RISK REGULATION IN BANKING INDUSTRY
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Risk Management (Elective) — CAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary objective of risk regulation in banking?
The primary objective is to ensure the safety and soundness of individual banks and the stability of the overall financial system by setting minimum capital, liquidity, and governance standards.
What is the minimum Common Equity Tier 1 (CET1) ratio required under Basel III?
4.5% of risk-weighted assets minimum CET1 ratio
Which international body issues the Basel Accords that form the foundation of bank risk regulation?
The Basel Committee on Banking Supervision (BCBS), headquartered at the Bank for International Settlements (BIS) in Basel, Switzerland, issues the Basel Accords.
What does the term 'Pillar 1' refer to in the Basel II/III framework?
Minimum capital requirements for credit, market, and operational risk
What are the three pillars of Basel II framework?
The three pillars are Pillar 1 (Minimum Capital Requirements), Pillar 2 (Supervisory Review Process), and Pillar 3 (Market Discipline through public disclosure).
What is the purpose of the Supervisory Review Process (Pillar 2) under Basel norms?
Ensures banks hold capital beyond Pillar 1 minimums if needed
What minimum Capital to Risk-weighted Assets Ratio (CRAR) must Indian banks maintain under Basel III?
Indian banks must maintain a minimum CRAR of 9% (higher than the Basel III global minimum of 8%), as mandated by the Reserve Bank of India.
What global body coordinates international bank regulation standards?
Bank for International Settlements (BIS) through Basel Committee
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