Undercapitalisation

Glossary

Banking

Undercapitalisation

In a banking context, a bank is under-capitalised when its capital levels are below regulatory minimums, which requires it to take immediate remedial action. In a corporate context, a company is similarly under-capitalised if it has insufficient capital to operate (i.e. cash to pay bills), fund growth, meet demand spikes, finance inventory or pay creditors.

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