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A capital shortfall in an unconsolidated subsidiary is deducted from:
AAT1 capital
BTier 2 capital
CCash reserves
DCET1 capital
Answer & Solution
Correct answer: D. CET1 capital
1. An insurance subsidiary is the example given.
2. The whole shortfall must come off the parent's capital.
3. It is fully deducted from CET1.
_Source: Reserve Bank of India (Commercial Banks - Prudential Norms on Capital Adequacy) Directions, 2025_
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