Capital Adequacy Ratio, CAR, or CRAR: It is ratio of capital fund to risk weighted assets expressed in percentage terms.

Minimum requirements of capital fund in India:
* Existing Banks 09 %
* New Private Sector Banks 10 %
* Banks undertaking Insurance business 10 %
* Local Area Banks 15%

Non-performing Assets (NPA) Ratio: NPAs refer to the loans given by a bank that it classified as doubtful. This means that the bank has low or no hopes of recovering money on these loans. Lower the NPA that much better it is.

A non performing asset or a loan is when the interest and/or installment of principal on it has remained ‘past due’ or unpaid — for more than 90 days

Statutory Liquidity Ratio (SLR): This is the minimum amount of reserves (held in cash, gold, short term securities and other liquid assets) a bank must maintain during all times, after all it’s investments and lending.

The SLR for Indian banks is normally 25 per cent of the capital. For example, if a bank has Rs 100 with it, before it gives away all of it, it has to maintain at least Rs 25. This helps in case depositors want to withdraw money, or for liquidity purposes.

The ratios can be checked on the balance sheets of banks which can be checked at http://www.nseindia.com

Deposits up to Rs 1 lakh are insured.

Deposits up to Rs 1 lakh is insured under the government’s Deposit Insurance and Credit Guarantee Corporation (DICGC). As per this scheme, even if you keep multiple deposits (savings and fixed deposits) across branches of one bank, only a total of Rs 1 lakh is insured. So it is prudent to have your deposits divided between two to three banks if you want to insure your total money and get maximum coverage.

Stay away from banks that offer you a comparatively higher interest rate on FDs than other banks. This is known as ‘adverse selection’ in banking terms. “A bank would offer higher rates only because they need funds,” So be cautious with your money and do not be greedy.

In order to know which banks are insured check the below mentioned link.

http://www.dicgc.org.in/beta02/comm.htm

 

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