📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!
  • google app store apple app store
    • ✖

      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:

      1. Common shares (paid-up equity capital) issued by the bank
      2. Stock surplus (share premium) resulting from the issue of common shares;
      3. Statutory reserves;
      4. Capital reserves representing surplus arising out of sale proceeds of assets;
      5. 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.

      Practice Next
      More Capital Market Questions

      Relevant for Exams:

      ask-question