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    Question

    Based on the following case study, 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, the 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 Basel III Capital framework to the AIFIs as detailed in the following paragraphs.

    PNCPS are allowed to be included in Tier I Capital. What does ‘C’ in PNCPS stand for ?

    A Cumulative Correct Answer Incorrect Answer
    B Capital Correct Answer Incorrect Answer
    C Convertible Correct Answer Incorrect Answer
    D Currency Correct Answer Incorrect Answer
    E Called-up Correct Answer Incorrect Answer

    Solution

    Perpetual Non- Cumulative Preference Shares (PNCPS) can be issued as additional capital for the purpose of capital adequacy norms. PNCPS would be eligible to be treated as Tier I capital as AT-1 capital.  

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