In the context of banking regulation, the Capital Adequacy Ratio is prescribed to ensure that:
A. CRR is fixed at a particular level
B. Dividend distribution is unrestricted
C. Interest rates on deposits are maximised
D. Banks maintain adequate capital relative to their risk-weighted assets
Answer: Option D
Solution (By JKSSB Mock Tests)
The Capital Adequacy Ratio requires banks to hold a minimum amount of capital in proportion to their risk-weighted assets so that they can absorb losses and protect depositors.
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