• Dr. Humaira Begum

The most important component of a competitive economy is an efficient and effective functioning financial sector. The core of the financial sector i.e. the banking system plays an important role in transmitting monetary policy impulses to the economic system. To increase the efficiency, productivity, and profitability in banks, reforms were introduced. The reforms pertaining to norms for Capital Adequacy, Asset Classification and Provisioning, norms for Income Recognition have a direct bearing on the profitability of banks and other prudential norms like deregulation of interest rates, entry of new private banks, lowering of Statutory Liquidity Ratio and Cash Reserve Ratio, phasing out of directed credit programs and so on. The main principle behind the introduction of Capital Adequacy norm is to ensure that the banks attain sound financial health and the interest of the depositors is protected. Generally, Capital refers to shareholders money. But in the case of banking, it consists of Tier I capital belonging to the shareholders and Tier II Capital consisting of both, external and internal resources that are available to the bank. Adequacy is related to the risks, a banking company undertakes in its asset creation- be it credit risk, market risk, operational risk. To study the effect of CAR on spread, profits, correlation analysis is being used.

Capital Adequacy Ratio, Efficiency, Productivity, Profitability, Prudential Norms, Risks

"CAPITAL ADEQUACY NORM AND ITS EFFECTS ON PROFITS AND OTHER PARAMETERS", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.6, Issue 6, page no.992-998, June 2019, Available :http://www.jetir.org/papers/JETIR1906G51.pdf

"CAPITAL ADEQUACY NORM AND ITS EFFECTS ON PROFITS AND OTHER PARAMETERS", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.6, Issue 6, page no. pp992-998, June 2019, Available at : http://www.jetir.org/papers/JETIR1906G51.pdf