Loading...
UPSC 2018: Consider the following statements: 1. Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if the account-holders fail to repay dues. 2. CAR is decided by each individual bank. Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2
Attempt This Question
Not attemptedCorrect Answer: (a) 1 only
Capital Adequacy Ratio (CAR/CRAR) is the proportion of a bank’s own capital (Tier-1 and Tier-2 funds) to its risk-weighted assets; this capital is maintained so the bank can absorb losses if borrowers default, making statement 1 correct. The required ratio is fixed by regulators (RBI based on Basel norms), not individually by each bank, so statement 2 is incorrect. Therefore only statement 1 is right. ([economictimes.indiatimes.com](https://economictimes.indiatimes.com/topic/capital-adequacy-ratio/?utm_source=openai))
Related UPSC Questions
More from Banking & Financial Sector
2018moderate
With reference to the governance of public sector banking in India, consider the following statements: 1. Capital infusion into public sector banks b
2019moderate
What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?
2016moderate
What is/are the purpose/purposes of the 'Marginal Cost of Funds based Lending Rate (MCLR)' announced by RBI? 1. These guidelines help improve the tra
Related Indian Economy Topics
2018Taxation
With reference to India's decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the f
2018Agriculture & Rural Development
Consider the following statements: 1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years
Frequently Asked Questions
What is the correct answer to this UPSC 2018 Indian Economy question?▼
The correct answer is option (a): 1 only. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Banking & Financial Sector question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2018, GS Paper 1, as Question 16. It falls under Indian Economy > Banking & Financial Sector.
What is the difficulty level of this UPSC question?▼
This question is rated "moderate". It requires sound conceptual understanding of the topic.
How many UPSC Prelims questions have been asked from Banking & Financial Sector?▼
UPSC has asked 47 questions from Banking & Financial Sector (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.