What is the minimum Capital Adequacy Ratio CAR including capital buffer proposed for All India Finan...........

Finance (RBI) Reserve Bank of India

Read the following case study and answer the following 4 questions.

Over the years, the role of the AIFIs (EXIM Bank, NABARD, NHB & SIDBI) in the Indian financial system has undergone significant change reflecting the changes in their business models. As the Indian economy grows further, AIFIs are increasingly being seen as key institutions to promote the flow of direct or indirect credit to the economic sectors they cater to. It has been decided, therefore, to extend the Basel III Capital framework to the AIFIs as detailed in the following paragraphs.

(2 Markers)

What is the minimum Capital Adequacy Ratio (CAR) including capital buffer, proposed for All India Financial Institutions (AIFIs) by RBI?

This questions was previously asked in

RBI Grade B Phase 2 Exam (2022)

View All RBIB Previous Year Papers

10.5%

11.5%

12%

12.5%

15.0%

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Explanation:

This question is asked from the topic called ‘BASEL NORMS’. AIFIs are required to maintain a minimum Pillar 1 Capital to Risk-weighted Assets Ratio (CRAR) of 9% on an ongoing basis (other than capital conservation buffer and countercyclical capital buffer etc.). These institutions should have minimum total capital at 9 per cent from 1 April 2022. Basel norms has been one of the favourite topics of RBI as Basel norms focuses on the risks to banks and the financial system.