Revaluation Reserve

Revaluation  reserves  are  a  part  of Tier-II  capital. These reserves arise  from  revaluation of assets  that are undervalued on  the  bank’s  books,  typically  bank  premises  and marketable securities. The extent to which the revaluation reserves  can be  relied upon  as  a  cushion  for unexpected losses depends mainly upon  the  level of certainty  that can be placed on  estimates of  the market  values of  the  relevant assets  and  the  subsequent  deterioration  in  values  under difficult market  conditions or  in a  forced  sale.

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