In banking and finance, risk weightage is a percentage assigned to assets or loans based on how risky they are. This percentage determines how much capital a bank needs to keep aside as a safety cushion in case of losses. Higher-risk assets get higher risk weightages, meaning more capital needs to be reserved for them. Lower-risk assets get lower risk weightages, requiring less capital. This calculation is vital for assessing a bank’s financial strength, known as the capital adequacy ratio.