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how to predict capital adequacy ratio of icici 13.4% and sbi
11%...which one is better and how?
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Answer Posted / chinmay
Capital adequacy ratio is the ratio which determines the
capacity of the bank in terms of meeting the time
liabilities and other risk such as credit risk, operational
risk, etc.
In the most simple words, a bank's capital is the "cushion"
for potential losses, which protect the bank's depositors
or other lenders.
It is the ratio of Capital over risk weighted assets (RAW).
RAW are lendings and investments of the bank having
different risk weights. So higher the ratio, better is the
picture.
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