Economics • Banking & FinanceHard
Which of the following constitutes 'Tier-1 Capital' under Basel III norms for commercial banks?
A. Subordinated debt instruments of residual maturity
B. General provisions and loan-loss reserves
C. Common Equity Tier 1 (CET1) capital and disclosed reserves plus perpetual non-cumulative preference shares✓ Correct Answer
D. Revaluation reserves arising from fixed asset appreciation
💡 Solution & Explanation
Tier-1 capital under Basel III norms primarily comprises Common Equity Tier 1 capital, disclosed reserves, and perpetual non-cumulative preference shares that serve as going-concern loss absorbers. Subordinated debt and general loan-loss provisions generally fall under Tier-2 capital classifications.
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