Capital adequacy ratio for a NBFC – MFI is ______.
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 15% of the aggregate risk weighted assets.
The capital adequacy ratio (CAR) for a Non-Banking Financial Company – Microfinance Institution (NBFC-MFI) is 15%. This ratio is set by the Reserve Bank of India (RBI) to ensure that NBFC-MFIs maintain sufficient capital to cover their risks and support their operations. The CAR is calculated as the ratio of a financial institution’s capital to its risk-weighted assets and is essential for maintaining financial stability and protecting depositors.