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Class Lecture-23

Economics

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34 views12 pages

Class Lecture-23

Economics

Uploaded by

tb8f29244s
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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By: Basava Uppin

By: Basava Uppin


Practice MCQ By: Basava Uppin
Practice MCQ
Which among the following statements related to 'Fugitive Who among the following is/are the criteria for the declaration
Economic Offender" is incorrect? of Wilful Defaulter in India?
(a) Fugitive Economic Offender refers to a person against 1. Person who escapes from India without repaying loans
whom an arrest warrant has been issued for committing 2. Person who defaults on loan repayment despite having
an offence listed in the Act and the value of the offence is capacity to do so.
at least Rs. 100 crore. 3. Person who has diverted the loan amount for other
(b) Fugitive Economic Offender may have either left India to purposes
avoid criminal prosecution or being abroad, refuses to
return to India to face criminal prosecution. Which of the statements given above is/are correct?
(c) Corruption by Civil Servants is among the Offences listed (a) 1 only
in the act to declare Fugitive Economic Offenders (b) 1 and 2 only
(d) The final power to declare a person as Fugitive Economic (c ) 2 and 3 only
Offender has been vested with the Enforcement (d) 1, 2 and 3
Directorate.
BASEL NORMS By: Basava Uppin

DETAILS ABOUT BANK OF INTERNATIONAL SETTLEMENT (BIS)


• International Financial Institution that is owned by around 63
Central Banks across the world (including RBI).
• Located at Basel, Switzerland
• Mandate: promote cooperation among the Central Banks.

Basel Committee on Banking Supervision (BCBS)


Lay down BASEL Norms to ensure stability and resilience of Banks
across the global.

BASEL I: 1988
BASEL II: 2004
BASEL III: 2010
By: Basava Uppin
By: Basava Uppin
Asset Value of Asset Risk Weightage Risk Weightage
Asset (RWA)
Credit Loan to the Centre Rs 200 0% 0
Risk Loan to the State Rs 200 0% 0
Loan to the Agriculture Rs 100 50% 50
Loan to Corporate Rs 100 20% 10
Market Gold Rs 100 10% 10
Risk G-Secs Rs 100 0% 0
Bond Rs 100 5% 5
Foreign Currency Assets Rs 100 10% 10
Operation 15% of the Annual Gross Income 15
al Risk If Gross income is Rs 100, Operational Risk is around Rs 15.

Total Consolidated Assets : Rs 1000


Total Risk Weightage Assets : Rs 100
By: Basava Uppin
Capital Adequacy Ratio (CAR)
Tier-1 Capital
By: Tier-2
Basava Uppin
Capital
Principal: Banks should have adequate amount of its
own capital to cover risks arising from bad assets. Called as Going Concern Capital Gone Concern Capital
Purpose Absorb losses Used upon liquidation
Formula: Tier-1 Capital (Equity) + Tier-2 Capital (Debt)
Risk Weighted Assets (RWAs) Categorization Common Equity Tier- N/A
Example: 1 Capital
Additional Tier-1
Purpose of Loan Risk % Risk-
Capital
Loan Amount Weighted
Asset Components • Common Shares • Preference shares
(RWA) • Profits earned • Provisioning Amount
• Money raised • Money raised through
Agriculture Rs 100 20% Rs 20
through Additional Tier-II Bonds
Agriculture Rs 200 20% Rs 40 Tier-1 Bonds
Industry Rs 200 17.5% Rs 35
Government Rs 100 5% Rs 5
Total Rs 600 - Rs 100
By: Basava Uppin
By: Basava Uppin
By: Basava Uppin
By: Basava Uppin
Criteria Capital Conservation Buffer (CCB) Counter Cyclical Capital Buffer
(CCCB)
When the Buffer should During Normal Times During periods of high credit
be built up? growth
When the Buffer should During periods of stress During periods of stress
be used?
Is it activated in India? Yes No
Value 2.5% of RWAs 0% to 2.5% of RWAs

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