Capital adequacy ratios

what is Capital adequacy ratios in Banks? How to study it in detail?
How this affects banking sector?
Replies (3)
Quick Summary
Capital Adequacy Ratios (CAR) are a measure of a bank's capital relative to its risk-weighted assets. This ratio ensures banks have sufficient capital to absorb unexpected losses. The calculation involves dividing the bank's capital fund (split into Tier I and Tier II capital) by its risk-weighted assets and off-balance sheet items. For those looking to study this topic in depth, specific accounting courses are recommended.

 Ratio is for minimum  capital  requirement  as per the statutes  

Capital  adequacy  ratio  worked out as  follows 

Capital  fund  *  100  /   Risk weighted  assets and off balance sheet items 

Also capital  fund define to two  Tier-I  and Tier-II 

Tier I - core capital  for  permanent  support  against  unexpected losses 

Tier II - capital is less permanent  and  support  against  unexpected losses .   

Where can I study this in detail to get clarity?

IPCC II - Accounting (new )  I am not sure  about  new ( old course - P.E course II) . 

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