Optimize IAS
  • Home
  • About Us
  • Initiatives
    • Daily Practice Sheets
    • Daily Prelims Notes
    • Prelims Power Play
    • Friday Factly
    • Sunday Essay Sadhna
    • Mains Master Notes
    • Public Administration Answer Writing
  • Courses
    • Laqshya 2021 / Laqshya 2021 Advance (Prelims)
    • Santosh Sir 700+ Mains Mentorship Program
    • Our Video Courses
  • PROVEN STRATEGY
    • Prelims Strategy
    • Mains Strategy
    • Interview Strategy
    • Sunday Success Sutra
  • Resources
    • DPS Compilation
    • DPN Compilation
    • Friday Factly Compilation
    • Sunday Essay Sadhna Compilation
    • PSIR Notes
    • General Studies Notes
    • UPSC Mains Previous Year Papers
  • Contact Us
  • Home
  • About Us
  • Initiatives
    • Daily Practice Sheets
    • Daily Prelims Notes
    • Prelims Power Play
    • Friday Factly
    • Sunday Essay Sadhna
    • Mains Master Notes
    • Public Administration Answer Writing
  • Courses
    • Laqshya 2021 / Laqshya 2021 Advance (Prelims)
    • Santosh Sir 700+ Mains Mentorship Program
    • Our Video Courses
  • PROVEN STRATEGY
    • Prelims Strategy
    • Mains Strategy
    • Interview Strategy
    • Sunday Success Sutra
  • Resources
    • DPS Compilation
    • DPN Compilation
    • Friday Factly Compilation
    • Sunday Essay Sadhna Compilation
    • PSIR Notes
    • General Studies Notes
    • UPSC Mains Previous Year Papers
  • Contact Us

CRAR and Bank Capitalization

  • June 6, 2020
  • Posted by: admin
  • Category: DPN Topics
No Comments
Print Friendly, PDF & Email

Subject: Economy

Context:

Despite a large part of the Atmanirbhar Bharat package relying on aggressive lending by banks, the government does not see an immediate need for equity infusion in the public sector banks (PSBs), as their capital to risk weighted asset ratio (CRAR) is expected to stay above the regulatory requirements

Concept:

CRAR

  • Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk weighted assetsand current liabilities.
  • It is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.
  • The Basel III norms stipulated a capital to risk weighted assets of 8%.
  • However, as per RBI norms, Indian scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12%.

Recapitalization

  • Bank recapitalization, means infusing more capital in state-run banks so that they meet the capital adequacy norms.
  • The government, using different instruments, infuses capital into banks facing shortage of capital.
  • In compliance with RBI guidelines which are based on Basel norms requiring banks to maintain certain amount of capital reserves, the government, which is also the biggest shareholder, infuses capital in banks by either buying new shares or by issuing bonds.
  • As the state-run banks were struggling to deal with burgeoning NPAs, the government from time-to-time kept on announcing recapitalization to keep the banks afloat.
Print Friendly, PDF & Email
Loading

Recent Posts

  • Quiz 2021: Prelims Power Play 27 January 2021 January 27, 2021
  • Daily Prelims Notes 27 January 2021 January 27, 2021
  • FICCI January 27, 2021
  • GOVIND BALLABH PANT January 27, 2021
  • UNSC January 27, 2021
  • INDIAN ASTRONOMICAL UNION January 27, 2021
  • REGEN-COV January 27, 2021
  • EUROPEAN COMMISSION January 27, 2021
  • SILENT CYBER January 27, 2021
  • CCI January 27, 2021

About

If IAS is your destination, begin your journey with Santosh Sir. I have the distinction of clearing all 6 UPSC CSE Prelims with huge margins.

I mastered the art of clearing UPSC CSE Prelims and in the process devised an unbeatable strategy to ace Prelims which many students struggle to do 

My Initiative

  • Daily Practice Sheets
  • Daily Prelims Notes
  • Friday Factly
  • Prelims Power Play
  • Sunday Essay Sadhna

My Proven Strategy

  • Interview Strategy
  • Mains Strategy
  • Motivational
  • Prelims Strategy

Contact us

Contact@optimizeias.com

Search