Session - 6 - FIN 441 Bank Management & Electronic Banking...

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Bank Management & Electronic Banking FIN 441
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2 Session 6 Capital Management
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3 Session 6 : Capital Management Capital Equity capital refers principally to the funds contributed by the owners of an organization. Bank capital refers principally to funds contributed by the bank’s owners, consisting mainly of stocks, reserves and those earnings that are retained in the bank. Raising sufficient capital and retaining enough capital to protect the interests of depositors, borrowers, employees, owners is one of the greatest challenges in bank management.
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4 Session 6 : Capital Management Types of Capital CORE CAPITAL (TIER 1) Paid up Capital Non-repayable Share premium account Statutory Reserve General Reserve Retained Earnings Minority interest in Subsidiaries Non-Cumulative irredeemable Preference Shares Dividend Equalization Account SUPPLEMENTARY CAPITAL (TIER 2) General provision maintained against unclassified loans Assets Revaluation Reserves All other Preference Shares Perpetual Subordinated debt Exchange Equalization A/C
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This note was uploaded on 04/22/2011 for the course BBA FIN 441 taught by Professor Dewanmostafiz during the Fall '10 term at BRAC University.

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Session - 6 - FIN 441 Bank Management & Electronic Banking...

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