What is tier 1 capital?

From a regulators perspective, it is the core measurement of a banks’ financial strength. Retained earnings and shareholders’ equity is part of Tier 1 capital. It consists of disclosed reserves and common stock. You can read about the Capital Adequacy Ratio (CAR) in the given link.

Further readings:

  1. Topic-Wise GS 3 Questions for UPSC Mains
  2. Basel III Norms – Regulations by Basel Committee on Banking Supervision

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