Appendix PCD-1 Investments in Commercial Entities
Bank "x" with eligible capital of 1,000,000 before deductions has made investment in seven commercial entities listed below:
| Investee | Amount | %age of bank's capital |
| a | 100,000 | 10% |
| b | 120,000 | 12% |
| c | 150,000 | 15% |
| d | 160,000 | 16% |
| e | 170,000 | 17% |
| f | 200,000 | 20% |
| g | 250,000 | 25% |
| Total | 1,150,000 | 115% |
The amount to be deducted from capital in respect of these investments will be based on the following calculation:
15% threshold (Individual basis)
| Sr # | Amount | 15% of Bank's capital | Excess over 15% of Bank's capital |
| d | 160,000 | 150,000 | 10,000 |
| e | 170,000 | 150,000 | 20,000 |
| f | 200,000 | 150,000 | 50,000 |
| g | 250,000 | 150,000 | 100,000 |
| Total | 180,000 |
Capital deduction on account of 15% threshold on individual basis is 180,000 (A).
60% Threshold (Aggregate basis)
Aggregate of investments after 15% deduction:
| c | 150,000 |
| d | 150,000 |
| e | 150,000 |
| f | 150,000 |
| g | 150,000 |
| Total | 750,000 (B) |
| 60% of Bank's capital | = | 600,000 |
| Aggregate (B) | = | 750,000 |
| Deduction | = | 150,000 |
So the capital deduction based on the 60% threshold on aggregate basis is 150,000 (C).
Total deduction based on investments in commercial entities is 330,000 (A+C).
Net eligible capital after deductions is 670,000 (1,000,000 - 330,000).
Remaining amount of investments 820,000 (1,150,000-330,000) will be risk weighted under the applicable risk weighting rules.