Risk 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 66 rapid-fire Q&A cards.
What is the primary objective of Basel III regulations in banking?
Basel III aims to strengthen the regulation, supervision, and risk management of banks by improving the banking sector's ability to absorb shocks arising from financial and economic stress.
What is the minimum Total Capital Adequacy Ratio (CAR) required by RBI under Basel III for Indian banks?
Minimum total CAR is 11.5% including capital conservation buffer.
What does the Capital Conservation Buffer (CCB) require under Basel III?
The Capital Conservation Buffer requires banks to maintain an additional 2.5% of Common Equity Tier 1 (CET1) capital above the minimum requirement to absorb losses during periods of financial stress.
What is the primary purpose of the Basel Accords issued by the Basel Committee on Banking Supervision (BCBS)?
To provide international standards for bank capital adequacy and risk management.
What is the Countercyclical Capital Buffer (CCyB) and its purpose?
The Countercyclical Capital Buffer (up to 2.5% of risk-weighted assets) is activated by national regulators during periods of excessive credit growth to protect the banking sector from system-wide risks.
When was the Basel I Accord introduced and what was its primary focus?
Basel I was introduced in 1988, focusing on credit risk capital requirements.
What are the three pillars of the Basel II/III framework?
The three pillars are: Pillar 1 (Minimum Capital Requirements), Pillar 2 (Supervisory Review Process), and Pillar 3 (Market Discipline through disclosure requirements).
What is the Risk-Weighted Asset (RWA) concept and why is it used in capital adequacy calculations?
RWA assigns risk weights to assets reflecting their credit risk for capital computation.
Video classes for this chapter
Risk Regulations in Banking industry Part 2
Risk regulations in banking industry Part 1
risk regulations in banking industry PART -2
risk regulations in banking industry PART 3
Risk Regulations in Banking industry Part 2
Risk regulations in banking industry Part 1
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