Risk Management in Financial Institutions (RMFI) math Formulae
Leverage Ratio=
𝑇𝑖𝑒𝑟𝐼 𝐶𝑎𝑝𝑖𝑡𝑎𝑙
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡
Liquidity Coverage Ratio (LCR) =
𝑆𝑡𝑜𝑐𝑘 𝑜𝑓 𝐇𝐢𝐠𝐡−𝐐𝐮𝐚𝐥𝐢𝐭𝐲 𝐋𝐢𝐪𝐮𝐢𝐝 𝐀𝐬𝐬𝐞𝐭𝐬( 𝑯𝑸𝑳𝑨)
𝑇𝑜𝑡𝑎𝑙 𝑁𝑒𝑡 𝐶𝑎𝑠ℎ 𝑂𝑢𝑡𝑓𝑙𝑜𝑤𝑠 𝑜𝑣𝑒𝑟 𝑡ℎ𝑒 𝑛𝑒𝑥𝑡 30 𝐶𝑎𝑙𝑒𝑛𝑑𝑒𝑟 𝐷𝑎𝑦𝑠
𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑆𝑡𝑎𝑏𝑙𝑒 𝐹𝑢𝑛𝑑𝑖𝑛𝑔
Net Stable Funding Ratio (NSFR)=
𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑆𝑡𝑎𝑏𝑙𝑒 𝐹𝑢𝑛𝑑𝑖𝑛𝑔
Tier-I Capitals: Paid-up capitals, Non-repayable share premium account, Statutory Reserves
(CLR/SLR), Retained Earnings, Minority interest in subsidiaries, dividend equalization account,
Non-cumulative irredeemable preference shares, Perpetual Bond (AT-I)
Tier-2 Capitals: General Provisions, Subordinated Debts/Perpetual Debts, Asset revaluation
reserves, all other preference shares, Exchange equalization account, Revaluation reserves for
securities and
Capital Adequacy Ratio (CAR)=
𝑅𝑒𝑔𝑢𝑙𝑎𝑟𝑖𝑡𝑦 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 (𝑇𝑖𝑒𝑟𝐼+𝑇𝑖𝑒𝑟𝐼𝐼+𝑇𝑖𝑒𝑟𝐼𝐼𝐼)
𝑇𝑜𝑡𝑎𝑙 𝑅𝑖𝑠𝑘−𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝐴𝑠𝑠𝑒𝑡 (𝑇𝑅𝑊𝐴)
Minimum Capital Ratio= 10% of RWA
CET-I Capital= (Paid-up Capital + Statutory Reserve + Retained Earnings +
General Reserve+ Non-repayable share Premium)
CET-I Ratio=
𝐶𝐸𝑇−𝐼 𝐶𝑎𝑝𝑖𝑡𝑎𝑙
𝑅𝑊𝐴
× 100 (Minimum 4.5%)
Capital Conservation Buffer (CCB)= 2.5%
Addn. Tier-I Ratio=
Addn.Tier−I 𝐶𝑎𝑝𝑖𝑡𝑎𝑙
𝑅𝑊𝐴
× 100 (Maximum 1.5%)
Tier-I Capital= CET-I Capital + Addn. Tier-I Capital
Tier-I Ratio=
𝑇𝑖𝑒𝑟𝐼 𝐶𝑎𝑝𝑖𝑡𝑎𝑙
𝑅𝑊𝐴
× 100
Tier-II Capital= Subordinated Bond + General Provisions
Tier-II Capital Ratio=
𝑇𝑖𝑒𝑟−𝐼𝐼 𝐶𝑎𝑝𝑖𝑡𝑎𝑙
𝑅𝑊𝐴
× 100
Total Capital= Tier-I + Tier-II Capital
Capital to Risk-Weighted Asset Ratio (CRAR)=
𝑇𝑜𝑡𝑎𝑙 𝐸𝑙𝑖𝑔𝑖𝑏𝑙𝑒 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 (𝑇𝐸𝐶)
𝑇𝑜𝑡𝑎𝑙 Risk−Weighted Asset
× 100
BPE::98
BPE::96