The Reserve Bank of India has allowed banks to issue additional Tier 1 capital instruments, the principal amount of which would absorb losses, either through conversion into common shares or a write-down mechanism that allocates the losses to the instruments, either temporarily or permanently. The limits on admissibility of excess additional Tier 1 and Tier 2 capital for computing and reporting Tier 1 capital and CRAR (capital adequacy ratio) have been withdrawn. Accordingly, a bank having met the minimum capital requirements may admit excess additional Tier 1 and Tier 2 capital for the purpose of reporting. (Hindu Businessline dated 01.09.2014)
The marginal cost of capital (MCC) is the total combined cost of debt, equity, and…
The weighted average cost of capital (WACC) is the average rate that a business pays…
The Reserve Bank of India (RBI) defines a personal loan as a type of unsecured…
A share is a unit of ownership in a company and has an exchangeable value…
The cost of debt is the interest rate a company pays on its debt, and…
This article explains the assumptions and key aspects of approaches to capital structuring, including the…