Capital risk weighted asset ratio of 10% - No need for prior central bank approval for equity investments.
Q. Lenders will not require prior central bank approval for equity investments if they have a capital risk weighted asset ratio of how much?- Published on 18 Sep 15
a. 10% or more
b. 10% or less
c. 8% or more
d. 8% or less
ANSWER: 10% or more
Lenders will not require prior approval by the central bank for making equity investments if they have capital risk weighted asset ration of 10% or higher and have made profits in the previous financial year, according to notification by RBI. Equity investments without prior approval would have to equal around less than 10% of the company’s paid up capital or lower than one fifth of the paid up capital if including subsidiaries or JVs.