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The Capital Conservation Buffer must be held in the form of:
ATier 2 capital
BCash reserves
CCET1 capital
DAT1 capital
Answer & Solution
Correct answer: C. CET1 capital
1. The buffer is meant to absorb losses first.
2. Only the purest capital can do that job.
3. So it is held as CET1 capital.
_Source: Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Directions, 2025_
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