CAIIB ABM Module A & C By Ashish Sir Class 12
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Bank Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What does the term 'Capital Adequacy' refer to in the context of banking regulation?
Capital adequacy refers to the minimum amount of capital a bank must hold relative to its risk-weighted assets, ensuring the bank can absorb losses and protect depositors. Under Basel III, the minimum CAR for Indian banks is 9% (higher than the 8% Basel minimum).
What is the concept of Net Interest Income (NII) sensitivity in banking?
Change in NII due to interest rate fluctuations over a period
What is the difference between Tier 1 and Tier 2 capital under Basel III norms?
Tier 1 capital (going-concern capital) includes Common Equity Tier 1 (CET1) and Additional Tier 1 instruments like perpetual bonds, representing core capital. Tier 2 capital (gone-concern capital) includes subordinated debt and general provisions, acting as a secondary buffer for creditors in liquidation.
What is Basis Risk in the context of interest rate risk management?
Risk from imperfect correlation between rates on assets and liabilities
What is the Capital Conservation Buffer (CCB) and what is its prescribed level under Basel III?
The Capital Conservation Buffer is an additional CET1 capital requirement of 2.5% above the minimum, designed to ensure banks build up capital buffers outside periods of stress. Banks that erode this buffer face restrictions on dividend payments and discretionary bonuses.
What is a Yield Curve and what does its shape indicate about the economy?
Graph of yields vs maturities; shape signals economic expectations
How is the Leverage Ratio defined under Basel III and what is the minimum prescribed level?
The Leverage Ratio is calculated as Tier 1 capital divided by the total exposure measure (on-balance-sheet and off-balance-sheet items), expressed as a percentage. Basel III mandates a minimum Leverage Ratio of 3%, and RBI requires Indian banks to maintain at least 4%.
What is Repricing Risk and how does it arise in banking?
Risk from timing differences in rate resets of assets and liabilities
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