Tier-1 capital: Tier 1 capital, used to describe the capital adequacy of a bank, is core capital that includes equity capital and disclosed reserves. Tier 1 capital is essentially the most perfect form of a bank’s capital — the money the bank has stored to keep it functioning through all the risky transactions it performs, such as trading/investing and lending.
Tier-2 capital: Tier-2 capital is the secondary component of bank capital, that makes up a bank’s required reserve. Tier 2 capital is a measure of a bank’s financial strength with regard to the second most reliable forms of financial capital, from a regulator’s point of view. It consists of accumulated after-tax surplus of retained earnings, revaluation reserves of fixed assets and long-term holdings of equity securities, general loan-loss reserves, hybrid (debt/equity) capital instruments, and subordinated debt.
CAR: Capital adequacy ratio is the percentage of total capital(total of tier 1 and tier 2 capitals) to the total risk-weighted assets. It is a measure of banks capital. It helps to prevent bank failure.
Public debt: Public debt includes internal debt comprising borrowings inside the country like market loans; borrowings from RBI on the basis of special securities bills and external debt comprising loans from foreign countries, International financial institutions, NRI deposits.
CGPCS Notes brings Prelims and Mains programs for CGPCS Prelims and CGPCS Mains Exam preparation. Various Programs initiated by CGPCS Notes are as follows:-