After collapse of banks like PMC bank and YES bank, every Indian is now worried about their own bank, weather your money deposited in the bank are safe or not. Health of Bank depends on two parameters. Though bot the parameters are independent of each other and are indicator of different kind of risk a bank poses, but the financial experts of India are divided among themselves about which ratio to check to see if the bank is safe or not. The two ratios are MCAP ratio and CRAR Ration.

What is MCAP Ratio?
MCAP means Market Cap or Market Capitalization means the total deposits of the bank divided by their market capitalization. Many financial experts use this ratio to determine weather to invest in that bank or not. So that can be one of the best ratio to ensure your bank’s health. According to the market experts, the MCAP ratio of 2.5 to 4% is considered as Healthy Ratio. Some of the bank which maintain healthy MCAP ratios are
Kotak Mahindra Bank – .83% MCAP
HDFC – 1.23% MCAP
ICICI – 2.48% MCAP

Some of the risky Banks with high MCAP ratios are
YES Bank – 8.96% MCAP
South India Bank – 34% MCAP
Karoor Vysya Bank – 11% MCAP

What is CRAR Ratio?
CRAR is capital to risk-weighted assets ratio. According to the international standards, a Bank should maintain 8 per cent of CRAR but Indian banks on an average have a CRAR of 14.3 per cent which almost translates into 80 per cent greater capital than the international norms. According to the CEA, the Reserve Bank of India (RBI) has put the 9 per cent CRAR limit for banks and hence in comparison to that as well, Indian banks have 60 per cent more capital.

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