{"id":204170,"date":"2025-03-21T15:35:03","date_gmt":"2025-03-21T15:35:03","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=204170"},"modified":"2025-03-21T15:35:05","modified_gmt":"2025-03-21T15:35:05","slug":"which-among-the-following-is-not-tier-i-capital","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/21\/which-among-the-following-is-not-tier-i-capital\/","title":{"rendered":"Which among the following is NOT Tier I Capital"},"content":{"rendered":"\n

Which among the following is NOT Tier I Capital?<\/p>\n\n\n\n

[A] Paid up Capital
[B] Statutory Reserves
[C] Revaluation Reserves
[D] Investment Fluctuation Reserves<\/p>\n\n\n\n

The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n

The correct answer is [C] Revaluation Reserves<\/strong>.<\/p>\n\n\n\n

Explanation:<\/h3>\n\n\n\n

Tier I Capital<\/strong>, also known as Core Capital<\/strong>, refers to the primary capital that a financial institution holds, which is used to absorb losses in times of financial distress. Tier I capital is essential for maintaining a bank’s solvency and is the most stable form of capital. It includes funds that are available for an institution to cover financial difficulties and regulatory requirements.<\/p>\n\n\n\n

The components of Tier I Capital typically include:<\/p>\n\n\n\n

    \n
  1. Paid up Capital<\/strong>: This represents the amount of money raised by a company through the issuance of shares. It is one of the fundamental forms of equity capital and is part of Tier I capital because it represents permanent and stable capital.<\/li>\n\n\n\n
  2. Statutory Reserves<\/strong>: These are reserves that banks are required by law to maintain from their profits to protect depositors and ensure stability. Statutory reserves are included in Tier I Capital as they are a part of the equity base that provides strength to the financial institution.<\/li>\n\n\n\n
  3. Investment Fluctuation Reserves<\/strong>: This reserve is established to account for potential fluctuations in the value of investments. These reserves are a part of Tier I capital because they reflect the institution\u2019s ability to absorb market risks and losses arising from fluctuations in the market value of its investments.<\/li>\n<\/ol>\n\n\n\n

    However, Revaluation Reserves<\/strong> do NOT<\/strong> qualify as Tier I Capital.<\/p>\n\n\n\n

    Revaluation Reserves<\/strong> arise when an institution revalues its assets (e.g., property, equipment, or securities) to reflect their current market value, rather than their historical cost. While revaluation increases the book value of assets, it does not represent actual cash or liquid capital available for loss absorption. Moreover, revaluation reserves are not considered stable or permanent in the same way as paid-up capital or statutory reserves, and they can fluctuate depending on market conditions. Therefore, revaluation reserves are excluded from Tier I capital under regulatory frameworks like the Basel Accords.<\/p>\n\n\n\n

    In summary, while paid-up capital, statutory reserves, and investment fluctuation reserves contribute to the core financial strength of a bank, revaluation reserves<\/strong> are not considered part of Tier I capital due to their volatile and non-liquid nature.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Which among the following is NOT Tier I Capital? [A] Paid up Capital[B] Statutory Reserves[C] Revaluation Reserves[D] Investment Fluctuation Reserves The correct answer and explanation is : The correct answer is [C] Revaluation Reserves. Explanation: Tier I Capital, also known as Core Capital, refers to the primary capital that a financial institution holds, which is […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-204170","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/204170","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=204170"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/204170\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=204170"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=204170"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=204170"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}