Consider the following with respect to Basel Norms
1. They are banking norms aimed at maintaining stability of the banking sector
2. Capital Conservation buffer of 2.5% was first specified in Basel 3

1 only

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2 only

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Both 1 and 2

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None of the above

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Solution

The correct option is C Both 1 and 2
The Basel norms is an effort to coordinate banking regulations across the globe, with the goal of strengthening the international banking system.

The BASEL norms have three aims: Make the banking sector strong enough to withstand economic and financial stress; reduce risk in the system, and improve transparency in banks.

The capital conservation buffer was introduced to ensure that banks have an additional layer of usable capital that can be drawn down when losses are incurred. The buffer was implemented in full as of 2019 and is set at 2.5% of total risk-weighted assets.

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Q40) Identify the correct statement/s about the Basel norms introduced by the Bank of international settlements (BIS)

i) The Basel committee on banking supervision looks after the implementation of Basel norms.

ii) Basel norms 1 was introduced in 1990

iii) Indian banks are following Basel norms 2 which were introduced in 2004

iv) Indian banks will adopt Basel norms 3 in 2019

Q2. Consider the following statements Basel III norms:

1. The Basel III norms stipulated a capital to risk-weighted assets of 8%.

2. Indian scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12%.

Select the correct answer using the codes given:

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