UPSC Prelims 2018 · GS Paper 1 · Q16

Economy

Easy · Capital Adequacy Ratio

Consider the following statements regarding the Capital Adequacy Ratio (CAR) of a bank:

1. It measures a bank's capital as a proportion of its risk-weighted assets.

2. Each individual bank is free to independently decide its own minimum CAR threshold.

Which of the statements given above is/are correct?