Consider the following elements of core and supplementary capital of ABC Bank Ltd. (Rs in millions): Paid up capitalRs 2,400General reserve40Capital redemption funds120Capital adjustment…

Consider the following elements of core and supplementary capital of ABC Bank Ltd. (Rs in millions):

Paid up capitalRs 2,400General reserve40Capital redemption funds120Capital adjustment funds220Retained earnings120Goodwill70Fictitious assets24Cumulative preference shares550Subordinated term loans600General loan loss provision240Exchange equalization reserves120Hybrid capital instruments260Investment adjustment reserve110Asset revaluation reserve220 Suppose the followings are the balance sheet items and off-balance sheet items, and risk weights to corresponding items of ABC Bank Ltd.

Balance sheet itemsBook Value (in millions)Risk weight (in %)Cash balance4800Government securities1,2000Claims on foreign government and central bank45050Claims on domestic companies17,500100Staff loans and advances15060Claims secured by residential properties25,20060Off-balance sheet itemsL/C commitment150050Bid bond12050Advance payment guarantee550100 a. Estimate the core capital, the supplementary capital and the total capital fund of ABC Bank? b. What are the on-balance sheet, the off-balance sheet and total risk-weighted assets of ABC Bank? c. What is the core capital ratio and the capital adequacy ratio of ABC Bank? d. Calculate the minimum required capital fund if required capital is 11 percent of the total risk-weighted assets? e. Do you think that ABC Bank has adequate capital to support its assets?