PNCPS are allowed to be included in Tier 1 Capital under Basel Norms What does lsquo C rsquo in PNCP...........

Finance (RBI) Reserve Bank of India

Read the following case study and answer the following 4 questions.

Over the years, the role of the AIFIs (EXIM Bank, NABARD, NHB & SIDBI) in the Indian financial system has undergone significant change reflecting the changes in their business models. As the Indian economy grows further, AIFIs are increasingly being seen as key institutions to promote the flow of direct or indirect credit to the economic sectors they cater to. It has been decided, therefore, to extend the Basel III Capital framework to the AIFIs as detailed in the following paragraphs.

(2 Markers)

PNCPS are allowed to be included in Tier 1 Capital under Basel Norms. What does ‘C’ in PNCPS stand for?

This questions was previously asked in

RBI Grade B Phase 2 Exam (2022)

View All RBIB Previous Year Papers

Cumulative

Capital

Convertible

Currency

Called up

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Explanation:

This is a static question from the chapter “Basel Norms”. PNCPS stands for Perpetual Non-Cumulative Preference Shares (PNCPS). Perpetual Non-Cumulative Preference Shares (PNCPS) held by members/subscribers, may be treated as shares for the purpose of compliance with the extant share linking to borrowing norms. As I mentioned earlier it is important to study the Basel Norms in greater detail as it holds good weightage for this exam.