brisk regulations in banking industry
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary regulatory body overseeing risk management practices in Indian banks?
The Reserve Bank of India (RBI) is the primary regulatory body that prescribes risk management guidelines for banks in India through its various circulars, master directions, and Basel implementation frameworks.
What is the minimum Capital to Risk-weighted Assets Ratio (CRAR) prescribed by RBI for Indian banks?
Minimum CRAR is 9% under RBI Basel III guidelines.
Which Basel framework introduced the concept of three pillars for bank regulation?
Basel II introduced the three-pillar framework: Pillar 1 (Minimum Capital Requirements), Pillar 2 (Supervisory Review Process), and Pillar 3 (Market Discipline), which RBI adopted progressively for Indian banks.
What is the purpose of the Pillar 2 under Basel III framework?
Pillar 2 addresses supervisory review of capital adequacy beyond Pillar 1.
What does the Internal Capital Adequacy Assessment Process (ICAAP) require banks to do?
ICAAP requires banks to assess all material risks they face, determine adequate capital levels to cover those risks beyond minimum regulatory capital, and maintain a forward-looking capital plan aligned with their risk appetite.
What is the minimum Liquidity Coverage Ratio (LCR) that banks must maintain as per RBI?
Banks must maintain minimum LCR of 100% as per RBI norms.
Under RBI's Basel III guidelines, what is the minimum Common Equity Tier 1 (CET1) ratio required for Indian banks?
RBI requires Indian banks to maintain a minimum CET1 ratio of 5.5%, which is higher than the Basel III global minimum of 4.5%, reflecting a more conservative approach to capital adequacy.
What is the Additional Tier 1 (AT1) capital and what instruments qualify for it?
AT1 capital includes perpetual non-cumulative preference shares and bonds.
Video classes for this chapter
More chapters in Module B - Risk Management
Master the full BFM syllabus
Every chapter of Bank Financial Management — videos, tests, notes and one-liner decks in one place.