alexa

Search in Indianmoney's WealthPedia

Home Articles What is Risk-Weighted Assets?

What is Risk-Weighted Assets?

IndianMoney.com Research Team | Posted On Sunday, April 12,2009, 10:17 AM

5.0 / 5 based on 1 User Reviews

What is Risk-Weighted Assets?

 

 

A bank's assets weighted according to credit risk, some assets, like debentures, are assigned a higher risk than others, such as cash. This type of asset calculation is used in determining the capital requirement for a financial institution, and is regulated by the Federal Reserve Board. In terms of the smallest amount of capital that is required within banks and other institutions, based on a percentage of the assets, weighted by risk.

Assets which are weighted for credit risk according to a formula used by the Reserve Bank. On and off-balance-sheet items are weighted for risk, with off-balance-sheet items converted to balance-sheet equivalents before being allocated a risk weight. Risk weights are in five categories, from zero to 100 per cent, those carrying a zero weight include notes and coins, gold matched by gold liabilities, balances with the Reserve Bank.

See Also: What are fixed Assets?

What is your Credit Score? Get FREE Credit Score in 1 Minute!

Get Start Now!
CIBIL Meter
Get It now!
Attention!

This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.