Q. Consider the following statements with reference to the BASEL-III norms:
Which of the above given statements is/are correct?

1 only

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2 only

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Both 1 and 2

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Neither 1 nor 2

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Solution

The correct option is B
2 only
Explanation:

Statement 1 is incorrect: Tier 1 capital is more reliable as compared to Tier 2 capital because Tier 2 capital is more difficult to accurately calculate and more difficult to liquidate.

Statement 2 is correct: Under the BASEL-III norms banks have to maintain 7 percent of Risk Weighted Assets. It is adopted to protect the banks from the unforeseen risk that could arise in future.

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Similar questions

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:

1

2

3

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