Explain the term ‘Bank Capital’. Discuss the functions and classification of Bank Capital. What are the requirements that banking companies need to fulfill in order to carry on their business in India.

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Bank Capital: Understanding its Significance, Functions, and Classification

Bank capital is a critical component of a financial institution's structure, representing the financial cushion that safeguards against unexpected losses. It serves as a buffer to absorb losses arising from various risks, ensuring the continuity and stability of banking operations. Understanding the functions and classification of bank capital is essential for comprehending the financial resilience of banking institutions.

Functions of Bank Capital:

1. Risk Absorption: The primary function of bank capital is to absorb losses that may arise due to credit, market, operational, or other risks. In times of financial stress, the capital acts as a shock absorber, protecting the depositors and stakeholders from the adverse impacts of losses.

2. Liquidity Support: Bank capital provides a source of funds that can be used during periods of liquidity crunch. ________ _____ ______ ____________ ___ ______ ____ ____________ _______.
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Degree : MASTER DEGREE PROGRAMMES
Course Name : Master in Business Administration
Course Code : MBA
Subject Name : Bank Financial Management
Subject Code : MS 422
Year : 2022