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    Question

    Expected prescribed minimum Common Equity Tier 1 (CET1)

    for banks in India is -
    A 4.5% Correct Answer Incorrect Answer
    B 5.0% Correct Answer Incorrect Answer
    C 5.5% Correct Answer Incorrect Answer
    D 6.0% Correct Answer Incorrect Answer
    E 6.5% Correct Answer Incorrect Answer

    Solution

    Minimum Common Equity Tier 1 (CET1) for banks in India is 5.5%. Tier 1 capital = common equity tier 1 (CET1) capital+ Additional Tier 1 capital (AT1) Common equity Tier 1 comprises of a bank’s core capital and includes common shares, stock surpluses resulting from the issue of common shares, retained earnings, common shares issued by subsidiaries and held by third parties. Additional Tier 1 capital is defined as those uncommon instruments which are eligible to be included in this tier. As per Basel guidelines it is expected that all banks should meet the minimum required CET1 ratio of 4.50% by 2019.

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