CSE-2019 | Prelims Daily Quiz 28

Question:

Recently, there has been a conflict between RBI and the Govt. over capital norms of banks. Consider the following statements in this regard:

1. Basel norms require banks to have a capital adequacy ratio of 8%.

2. RBI has prescribed banks to have a capital adequacy ratio of more than 8%.

3. Adequate capital enables a bank to sustain unexpected losses without defaulting on its obligations.

 

Choose the correct statement/s from the codes given below:

A) 1 only

B) 1 and 2 only

C) 3 only

D) 1, 2 and 3

D) 1, 2 and 3

  • The government wants the capital adequacy ratio of banks to be at 8% as per Basel norms, but RBI has prescribed 9%.

     

  • Prudential capital regulations aim to enable banks to sustain unexpected losses without defaulting on its obligations, especially deposits, by maintaining adequate levels of bank capital.