What is the minimum Tier 1 capital ratio?

As per Basel Accords, the minimum tier 1 capital ratio should be 6% and as per the same Basel Accords, the banks must have a minimum capital ratio of 8%. Minimum capital requirements is one the three main pillars or three main principles of Basel III. You can read about the Basel III Norms – Regulations by the Basel Committee on Banking Supervision in the given link.

Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital to its risk. Basel Norms are the international banking regulations. Basel III guidelines were released in 2010. 

Further readings:

  1. Topic-Wise GS 3 Questions for UPSC Mains
  2. Capital Adequacy Ratio (CAR)

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