Question
PNCPS are allowed to be included in Tier I Capital. What
does ‘C’ in PNCPS stand for ? Based on the following case study, answer the following 4 questions. Over the years, the role of the AIFIs (EXIM Bank, NABARD, NHB & SIDBI) in the Indian financial system has undergone significant change reflecting the changes in their business models. 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 as detailed in the following paragraphs.Solution
Perpetual Non- Cumulative Preference Shares (PNCPS) can be issued as additional capital for the purpose of capital adequacy norms. PNCPS would be eligible to be treated as Tier I capital as AT-1 capital.
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