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      Question

      For large exposure measurement purposes, what component

      forms the underlying "eligible capital base" for an Upper Layer entity?
      A Total Capital Funds (Tier-I + Tier-II) Correct Answer Incorrect Answer
      B Core Tier-I Capital Correct Answer Incorrect Answer
      C Subordinated Tier-II Debt Instruments only Correct Answer Incorrect Answer
      D Total Paid-up Equity Capital Correct Answer Incorrect Answer
      E Net Owned Funds plus statutory cash reserve ratios Correct Answer Incorrect Answer

      Solution

      Under modernized framework adjustments, exposure limits are calculated strictly as a percentage of the entity's Tier-I capital. Tier-II capital is excluded from acting as the calculation denominator for large exposure compliance.

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