Question
What is the minimum capital adequacy ratio to be
maintained by a Small Finance Bank?Solution
The capital adequacy framework for SFB is as follows:
| Minimum Capital Requirement | 15% |
| Common Equity Tier 1 | 6% |
| Additional Tier I | 1.5% |
| Minimum Tier I capital | 7.5% |
| Tier 2 capital | 7.5% |
| Capital Conservation Buffer | Not Applicable |
| Counter-cyclical capital buffer | Not applicable |
| Pre-specified Trigger for conversion of AT1 | CET1 at 6% up to March 31, 2019, and 7% thereafter |
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