In economics, which term is used to refer to 'the ratio of a bank's capital in relation to its risk weighted assets and current liabilities'?

Correct option is C

The Capital Adequacy Ratio (CAR) is a measure of a bank's capital in relation to its risk-weighted assets and current liabilities. It is used to ensure that banks have enough capital to absorb losses and protect depositors.

Information Booster:

• Formula:CAR = (Bank’s Capital / Risk-Weighted Assets) × 100
• Regulated by RBI under Basel III norms.
• Minimum CAR for Indian banks: 9% (as per RBI guidelines).

Additional Knowledge:

• Cash Reserve Ratio (CRR): The percentage of total deposits that banks must keep with the RBI.
• Capital Account: Refers to capital transactions in a country's Balance of Payments (BoP).
• Capacity Cost: Not related to banking; refers to fixed costs in production.