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Example

Following are the details of the bank for the year ending 1999-2000	Rs. in crs.
Equity Capital	130
Statutory reserves	40
Undisclosed reserves	50
General provision and loss reserves	50
Subordinated debt
Maturity between 2 to 3 years	30
Maturity between 4-5 years	30
Maturity within one year	10
Equity investments in subsidiaries	20
Revaluation reserves	40
Cash in hand	20
Balance with RBI	30
Loans and advances guaranteed by GOI	150
Loans and advances guaranteed to PSU's of Central Government	70
Furniture and fixtures	100
Buildings and equipments	75
Underwriting facility provided to public sector undertaking	20
Other Risk Weighted Assets	1500

Computation of Capital Adequacy Ratio

Step 1: Compute Tier I capital
Equity capital and reserves (a)	130
Statutory reserves (b)	40
Equity investments in subsidiaries (c)	20
Tier1= a+b-c	150.00

Step 4: Compute Capital Adequacy Ratio	Rs (in Crore)
Tier I capital (A)	150
Tier II Capital  (B)	126.11
Total RWA(C)	1768.75
CAR= (A+B)/C	0.1561

Therefore, we see that Capital Adequacy Ratio of the bank is 15.47%