What does the so called capital to risk weighted assets ratio (CRAR) denote with respect to the banks?

  1. Balance sheet strength of the banks
  2. Immunity of banks against capital loss
  3. Day today Liquidity condition of the banks

Select the correct option from the codes given below:

Answer: [A] Only 1 & 2

CRAR is a standard metric to measure balance sheet strength of banks. Higher the CRAR the lesser is the chance for bank to suffer capital loss. Third statement is incorrect.

This question is a part of GKToday's Integrated IAS General Studies Module