What are PCA parameters?

The Reserve Bank has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) Framework, in terms of three parameters, i.e. capital to risk weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA), for initiation of certain structured and discretionary …

How many components of PCA are there?

Unlike the pixel basis, the PCA basis allows us to recover the salient features of the input image with just a mean plus eight components! The amount of each pixel in each component is the corollary of the orientation of the vector in our two-dimensional example.

Does PCA include dependent variable?

PCA is a technique to account for the variability of the system from the linear combination of independent variables, thus it should not include dependent variables.

What is the meaning of Crar?

Capital Adequacy Ratio (CAR) is also known as Capital to Risk (Weighted) Assets Ratio (CRAR), is the ratio of a bank’s capital to its risk. National regulators track a bank’s CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements.

Should PCA include Target variable?

No, you don’t need to include response variables. The (major) purpose for PCA is to find directions that could spread data as much as possible, and some dimensions can be eliminated.

What is CET1 ratio?

The CET1 ratio compares a bank’s capital against its assets. In the event of a crisis, equity is taken first from Tier 1. Many bank stress tests against banks use Tier 1 capital as a starting measure to test the bank’s liquidity and ability to survive a challenging monetary event.

How is Crar calculated?

Calculating CAR The capital adequacy ratio is calculated by dividing a bank’s capital by its risk-weighted assets. The capital used to calculate the capital adequacy ratio is divided into two tiers.