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Question

Which of the following are not the components of Tier 1 (Primary Capital) for maintaining the requirements as per BASEL regulations

A Common shares (paid-up equity capital) issued by the bank Correct Answer Incorrect Answer
B Share Premium Correct Answer Incorrect Answer
C Statutory Reserves Correct Answer Incorrect Answer
D Revaluation Reserve Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

  Elements of Common Equity component of Tier 1 capital will comprise the   following: (i) Common shares (paid-up equity capital) issued by the bank (ii) Stock surplus (share premium) resulting from the issue of common shares; (iii) Statutory reserves; (iv) Capital reserves representing surplus arising out of sale proceeds of assets; (v) Revaluation reserves arising out of change in the carrying amount of a bank’s property consequent upon its revaluation may, at the discretion of banks, be reckoned as CET1 capital at a discount of 55% Therefore, all are included.

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