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Abstract
The capital adequacy represents the overall financial condition of the bank and its ability to meet the need for additional capital. Capital adequacy of banks is measured by the ratio of capital to risk weighted assets (CRAR). A sound capital Adequacy ratios or position strengthen the confidence of various stakeholders in the bank. It is a ratio of solvency. The banks are required to maintain capital adequacy ratio as specified by RBI from time to time. As per the latest RBI norms, the banks in India should maintain a capital adequacy ratio of 9 %. Higher the capital adequacy ratio, stronger is considered a bank; as it ensures high safety against bankruptcy.