onomi      on epts and erminolo ies          22.9
     (M), earnings (E), liquidity (L) and systems for                  paid-up capital (paid-up capital is
     control (S). The acronym is used as a technique                   subscribed capital plus credit/due on the
     for evaluating and rating the operations and                      shareholders).
     performance of banks all over the world.                    (iv) Issued Capital: The amount of the capital
                                                                       which has been sought by a company to
        cApitAl                                                        be raised by the issue of shares (it should
     Capital is one of the three main factors of                       be kept in mind that this cannot exceed
     production (labour and natural resources are the                  the authorised capital).
     other two), classified into physical capital (i.e.,          (v) Called-up Capital: The amount of share
     factories, machines, office, etc.) and human capital              capital the shareholders have been called
     (i.e., training, skill, etc.).                                    to pay to date under the phased payment
           In a joint stock company, the capital has                   terms. It is usually equal to the ‘paid-up
     various specific terms showing different forms of                 capital’ of the company except where
     the share capital:                                                some shareholders have failed to pay
           (i) Authorised Capital: This is the amount of               their due installments (known as calls in
                share capital fixed in the Memorandum                  arrears).
                of Association (MoA) and the article of
                association of a company as required by         cApitAl ADequAcy rAtio
                the Companies Act. This is also known as
                                                             A regulation on commercial banks, co-operative
                the Nominal or Registered Capital.
                                                             banks and the non-banking financial companies
                This is the limit (i.e., nominal value)      to maintain a certain amount of capital in relation
                upto which a company can issue shares.       to their assets (i.e., loans and investments) as a
                Companies often extend their authorised      cushion (shock-absorber) against probable losses
                capital (via an amendment in the MoA)
                                                             in their investments and loans.
                in advance of actual issue of new shares.
                This allows the timing of capital issue to         A concept devised by the Bank for
                be fixed in light of the company’s need      International Settlements (BIS), Basel, the
                for new capital and the state of the capital provision was implemented in India in 1992 by
                market and allows share options to be        the RBI (for more detailed discussion see the
                excercised accordingly.                      chapter on ‘Banking’).
          (ii) Paid-up Capital: The part of the
                authorised capital of a company that has        cApitAl consumption
                actually been paid up by the shareholders.   The capital that is consumed by an economy or
                A difference may arise because all shares    a firm in the production process. Also known as
                authorised may not have been issued or       depreciation.
                the issued shares have been only partly
                paid-up by then.
                                                                cApitAl-output rAtio
         (iii) Subscribed Capital: The capital that has
                actually been paid by the shareholders       A measure of how much additional capital is
                (as they might have committed more           needed to produce each extra unit of the output.
                than this to contribute). It means, the      Put the other way round, it is the amount of extra
                subscribed capital is the actually realised  output produced by each unit of added capital.