Question

What is the minimum Capital adequacy ratio (CAR)

Q: Answer-What is the minimum Capital adequacy ratio (CAR) proposed for All India Financial Institutions in a...

AIFIs are required to maintain a minimum Pillar 1 Capital to Risk-weighted Assets Ratio CRAR of 9 on an on-going basis other than capital conservation buffer and countercyclical capital buffer etc.. These institutions should have minimum total capital at 9 per cent from 1 April 2022.

proposed for All India Financial Institutions in a recently released draft by RBI? Read the following passage and answer the next 3 questions The RBI in October 2021 released a draft framework on master directions to implement the Basel III Capital Framework for All India Financial Institutions (AIFIs) including EXIM Bank, NABARD, NHB, and SIDBI. The draft directions propose a stricter capital ratio of total risk-weighted assets (RWA). They also propose AIFIs to maintain a capital conservation buffer in the form of common equity, in addition to the minimum capital adequacy ratio. As the Indian economy grows further, the AIFIs are increasingly being seen as key institutions to promote the flow of direct or indirect credit to the economic sectors they cater to. It has been decided, therefore, to extend Basel III Capital framework to the AIFIs,” RBI said. According to RBI, the AIFIs shall implement all three pillars of Basel III captial regulations, considering their role in the Indian financial system. AIFIs are required to maintain a minimum pillar 1 capital to RWA (CRAR) on an on-going basis other than capital conservation buffer and counter-cyclical captial buffer. Source: economictimes

A Tier 1 CAR of 7%, CAR of 9% and CAR+CCB of 11.5%

B Tier 1 CAR of 6%, CAR of 8% and CAR+CCB of 10.5%

C Tier 1 CAR of 4%, CAR of 7% and CAR+CCB of 9.5%

D Tier 1 CAR of 6%, CAR of 7.5% and CAR+CCB of 9%

E Tier 1 CAR of 9%, CAR of 11.5% and CAR+CCB of 15%