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CAIIB ABM Module A & C By Ashish Sir Class 3
What does the Capital Adequacy Ratio (CAR) measure in banking?
CAR measures a bank's available capital expressed as a percentage of its risk-weighted credit exposures, ensuring the bank can absorb reasonable losses before becoming insolvent.
What is the primary objective of Pillar 1 under the Basel II framework?
To set minimum capital requirements for credit, market, and operational risks.
Under Basel III, what is the minimum Common Equity Tier 1 (CET1) ratio prescribed for Indian banks?
Under Basel III, the minimum CET1 ratio for Indian banks is 5.5%, which is higher than the global Basel III minimum of 4.5%.
What is the Standardised Approach for measuring credit risk under Basel II?
It uses external credit ratings to assign risk weights to exposures.
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