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Fin News Letter

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Submitted By vankomm
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Finomina News Letter
Indian Institute Of Management Udaipur

Aman/Sravan 10/28/2011

Ratio Information

Capital Adequacy Ratio - CAR
It is a measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit exposures.

Also known as "Capital to Risk Weighted Assets Ratio (CRAR)." Capital Adequacy Ratio – CAR This ratio is used to protect depositors and promote the stability and efficiency of financial systems around the world. Two types of capital are measured: tier one capital, which can absorb losses without a bank being required to cease trading, and tier two capital, which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors.

SLR- Statutory liquidity ratio
It is the amount of liquid assets, such as cash, precious metals or other approved securities, that a financial institution must maintain as reserves other than the cash with the Central Bank. The statutory liquidity ratio is a term most commonly used in India. The maximum and minimum limits for the SLR are 40% and 25% respectively in India

CRR-Cash Reserve Ratio
The reserve requirement (or cash reserve ratio) is a central bank regulation that sets the minimum reserves each commercial bank must hold (rather than lend out) of customer deposits and notes. It is normally in the form of cash stored physically in a bank vault (vault cash) or deposits made with a central bank. The CRR ratio in india is 6%

Repo Rate
Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks

to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive. Current Repo Rate in India is 8.5%

Reverse Repo Rate
Reverse Repo rate is the rate at which Reserve Bank of

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