/strong><\/td><td><strong>Solvency Ratio<\/strong><\/td><\/tr><tr><td>Meaning<\/td><td>Measures a bank\u2019s capital vs. risk-weighted assets<\/td><td>Measures a company\u2019s ability to meet long-term debts<\/td><\/tr><tr><td>Applicability<\/td><td>Banks &amp; financial institutions<\/td><td>All industries &amp; companies<\/td><\/tr><tr><td>Formula<\/td><td>(Tier 1 + Tier 2) \u00f7 RWA \u00d7 100<\/td><td>(Net Profit + Depreciation) \u00f7 Total Liabilities \u00d7 100<\/td><\/tr><tr><td>Regulated by<\/td><td>RBI, Basel norms<\/td><td>No fixed regulator<\/td><\/tr><tr><td>Focus<\/td><td>Banking stability &amp; depositor safety<\/td><td>Corporate financial health<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"10_Practice_Questions_on_CAR_with_Answers\"><\/span>10 Practice Questions on CAR (with Answers)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Q1.<\/strong> CAR stands for?<br><strong>Ans:<\/strong> Capital Adequacy Ratio<\/p>\n\n\n\n<p><strong>Q2.<\/strong> CAR is also called?<br><strong>Ans:<\/strong> Capital to Risk (Weighted) Assets Ratio (CRAR)<\/p>\n\n\n\n<p><strong>Q3.<\/strong> Who sets global standards for CAR?<br><strong>Ans:<\/strong> Basel Committee on Banking Supervision (BCBS)<\/p>\n\n\n\n<p><strong>Q4.<\/strong> Minimum CAR required under Basel III norms globally?<br><strong>Ans:<\/strong> 8%<\/p>\n\n\n\n<p><strong>Q5.<\/strong> Minimum CAR required in India (RBI)?<br><strong>Ans:<\/strong> 9%<\/p>\n\n\n\n<p><strong>Q6.<\/strong> Which capital is considered more reliable in CAR?<br><strong>Ans:<\/strong> Tier 1 Capital (Core Capital)<\/p>\n\n\n\n<p><strong>Q7.<\/strong> Which assets are considered 0% risk weight?<br><strong>Ans:<\/strong> Government securities\/loans to Government<\/p>\n\n\n\n<p><strong>Q8.<\/strong> What is the formula of CAR?<br><strong>Ans:<\/strong> (Tier 1 Capital + Tier 2 Capital) \u00f7 Risk Weighted Assets \u00d7 100<\/p>\n\n\n\n<p><strong>Q9.<\/strong> If Tier 1 = \u20b950 cr, Tier 2 = \u20b910 cr, RWA = \u20b9400 cr, find CAR.<br><strong>Ans:<\/strong> (50+10)\/400 \u00d7 100 = 15%<\/p>\n\n\n\n<p><strong>Q10.<\/strong> Why does RBI keep stricter CAR norms (9%) than Basel (8%)?<br><strong>Ans:<\/strong> To ensure extra financial stability and depositor protection in India.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1756909513145\"><strong class=\"schema-faq-question\"><strong>Q1. What is the Capital Adequacy Ratio (CAR) in banking?<\/strong><\/strong> <p class=\"schema-faq-answer\">The Capital Adequacy Ratio (CAR), also called the Capital to Risk (Weighted) Assets Ratio (CRAR), is a measure of a bank\u2019s financial strength. It shows how much capital a bank has in relation to its risk-weighted assets and ensures that banks can absorb potential losses while protecting depositors.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1756909545890\"><strong class=\"schema-faq-question\"><strong>Q2. What is the minimum Capital Adequacy Ratio (CAR) required in India?<\/strong><\/strong> <p class=\"schema-faq-answer\">As per RBI\u2019s Basel III guidelines, Indian banks must maintain a minimum CAR of 9%, which is higher than the global Basel requirement of 8%. This stricter rule ensures financial stability and depositor protection in India.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1756909569756\"><strong class=\"schema-faq-question\"><strong>Q3. What are Tier 1 and Tier 2 Capital in CAR calculation?<\/strong><\/strong> <p class=\"schema-faq-answer\">Tier 1 Capital (Core Capital) includes equity capital, reserves, and retained earnings; it is the most reliable source to absorb losses. Tier 2 Capital (Supplementary Capital) includes subordinated debt, hybrid instruments, and revaluation reserves; it supports the bank during financial stress but is less reliable than Tier 1.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1756909613231\"><strong class=\"schema-faq-question\"><strong>Q4. Why is Capital Adequacy Ratio important for bank exams?<\/strong><\/strong> <p class=\"schema-faq-answer\">CAR is a repeatedly asked topic in IBPS, SBI, RBI, NABARD, and LIC AAO exams. It helps candidates understand Basel norms, RBI regulations, banking risk management, and financial stability, making it crucial for both objective and descriptive exam sections.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1756909745442\"><strong class=\"schema-faq-question\"><strong>Q5. What is the difference between Capital Adequacy Ratio and Solvency Ratio?<\/strong><\/strong> <p class=\"schema-faq-answer\"><strong>CAR (CRAR):<\/strong> Specific to banks, measures capital vs. risk-weighted assets to ensure depositor safety.<br\/><strong>Solvency Ratio:<\/strong> Used for companies across industries, measures ability to meet long-term debts.<\/p> <\/div> <\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n<ul class=\"wp-block-latest-posts__list is-grid columns-3 wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/union-bank-of-india-apprentice-syllabus\/\">Union Bank Apprentice Syllabus 2026 &amp; Exam Pattern<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/union-bank-of-india-apprentice-recruitment\/\">Union Bank Apprentice Recruitment 2026, Apply 1865 Posts<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/nicl-assistant-vs-ibps-po-mains\/\">NICL Assistant Mains vs IBPS PO Mains 2026: Detailed Comparison<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/banking-terms-for-ibps-po-interview\/\">IBPS PO Interview 2026: Download Important Banking Terms PDF<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/oicl-ao-result\/\">OICL AO Mains Result 2026, Check Phase 2 Merit List<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/www.oliveboard.in\/blog\/government-banks-in-india\/\">Public Sector Banks in India, FREE PDF &amp; Live Quiz<\/a><\/li>\n<\/ul>\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n","protected":false},"excerpt":{"rendered":"<p>The Capital Adequacy Ratio (CAR) is one of the most important topics in banking and financial awareness for exams like<\/p>\n","protected":false},"author":60,"featured_media":229466,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,31],"tags":[16617],"class_list":["post-226818","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","category-bank-exams","tag-capital-adequacy-ratio","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-50"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Capital Adequacy Ratio (CAR) Meaning, Formula &amp; Basel Norms 2025<\/title>\n<meta name=\"description\" content=\"Capital Adequacy Ratio (CAR) 2025: Know its meaning, formula, tiers, Basel norms &amp; RBI requirements. Key concept for banking exam preparation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Capital Adequacy Ratio (CAR) Meaning, Formula &amp; Basel Norms 2025\" \/>\n<meta property=\"og:description\" content=\"The Capital Adequacy Ratio (CAR) is one of the most important topics in banking and financial awareness for exams like IBPS PO, IBPS RRB, SBI PO, RBI\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/\" \/>\n<meta property=\"og:site_name\" content=\"Oliveboard\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Oliveboard\" \/>\n<meta property=\"article:published_time\" content=\"2025-09-26T06:13:21+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-09-26T06:13:24+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"730\" \/>\n\t<meta property=\"og:image:height\" content=\"480\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"Tripti Mishra\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Oliveboard\" \/>\n<meta name=\"twitter:site\" content=\"@Oliveboard\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Tripti Mishra\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/\"},\"author\":{\"name\":\"Tripti Mishra\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#\/schema\/person\/d85e63b0781e1a55771b9894184814a5\"},\"headline\":\"Capital Adequacy Ratio (CAR) Meaning, Formula &#038; Basel Norms 2025\",\"datePublished\":\"2025-09-26T06:13:21+00:00\",\"dateModified\":\"2025-09-26T06:13:24+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/\"},\"wordCount\":1049,\"publisher\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp\",\"keywords\":[\"Capital Adequacy Ratio\"],\"articleSection\":[\"Articles\",\"Bank Exams\"],\"inLanguage\":\"en-US\"},{\"@type\":[\"WebPage\",\"FAQPage\"],\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/\",\"url\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/\",\"name\":\"Capital Adequacy Ratio (CAR) Meaning, Formula & Basel Norms 2025\",\"isPartOf\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp\",\"datePublished\":\"2025-09-26T06:13:21+00:00\",\"dateModified\":\"2025-09-26T06:13:24+00:00\",\"description\":\"Capital Adequacy Ratio (CAR) 2025: Know its meaning, formula, tiers, Basel norms & RBI requirements. Key concept for banking exam preparation.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#breadcrumb\"},\"mainEntity\":[{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909513145\"},{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909545890\"},{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909569756\"},{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909613231\"},{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909745442\"}],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#primaryimage\",\"url\":\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp\",\"contentUrl\":\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp\",\"width\":730,\"height\":480,\"caption\":\"Bank-Rate\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.oliveboard.in\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Bank Exams\",\"item\":\"https:\/\/www.oliveboard.in\/blog\/category\/bank-exams\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Capital Adequacy Ratio (CAR) Meaning, Formula &#038; Basel Norms 2025\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#website\",\"url\":\"https:\/\/www.oliveboard.in\/blog\/\",\"name\":\"Oliveboard\",\"description\":\"Free Govt. Exam Alerts &amp; Resources\",\"publisher\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.oliveboard.in\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#organization\",\"name\":\"Oliveboard\",\"url\":\"https:\/\/www.oliveboard.in\/blog\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2021\/11\/logo.png\",\"contentUrl\":\"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2021\/11\/logo.png\",\"width\":150,\"height\":40,\"caption\":\"Oliveboard\"},\"image\":{\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/Oliveboard\",\"https:\/\/x.com\/Oliveboard\",\"https:\/\/www.instagram.com\/oliveboard.in\/\",\"https:\/\/www.youtube.com\/channel\/UCRvrHAyNdOMI_JBkE2pjZtw?sub_confirmation=1\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#\/schema\/person\/d85e63b0781e1a55771b9894184814a5\",\"name\":\"Tripti Mishra\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/e9ff3153b7365669b619433e04937baec4da53cdb38c345d8283a33479dba3b6?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/e9ff3153b7365669b619433e04937baec4da53cdb38c345d8283a33479dba3b6?s=96&d=mm&r=g\",\"caption\":\"Tripti Mishra\"},\"description\":\"Hi, I'm Tripti, a senior content writer at Oliveboard, where I manage blog content along with community engagement across platforms like Telegram and WhatsApp. With 3+ years of experience in content and SEO optimization related to banking exams, I have led content for popular exams like SSC, banking, railway, and state exams.\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909513145\",\"position\":1,\"url\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909513145\",\"name\":\"Q1. What is the Capital Adequacy Ratio (CAR) in banking?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The Capital Adequacy Ratio (CAR), also called the Capital to Risk (Weighted) Assets Ratio (CRAR), is a measure of a bank\u2019s financial strength. It shows how much capital a bank has in relation to its risk-weighted assets and ensures that banks can absorb potential losses while protecting depositors.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909545890\",\"position\":2,\"url\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909545890\",\"name\":\"Q2. What is the minimum Capital Adequacy Ratio (CAR) required in India?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"As per RBI\u2019s Basel III guidelines, Indian banks must maintain a minimum CAR of 9%, which is higher than the global Basel requirement of 8%. This stricter rule ensures financial stability and depositor protection in India.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909569756\",\"position\":3,\"url\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909569756\",\"name\":\"Q3. What are Tier 1 and Tier 2 Capital in CAR calculation?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Tier 1 Capital (Core Capital) includes equity capital, reserves, and retained earnings; it is the most reliable source to absorb losses. Tier 2 Capital (Supplementary Capital) includes subordinated debt, hybrid instruments, and revaluation reserves; it supports the bank during financial stress but is less reliable than Tier 1.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909613231\",\"position\":4,\"url\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909613231\",\"name\":\"Q4. Why is Capital Adequacy Ratio important for bank exams?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"CAR is a repeatedly asked topic in IBPS, SBI, RBI, NABARD, and LIC AAO exams. It helps candidates understand Basel norms, RBI regulations, banking risk management, and financial stability, making it crucial for both objective and descriptive exam sections.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909745442\",\"position\":5,\"url\":\"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909745442\",\"name\":\"Q5. What is the difference between Capital Adequacy Ratio and Solvency Ratio?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"<strong>CAR (CRAR):<\/strong> Specific to banks, measures capital vs. risk-weighted assets to ensure depositor safety.<br\/><strong>Solvency Ratio:<\/strong> Used for companies across industries, measures ability to meet long-term debts.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Capital Adequacy Ratio (CAR) Meaning, Formula & Basel Norms 2025","description":"Capital Adequacy Ratio (CAR) 2025: Know its meaning, formula, tiers, Basel norms & RBI requirements. Key concept for banking exam preparation.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/","og_locale":"en_US","og_type":"article","og_title":"Capital Adequacy Ratio (CAR) Meaning, Formula & Basel Norms 2025","og_description":"The Capital Adequacy Ratio (CAR) is one of the most important topics in banking and financial awareness for exams like IBPS PO, IBPS RRB, SBI PO, RBI","og_url":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/","og_site_name":"Oliveboard","article_publisher":"https:\/\/www.facebook.com\/Oliveboard","article_published_time":"2025-09-26T06:13:21+00:00","article_modified_time":"2025-09-26T06:13:24+00:00","og_image":[{"width":730,"height":480,"url":"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp","type":"image\/webp"}],"author":"Tripti Mishra","twitter_card":"summary_large_image","twitter_creator":"@Oliveboard","twitter_site":"@Oliveboard","twitter_misc":{"Written by":"Tripti Mishra","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"NewsArticle","@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#article","isPartOf":{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/"},"author":{"name":"Tripti Mishra","@id":"https:\/\/www.oliveboard.in\/blog\/#\/schema\/person\/d85e63b0781e1a55771b9894184814a5"},"headline":"Capital Adequacy Ratio (CAR) Meaning, Formula &#038; Basel Norms 2025","datePublished":"2025-09-26T06:13:21+00:00","dateModified":"2025-09-26T06:13:24+00:00","mainEntityOfPage":{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/"},"wordCount":1049,"publisher":{"@id":"https:\/\/www.oliveboard.in\/blog\/#organization"},"image":{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#primaryimage"},"thumbnailUrl":"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp","keywords":["Capital Adequacy Ratio"],"articleSection":["Articles","Bank Exams"],"inLanguage":"en-US"},{"@type":["WebPage","FAQPage"],"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/","url":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/","name":"Capital Adequacy Ratio (CAR) Meaning, Formula & Basel Norms 2025","isPartOf":{"@id":"https:\/\/www.oliveboard.in\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#primaryimage"},"image":{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#primaryimage"},"thumbnailUrl":"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp","datePublished":"2025-09-26T06:13:21+00:00","dateModified":"2025-09-26T06:13:24+00:00","description":"Capital Adequacy Ratio (CAR) 2025: Know its meaning, formula, tiers, Basel norms & RBI requirements. Key concept for banking exam preparation.","breadcrumb":{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#breadcrumb"},"mainEntity":[{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909513145"},{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909545890"},{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909569756"},{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909613231"},{"@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909745442"}],"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#primaryimage","url":"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp","contentUrl":"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2025\/09\/Bank-Rate.webp","width":730,"height":480,"caption":"Bank-Rate"},{"@type":"BreadcrumbList","@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.oliveboard.in\/blog\/"},{"@type":"ListItem","position":2,"name":"Bank Exams","item":"https:\/\/www.oliveboard.in\/blog\/category\/bank-exams\/"},{"@type":"ListItem","position":3,"name":"Capital Adequacy Ratio (CAR) Meaning, Formula &#038; Basel Norms 2025"}]},{"@type":"WebSite","@id":"https:\/\/www.oliveboard.in\/blog\/#website","url":"https:\/\/www.oliveboard.in\/blog\/","name":"Oliveboard","description":"Free Govt. Exam Alerts &amp; Resources","publisher":{"@id":"https:\/\/www.oliveboard.in\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.oliveboard.in\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.oliveboard.in\/blog\/#organization","name":"Oliveboard","url":"https:\/\/www.oliveboard.in\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.oliveboard.in\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2021\/11\/logo.png","contentUrl":"https:\/\/www.oliveboard.in\/blog\/wp-content\/uploads\/2021\/11\/logo.png","width":150,"height":40,"caption":"Oliveboard"},"image":{"@id":"https:\/\/www.oliveboard.in\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/Oliveboard","https:\/\/x.com\/Oliveboard","https:\/\/www.instagram.com\/oliveboard.in\/","https:\/\/www.youtube.com\/channel\/UCRvrHAyNdOMI_JBkE2pjZtw?sub_confirmation=1"]},{"@type":"Person","@id":"https:\/\/www.oliveboard.in\/blog\/#\/schema\/person\/d85e63b0781e1a55771b9894184814a5","name":"Tripti Mishra","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.oliveboard.in\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/e9ff3153b7365669b619433e04937baec4da53cdb38c345d8283a33479dba3b6?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/e9ff3153b7365669b619433e04937baec4da53cdb38c345d8283a33479dba3b6?s=96&d=mm&r=g","caption":"Tripti Mishra"},"description":"Hi, I'm Tripti, a senior content writer at Oliveboard, where I manage blog content along with community engagement across platforms like Telegram and WhatsApp. With 3+ years of experience in content and SEO optimization related to banking exams, I have led content for popular exams like SSC, banking, railway, and state exams."},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909513145","position":1,"url":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909513145","name":"Q1. What is the Capital Adequacy Ratio (CAR) in banking?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The Capital Adequacy Ratio (CAR), also called the Capital to Risk (Weighted) Assets Ratio (CRAR), is a measure of a bank\u2019s financial strength. It shows how much capital a bank has in relation to its risk-weighted assets and ensures that banks can absorb potential losses while protecting depositors.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909545890","position":2,"url":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909545890","name":"Q2. What is the minimum Capital Adequacy Ratio (CAR) required in India?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"As per RBI\u2019s Basel III guidelines, Indian banks must maintain a minimum CAR of 9%, which is higher than the global Basel requirement of 8%. This stricter rule ensures financial stability and depositor protection in India.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909569756","position":3,"url":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909569756","name":"Q3. What are Tier 1 and Tier 2 Capital in CAR calculation?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Tier 1 Capital (Core Capital) includes equity capital, reserves, and retained earnings; it is the most reliable source to absorb losses. Tier 2 Capital (Supplementary Capital) includes subordinated debt, hybrid instruments, and revaluation reserves; it supports the bank during financial stress but is less reliable than Tier 1.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909613231","position":4,"url":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909613231","name":"Q4. Why is Capital Adequacy Ratio important for bank exams?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"CAR is a repeatedly asked topic in IBPS, SBI, RBI, NABARD, and LIC AAO exams. It helps candidates understand Basel norms, RBI regulations, banking risk management, and financial stability, making it crucial for both objective and descriptive exam sections.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909745442","position":5,"url":"https:\/\/www.oliveboard.in\/blog\/capital-adequacy-ratio\/#faq-question-1756909745442","name":"Q5. What is the difference between Capital Adequacy Ratio and Solvency Ratio?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"<strong>CAR (CRAR):<\/strong> Specific to banks, measures capital vs. risk-weighted assets to ensure depositor safety.<br\/><strong>Solvency Ratio:<\/strong> Used for companies across industries, measures ability to meet long-term debts.","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/posts\/226818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/users\/60"}],"replies":[{"embeddable":true,"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/comments?post=226818"}],"version-history":[{"count":2,"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/posts\/226818\/revisions"}],"predecessor-version":[{"id":226832,"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/posts\/226818\/revisions\/226832"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/media\/229466"}],"wp:attachment":[{"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/media?parent=226818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/categories?post=226818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.oliveboard.in\/blog\/wp-json\/wp\/v2\/tags?post=226818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}