Capital Adequacy Ratio as Performance Indicator of Banking Sector in India-An Analytical Study of Selected Banks

The capital adequacy ratio (CAR) is a measure of a bank's capital. As per the requirements of Basel committee on banking supervision, every bank must maintain a desirable level of Capital Adequacy Ratio. It is expressed as a percentage of a bank's risk weighted credit exposures. It is also known as capital-to-risk weighted assets ratio (CRAR), it is used to protect depositors and promote the stability and efficiency of financial systems around the world. It is the ratio of a bank's capital to its risk. The ratio ensures that the how much extent a bank can cover its losses in future. The present paper analyse the banking sector performance in the light of capital adequacy ratio. For the purpose of analytical study, five banks from each sector (Public, Private & Foreign) are selected. The analysis is done in the three Basel regime periods.