As Wikipedia explains, the denominator of the CAR is risk-weighted to reflect the fact that some assets, such as microcredit loans, are riskier than others, such as treasury bills. In this post, I am effectively treating loans as having a 100% risk weighting and everything else as having 0% weight. This is only approximately true. But the point stands that the CAR minimum should limit how much the Grameen Bank can lend from a given capital base.
