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The ratio indicates the risk bearing capacity of bank. The loans & advances which are the main assets of the bank are given risk weights which are prescribed by Reserve Bank Of India taking in view the risk that particular segement of loan portfolio may carry. the total of risk weighted assets are compared to the core capital i.e., Share capital & statutory reserves only & the percentage is arrived at the optimum percentage is 9%, meaning thereby against every risk weighted asset of Rs.100 should be supported by Rs.9 of core capital
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