The CRAR is the capital needed for a bank measured in terms of the risk weighted assets (mostly loans) disbursed by the banks. Higher the assets (and their risks), higher should be the capital for the bank.
CRAR is the central norm for regulation of banks. Higher amount of capital by shareholders will help it to survive on its own when some crisis situation comes. Similarly, higher capital by shareholders will discourage them to take too much risk. From these two angels, the new regulatory norms including the Basel III norms demand more capital with banks.
