Common equity tier 1

The highest quality capital a bank holds: paid-up equity and retained earnings, less regulatory deductions, as a percentage of risk-weighted assets.

A bank with ₹5,400 crore of core equity against ₹60,000 crore of risk-weighted assets reports 9%.

This is the layer that absorbs losses first and the one regulators watch most closely, because everything else in the capital stack either has a maturity, a coupon, or a condition attached.

A bank whose total capital looks comfortable while its core layer sits near the minimum is holding up its ratio with instruments that behave less well in a crisis.

Read the core ratio, not the headline.

The ratio is also the binding constraint on growth. Every rupee of new lending consumes core capital at the risk weight of the asset, so a bank near its minimum cannot expand without raising equity, and raising equity below book value transfers value away from existing shareholders. That is the trap weak banks find themselves in.