GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Net capital
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Core capital
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Gross capital
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Working capital
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Detailed explanation-1: -Tier 2 Capital is known a bank’s supplementary capital. This is capital that is seen as being of a higher risk than its Tier 1 core capital partners. The capital that falls within the definition of Tier 2 is revaluation reserve, undisclosed reserves, and subordinate debt.
Detailed explanation-2: -What Is Tier 1 Capital? Tier 1 capital refers to the core capital held in a bank’s reserves and is used to fund business activities for the bank’s clients. It includes common stock, as well as disclosed reserves and certain other assets.
Detailed explanation-3: -Tier 2 capital is the second layer of capital that a bank must keep as part of its required reserves. This tier is comprised of revaluation reserves, general provisions, subordinated term debt, and hybrid capital instruments. There are two levels of Tier 2 capital-upper level and lower level capital.