Govt Exams
SLF is a standing facility introduced by RBI allowing scheduled banks to borrow funds against government securities, providing liquidity at a specified spread over the policy rate.
RBI's multiple guidelines including IT Risk Management and Operational Risk frameworks mandate banks to have robust business continuity and disaster recovery plans to ensure service continuity.
The 'Too Big to Fail' concept recognizes that systemically important banks require stricter regulation and capital requirements because their failure could trigger a financial crisis.
Basel III mandates a minimum CET1 ratio of 4.5% of risk-weighted assets, along with additional capital buffers for systemically important banks.
Basel III norms were developed by the Basel Committee on Banking Supervision and adopted globally to strengthen banking sector resilience post-2008 financial crisis.
Faster advance growth than deposit growth indicates banks must source funds from market borrowings, wholesale deposits, or other expensive channels, impacting profitability and liquidity management.
Basel III mandates CCB of 2.5% and CCyB up to 1% (currently 0%), making the combined requirement up to 3.5%. This is over and above the minimum CAR.
PCR = (Total Provisions / Gross NPA) × 100. A 65% PCR means the bank has made provisions equivalent to 65% of its gross NPA.
CRR requirement = 4% of ₹10 lakh = ₹0.4 lakh. SLR requirement = 18% of ₹10 lakh = ₹1.8 lakh. Maximum lending = ₹10 lakh - ₹0.4 lakh - ₹1.8 lakh = ₹7.8 lakh
OMO sales of securities reduce liquidity and money supply. CRR reduction increases liquidity. QE and reverse repo rate cuts are expansionary measures.