Study the Effect of Adequate Capital on Bank Liquidity an "Applied Study of the Sample" in Indian Banks

Abstract

The public and private banking sector faces many risks, on top of which is the liquidity risk resulting from the bank’s inability to meet with short-term or long-term commitments, and in return, banks have sought to consolidate their financial positions by implementing the decisions of the Basel Banking Supervision, especially with regard to the criterion of capital adequacy, which leads to achieving financial stability the research aims to demonstrate the positive aspects of the capital adequacy criterion in improving the liquidity position in banks, increasing their ability to meet short-term commitments, and reducing the level of liquidity risk from Banks may be exposed to them, especially in times of financial and banking crises, and especially at the present time the fluctuations that banks face in the financial and other markets We conclude from this study that the general Indian banking sector is more fulfilling and adhering to international standards in terms of maintaining the capital adequacy ratio.

Research Methodology; The research was based on the descriptive approach to cover the mathematical side of the research, in order to reach the goals in the applied aspect of the study the analytical method was adopted, as it analyzes the numerical data contained in the reports search as well as balance sheets and final accounts which are an annual source for Indian banks sample data needed for analysis duration of the search.

Results; this study that the public Indian banking sector is more fulfilling and adhering to international standards in terms of maintaining the capital adequacy ratio. As for the Indian private banking sector, where it appears that there are varying fluctuations in maintaining the ratio of capital adequacy and these reasons are due to the tendency of private banks to raise the level of Risks to obtain satisfactory profits and vice versa.

Conclusions; The study demonstrated the strength of the Central Bank's control measures over government banks that have been achieved the minimum head sufficiency standard,The Indian Central Bank has not taken measures to strengthen the capital base of the banks and especially with regard to raising the cap on paid up capita