Qura Capital Ltd., a Non-Banking Financial Company (NBFC) classified under the Scale-Based Regulation framework, is required to maintain a minimum…

To determine whether Qura Capital Ltd. meets the capital adequacy requirement, we need to compute its Tier 1 Capital, Tier 2 Capital and compare the total capital ratio against the required 15% of Risk-Weighted Assets (RWA). Step 1: Computation of Tier 1 Capital Tier 1 Capital = Owned Fund – Investments in Group Entities + Eligible Perpetual Debt Instruments. Tier 1 Capital = 1,000 - 150 + 120 = 970 crore Note: The perpetual debt instruments are limited to 15% of the previous year's Tier 1 capital. Assuming 120crore qualifies, we include it in Tier 1 capital. Step 2: Computation of Tier 2 Capital Tier 2 Capital = Sum of: Preference Shares = 80 croreRevaluation reserves at discounted rate of 55 percent = 90 crore (200crore × 55% = 110 crore i.e - 200-110= 90)General Provisions (Limited to 1.25% of RWA) = 1.25% of 8,000 crore = 100 crore (Since actual general provisions are 50crore, we take 50crore)Hybrid Debt Capital Instruments = 90 croreSubordinated Debt = 140 crorePerpetual Debt Instruments exceeding Tier 1 Limit = 0 crore (As 120 crore is already within Tier 1 limit) Tier 2 Capital = 80 + 90 + 50 + 90 + 140 + 0 = 450 crore. Note: Tier 2 Capital cannot exceed Tier 1 Capital. Since 450crore is within the 970crore Tier 1 limit, it is fully eligible. Step 3: Compute Capital Adequacy Ratio (CAR) Total Capital = Tier 1 Capital + Tier 2 Capital. Total Capital=970 + 450 = 1,420 Capital Adequacy Ratio (CAR) = (Total Capital/Risk-Weighted Assets) × 100 =1420/8000*100 =17.75% Step 4: Conclusion Minimum required capital ratio = 15%Actual Capital Adequacy Ratio (CAR) = 17.75% Since Qura Capital Ltd.'s CAR (17.75%) is higher than the minimum requirement of 15%, it meets the regulatory capital adequacy norms.