Which committee's recommendations led to the implementation of Basel III norms in Indian banking?
Answer: D
Basel III norms were developed by the Basel Committee on Banking Supervision and adopted globally to strengthen banking sector resilience post-2008 financial crisis.
Q.2Hard
Under Basel III, what is the minimum Common Equity Tier 1 (CET1) capital ratio required for banks?
Answer: A
Basel III mandates a minimum CET1 ratio of 4.5% of risk-weighted assets, along with additional capital buffers for systemically important banks.
Q.3Hard
What is the concept of 'Too Big to Fail' in banking regulation?
Answer: B
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.
Q.4Hard
In a situation where a bank's Core Banking Solution (CBS) faces a system failure, which RBI regulation requires it to have a business continuity plan?
Answer: D
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.
Q.5Hard
What is the Standing Liquidity Facility (SLF) introduced by RBI?
Answer: A
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.
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Q.6Hard
Under the RBI's regulatory framework, what is the maximum loan amount that comes under Priority Sector Lending (PSL)?
Answer: B
RBI guidelines specify Rs. 10 lakh limit for agriculture sector and Rs. 1 crore for micro-enterprises under Priority Sector Lending (as of 2024).
Q.7Hard
Which of the following best describes 'Securitization' in banking?
Answer: A
Securitization is the process of converting illiquid assets (like loans) into tradable securities that are backed by the underlying cash flows of those assets.
Q.8Hard
Under Basel III, what is the minimum Common Equity Tier 1 (CET1) capital ratio required?
Answer: A
Basel III requires a minimum CET1 capital ratio of 4.5%, with an additional capital conservation buffer of 2.5%, bringing the total to 7%.
Q.9Hard
Which committee was constituted to review the regulation of shadow banking in India?
Answer: D
The Nayak Committee (2013) examined shadow banking entities and recommended a regulatory framework for NBFCs engaged in banking activities.
Q.10Hard
Which act governs the regulation of microfinance institutions in India?
Answer: A
The Microfinance Institutions (Development and Regulation) Act, 2006 specifically regulates MFIs, focusing on transparency and consumer protection.
Q.11Hard
What is the primary role of the Financial Stability and Development Council (FSDC)?
Answer: B
FSDC, chaired by the Finance Minister, coordinates between RBI, SEBI, IRDA, and other financial regulators to ensure financial stability.
Q.12Hard
Which framework governs Systemically Important Non-Banking Financial Companies (Si-NBFCs)?
Answer: C
RBI has a dedicated regulatory framework for NBFCs, with stricter norms for Si-NBFCs to maintain systemic stability.
Q.13Hard
Which of the following is a Tier 1 capital component for banks?
Answer: B
Common Equity Tier 1 (CET1), consisting of paid-up capital and retained earnings, is the highest quality Tier 1 capital.
Q.14Hard
Which international agreement sets standards for combating financial crime and terrorism financing?
Answer: B
FATF recommendations are international standards for combating money laundering and terrorism financing.
Q.15Hard
Which of the following banks is the oldest operating bank in India?
Answer: A
Bank of India, established in 1906, is one of the oldest operating banks. State Bank of India traces back to 1806 through Imperial Bank.
Q.16Hard
Which of the following is a characteristic of Tier-2 capital for banks?
Answer: B
Tier-2 capital includes subordinated debt, revaluation reserves, and general loan loss provisions. It supplements Tier-1 capital for meeting capital requirements.
Q.17Hard
Which international standard governs anti-money laundering and counter-terrorist financing?
Answer: B
The Financial Action Task Force (FATF) establishes international standards for combating money laundering and terrorist financing. India complies with FATF recommendations.
Q.18Hard
Under Basel III norms, what is the minimum Common Equity Tier-1 (CET-1) ratio requirement for banks?
Answer: A
Basel III prescribes a minimum CET-1 ratio of 4.5% of risk-weighted assets. India has implemented Basel III norms with additional conservation buffers.
Q.19Hard
What does the term 'Liquidity Coverage Ratio (LCR)' measure?
Answer: A
LCR under Basel III measures a bank's ability to survive a severe liquidity stress scenario lasting 30 days by maintaining sufficient high-quality liquid assets.
Q.20Hard
Which act governs the functioning of cooperative banks in India?
Answer: D
Cooperative banks are governed by the Banking Regulation Act 1949, State Cooperative Societies Acts, and the Multi-State Cooperative Societies Act 2002.
