20. BASEL NORMS

Question 1

MAIN PURPOSE OF BASEL NORMS

Answer 1

BANK FALIURE, LOSING DEPOSITORS MONEY

Question 2

BASEL NORM IS CREATED BY

Answer 2

BIS - BANK FOR INSTERNATIONAL STTTLEMENTS

Question 3

WHERE IS HQ OF BIS

Answer 3

BASEL, SWITZERLAND

Question 4

MEMBER CONTRIES MEETING OCCOURENCE IN EVERY

Answer 4

2 MONTHS

Question 5

WHAT IS BASEL ACCORDS

Answer 5

Question 6

WHAT IS FULL FORM OF BCBS ?

Answer 6

BASEL COMMITTEE FOR BANKIG SUPERVISION

Question 7

TOTAL NUMBER OF MEMBERS COUNTRIES IN COMMITTEE BCBS

Answer 7

28 MEMBER NATION

Question 8

3 TYPES OF RISK THAT BANK FACES

Answer 8

Question 9

What are Basel Norms?

Answer 9

Global banking regulations developed by BCBS to manage risk and ensure financial stability.

Question 10

Where is BCBS headquartered?

Answer 10

Basel, Switzerland, at the Bank for International Settlements (BIS).

Question 11

What is the primary goal of Basel Accords?

Answer 11

To ensure financial institutions have enough capital to absorb unexpected losses.

Question 12

When was Basel I introduced, and what was its focus?

Answer 12

1988, focused on credit risk with a minimum capital requirement of 8%.

Question 13

When did India adopt Basel I guidelines?

Answer 13

1999

Question 14

What are the three pillars of Basel II?

Answer 14

Capital Adequacy Requirements, Supervisory Review, Market Discipline.

Question 15

What is the minimum capital adequacy requirement under Basel II?

Answer 15

8% of risk-weighted assets.

Question 16

What is Market Discipline under Basel II?

Answer 16

Banks must disclose CAR, risk exposure, and financial details.

Question 17

Why was Basel III introduced?

Answer 17

To strengthen banks against financial stress after the 2008 crisis.

Question 18

What are the key focuses of Basel III?

Answer 18

Capital, leverage, funding, and liquidity.

Question 19

What is CRAR?

Answer 19

Capital to Risk Weighted Asset Ratio, measuring a bank’s capital against risk-weighted assets.

Question 20

What is the Basel III minimum capital requirement?

Answer 20

10.5%, including a 2.5% capital conservation buffer.

Question 21

What is India’s Capital Adequacy Requirement under Basel III?

Answer 21

11.5%, including a 2.5% buffer.

Question 22

What are the two types of capital under Basel III?

Answer 22

Tier 1 (Equity) and Tier 2 (Bonds).

Question 23

What is the role of the Capital Conservation Buffer?

Answer 23

An additional 2.5% cushion for banks during financial stress.

Question 24

What happens if a bank fails to maintain the Capital Conservation Buffer?

Answer 24

Restrictions on dividend distribution and bonuses.

Question 25

What is the Leverage Ratio under Basel III?

Answer 25

A measure to limit excessive borrowing by banks.

Question 26

What is the minimum leverage ratio under Basel III?

Answer 26

0.03

Question 27

What is the Net Stable Funding Ratio (NSFR)?

Answer 27

Ensures banks maintain stable funding over a one-year period.

Question 28

What is the Liquidity Coverage Ratio (LCR)?

Answer 28

Banks must hold enough high-quality liquid assets for 30 days of cash outflows.

Question 29

How does Basel III address systemically important banks?

Answer 29

Imposes additional capital requirements on 'Too Big to Fail' banks.

Question 30

What is the Countercyclical Capital Buffer?

Answer 30

Extra capital to be maintained in good times to absorb downturn losses.

Question 31

How does Basel III impact bank lending?

Answer 31

Higher capital requirements limit excessive lending but improve stability.

Question 32

What is the role of the Basel Committee?

Answer 32

Sets global banking regulations to reduce financial crises.

Question 33

Why do banks need to maintain higher capital under Basel III?

Answer 33

To absorb financial shocks and prevent banking crises.

Question 34

How does Basel III improve risk management?

Answer 34

Requires better risk assessment and governance policies.

Question 35

How does Basel III affect transparency?

Answer 35

Banks must disclose more financial information to regulators and the public.

Question 36

What are Systemically Important Banks (SIBs)?

Answer 36

Large banks whose failure could cause major economic disruption.

Question 37

How do Basel Norms protect depositors?

Answer 37

Ensuring banks have enough capital to cover financial risks.

Question 38

What is the future of Basel regulations?

Answer 38

Continuous updates to adapt to evolving financial risks and improve stability.