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Thursday, September 18, 2008

What is Capital Adequacy Ratio (CAR)?

Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR), is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss.

CAR set by the Monetary Authority of Singapore (MAS) set on insurance companies operating in Singapore is at 120%.

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