Banking TierII CAPITAL
This query is : Resolved
11 April 2009
What is Undisclosed Reserve included in TierII capital? All reserves are disclosed then how can TierII capital is calculated?
13 April 2009
As per RBI’s Prudential Guidelines on Capital Guidelines and Market Discipline following are the elements of Tier 2 Capital:
1. Revaluation reserves arising from revaluation of assets that are undervalued on the bank’s books, typically bank premises. … consider revaluation reserves at a discount of 55 percent while determining their value for inclusion in Tier 2 capital. Such reserves will have to be reflected on the face of the Balance Sheet as revaluation reserves.
2. General provisions and loss reserves not attributable to the actual diminution in value or identifiable potential loss in any specific asset and are available to meet unexpected losses…. (Investment fluctuation Reserve has been shifted to Tier 1)
3. Hybrid debt capital instruments which combine certain characteristics of equity and certain characteristics of debt. Examples are Perpetual Cumulative Preference Shares (PCPS), Redeemable Non-Cumulative Preference Shares (RNCPS) and Redeemable Cumulative Preference Shares (RCPS)
4.Subordinated debt : for inclusion in Tier 2 capital instruments with an initial maturity of less than 5 years or with a remaining maturity of one year should not be considered.
I cannot say what is meant by undisclosed reserve.
To calculate Tier 2 Capital of a bank, you will have to check the aforesaid guidelines as there are many limits and sub limits and then should have access to detailed balance sheet of the bank.
1. Revaluation reserves arising from revaluation of assets that are undervalued on the bank’s books, typically bank premises. … consider revaluation reserves at a discount of 55 percent while determining their value for inclusion in Tier 2 capital. Such reserves will have to be reflected on the face of the Balance Sheet as revaluation reserves.
2. General provisions and loss reserves not attributable to the actual diminution in value or identifiable potential loss in any specific asset and are available to meet unexpected losses…. (Investment fluctuation Reserve has been shifted to Tier 1)
3. Hybrid debt capital instruments which combine certain characteristics of equity and certain characteristics of debt. Examples are Perpetual Cumulative Preference Shares (PCPS), Redeemable Non-Cumulative Preference Shares (RNCPS) and Redeemable Cumulative Preference Shares (RCPS)
4.Subordinated debt : for inclusion in Tier 2 capital instruments with an initial maturity of less than 5 years or with a remaining maturity of one year should not be considered.
I cannot say what is meant by undisclosed reserve.
To calculate Tier 2 Capital of a bank, you will have to check the aforesaid guidelines as there are many limits and sub limits and then should have access to detailed balance sheet of the bank.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- About TDS & Income Tax
- Section 194JA & JB Income which ITR Form to use
- Pass word to open justification report for Q1 for FY 2026-27
- Scrutiny and reopening of past returns
- PPF interest-As Exempt Income disclosure
- Booth for sales promotion
- F & O PROFIT REPORTING FOR AY 2026-27
- Type of Capital Gain
- FEMA regulation Act. for inward remitance
- Rental income of jointly held property
- TDS on Rent received on redevelopment of building
- Tax on Deemed Capital Gain
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Taxation in the hands of Landowner under JDA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
