Types of Tier 2 or Supplementary Capital as per Basel Capital Adequacy Norms. #ChartAcc

Friday, January 10, 2014

ChartAcc.com - Tier 2 capital has two types as follows:

  1. Upper Tier 2 - It includes Debt which is: 
    • Perpetual (senior to preferred capital and equity
    • Deferrable and cumulative coupons 
    • Interest and principal can be written down
  2. Lower Tier 2 - 
    • cheap for banks to issue 
    • coupons not deferrable without triggering default 
    • subordinated debt with a maturity of a minimum of 10 years. 

For more on Basel click here.

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