Introduction to the Concept of Tier Capital

Under the provisions of Basel Banking Reforms, banks are required to maintain different types of tier capital with purpose of making banks more reliable and stable and lower the risks relating to various areas. The tier capital is categorized and explained as below

Tier 1 capital

Tier 1 capital is the core measure of a bank’s financial strength from a regulator’s point of view. It consists of the types of financial capital considered the most reliable and liquid, primarily equity.