What are the conditions for maintaining regulatory capital in terms of Tier I,II,II capital

Answer:

a) The amount of Tier 2 capital will be limited to 100% of the amount of Tier 1

capital.

b) 50% of revaluation reserves for fixed assets and securities eligible for Tier 2

capital.

c) 10% of revaluation reserves for equity instruments eligible for Tier 2 capital.

d) Subordinated debt shall be limited to a maximum of 30% of the amount of Tier

1 capital.

e)  A minimum of about 28.5% of market risk needs to be supported by Tier 1 capital. Supporting of Market Risk from Tier 3 capital shall be limited up to maximum of 250% of a bank’s Tier 1 capital that is available after meeting credit risk capital requirement.