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What are the minimum Capital to Risk-Weighted Assets Ratio (CRAR) requirements for urban cooperative banks (UCBs) as prescribed by the Reserve Bank of India (RBI)?

1. Tier 1: 8%, Tier 2 to 4: 10%
2. Tier 1: 9%, Tier 2 to 4: 12%
3. Tier 1: 10%, Tier 2 to 4: 15%
4. Tier 1: 8.5%, Tier 2 to 4: 11.5%

Correct answer: Tier 1: 9%, Tier 2 to 4: 12%

Solution

RBI prescribes minimum capital adequacy norms for urban cooperative banks with a Tier 1 requirement of 9% and a total CRAR requirement of 12%. These norms are meant to ensure that UCBs maintain sufficient capital to absorb risks.

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