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What Are The Parts Of Banks’ Capital? |
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Answer» BANK has following parts of capital:- TIER 1 capital: Paid up capital (core capital) + Reserves (owners or promoters’ fund) Tier 2 capital: Secondary Capital (borrowed FUNDS) + general loss reserves + subordinated term debts + undisclosed reserves (can’t be maintained in India) Tier 3 capital: Same as tier 2 capital but with a higher AMOUNT in order to face the MARKET risks of the bank. Bank has following parts of capital:- Tier 1 capital: Paid up capital (core capital) + Reserves (owners or promoters’ fund) Tier 2 capital: Secondary Capital (borrowed funds) + general loss reserves + subordinated term debts + undisclosed reserves (can’t be maintained in India) Tier 3 capital: Same as tier 2 capital but with a higher amount in order to face the market risks of the bank. |
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