CAIIB ABM Module A & C By Ashish Sir Class 3
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 66 rapid-fire Q&A cards.
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.
What is the difference between Tier 1 and Tier 2 capital under the Basel framework?
Tier 1 capital is the core, highest-quality capital (equity and retained earnings) that absorbs losses on a going-concern basis, while Tier 2 capital is supplementary capital (subordinated debt, general provisions) that absorbs losses only in liquidation.
What does IRB stand for in Basel credit risk measurement?
Internal Ratings-Based approach for credit risk capital calculation.
What is the Capital Conservation Buffer (CCB) under Basel III and its prescribed level in India?
The Capital Conservation Buffer is an additional CET1 capital buffer of 2.5% above the minimum requirement, designed to ensure banks build up capital reserves outside stress periods that can be drawn down when losses are incurred.
What is Probability of Default (PD) in credit risk modeling?
Likelihood that a borrower will default within one year.
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