Risk Management::(Most Important)
01 RBI implemented the Basel-III recommendations in India, w.e.f:
a) 01.01.2013, b. 31.03.2013, c. 01.04.2013, d. 30.09.2013
02 Basel III recommendations shall be completely implemented in India by:
31.03.2020, b. 31.03.2019 c. 31.03.2618 d. 31.03.2017
03 Basel III capital regulations were released by Basel Committee on Banking Supervision (BCBS) during as a
Global Regulatory Framework for more resilient banks and banking systems:
December 2010, b. March 2011, c. December 2011, d. December 2012
04 Basel III capital regulations are based on 3 mutually reinforcing pillar. These pillars are (1) Pillar-1 minimum capital standards (2)
supervisory review of capital adequacy (3) risk management.
all the 3 are correct, b. only 1 and 2 are correct, c. only 1 and 3 are correct, d. only 2 and 3 are correct Under Basel II,
05.Under Basel II the option available to compute capital for credit risk are:-
standardized approach, b. risk management approach, c. advance measurement approach, d. standardized approach,
06. Under Basel III, the options available to compute capital for operational risk are :
standardized approach, b) risk management approach, c) advance measurement, approach, d) basic indicator
approach,
07.Under Basel III, the options available to compute capital for market risk are :
standardized approach, b) risk management approach, c) advance, measurement approach, d) basic indicator approach
08.Certain specific prescription of Basel II capital adequacy framework will continue to apply along with Basel III (parallel run), till:
31.03.2019, b) 31.03.2018, c) 31.03.2017, d) 31.03.2016
09. A bank in India is to comply with capital adequacy ratio requirements at :(1) consolidated (group) level after consolidating the
assets liabilities of its subsidiaries / joint ventures (2) solo level (3) overseas operations of the bank under (I) and (2).
a)1 and 2 only correct, b) 1 and 3 only correct, c) 2 and 3 only correct, d) 1 to 3 all correct.
10. In India, the banks are required to maintain a minimum Pillar 1 capital to risk weighted assets ratio (or minimum total
capital to risk weighted assets ratio) of a s o n
a) 8%, 31' Mar each year, b) 9%, 31" Mar each year, c) 8%, ongoing basis, d) 9%, ongoing basis.
11. The banks in India are required to compute Basel III capital ratios in the following manner (1) Common equity Tier I capital ratio (2)
Tier I capital ratio (3) Tier 2 capital ratio (4) Total capital to risk weighted asset ratio a) I to 4 all, b) 1,2 and 4 only, c) 1, 3
and 4 only, d) 1 and 4 only
12. To calculate capital adequacy ratio, the banks are to take into account, which of the following risk:
credit risk and operational risk only, b) credit risk and market risk only, c) market risk and operational risk only, d)
credit risk, market risk and operational risk.
13.Which of the following statement regarding the Total regulatory capital under Basel III is correct:
total regulatory capital is sum total of Tier I capital and Tier 2 capital, b) Tier I capital is called `aning-concern' capital and Tier 2
capital is called 'gone-concern' capital, c) Tier I capital comprises common equity Tier I and additional Tier I, d) all the above.
14 As per Basel III implementation in India, Common Equity Tier 1 capital must be % of
risk weighted assets on ongoing basis: a: 5.5% b: 7%, c: 9% d: 11%
15. As per Basel III implementation in India, minimum Tier 1 capital must be % of risk weighted assets on ongoing basis:
a: 5.5% . b: 7%, c: 9% d: 11%
16. As per Basel III implementation in India, within the minimum Tier 1 capital, the additional Tier capital can be:
a: min 5.5% of risk weighted assets (RWA), b: max 5.5% of RWA, c: min 1.5% of RWA, d: max 1.5% of RWA
17. As per BaselIII implementation in India, within total capital of 9% of risk weighted assets, the Tier 2 capital can be:
a: max equal to Tier I capital, b) min equal to Tier I capital c) max equal to 2% of risk weighted assets, d) min equal to 2%
of risk weighted assets
18. Which of the following statements is not correct regarding Basel III implementation in India:
a) minimum common equity Tier I ratio should be 5.5% of RWAs, b) capital conservation buffer, c) (CCB) consisting of
common equity, should be 2.5% of RWAs, d) maximum additional tier 1 capital should be 1.5% of RWAs, e) minimum common
equity Tier I ratio plus capital conservation buffer should be 7%
19. Which of the following statements is not correct regarding Basel III implementation in India:
a) minimum Tier I capital ratio should be 8%, b) Tier 2 capital should be max 2%, c) minimum total capital ratio should be 9%, d)
minimum total capital ratio plus capital conservation buffer should be 11.5%
20. As per Basel III, which of the following is an element of Common Equity component of Tier I (1) common shares i.e. paid
up equity capital (2) stock surplus i.e. share premium (3) statutory reserves (4) capital reserves representing surplus arising
out of sale proceeds of assets (5) balance in profit and loss account at the end of the previous year.
a) 1 to 5 all, b) I to 4 only, c) 1,4 and 5 only, d) 1, 2 and 3 only
21. As per Basel III, which of the following can be included in Additional Tier I capital (1) Perpetual Noncumulative Preference
shares — PNCPS (2) stock surplus or share premium resulting from issue of Additional Tier I instruments (3) Debit capital
instruments eligible to be included in additional Tier I.: a) 1 to 3 all, b) 1 and 2 only, c) 1 and 3 only, d) 2 and 3 only
22. As per Basel III, Tier 2 capital comprises which. of the following (1) general provisions and loss reserves (2) debt capital
instruments issued by bank (3) preference share capital instruments with redeemable or cumulative feature (4) revaluation reserve
(5) stock surplus i.e. share premium resulting from issue of Tier 2 eligible instruments.
a) 1 to 5 all, b) 1 to 4 only, c) 1, 4 and 5 only, d) 1, 2 and 3 only.
23. As per Basel III, general provisions and loss reserves are included in Tier-2 capital maximum to the extent of: 1.25% of total risk
weighted assets under standardized approach and 0.6% of total risk weighted assets under IRB approach
a) 0.6% of total risk weighted assets under standardized approach and 0.6% of total risk weighted assets under IRB approach
b) 0.6% of total risk weighted assets under standardized approach and 1.25% of total risk weighted assets under IRB approach
c) 1.25% of total risk weighted assets under standardized approach and 1.25% of total risk weighted assets under IRB approach.
24 As per Basel III, the value of revaluation reserve is to be taken at % discount to include in Tier 2 capital:-
a: 60% b: 55%, c: 50% d: 45%
25 As per Basel III, adjustments / deductions are required to be made from Tier I and Tier 2 capital, relating to which of the following
(1) goodwill and other intangible assets (2) deferred tax assets (3) Investment in own shares (treasury stock) (4) investment
in capital of banking, financial or insurance entities :
1 to 4 all, b) 1 and 2 only, c) 1 and 3 only, d) 1 only
26 As per Basel III, the investment of a bank in the capital of a banking or financial or insurance entity is restricted to which of the
following: a) 10% of capital funds (after deductions) of the investing bank, b) 5% of the investee bank's equity capital, c
30% of paid up capital and reserves of the bank or 30%, of paid up capital of the company, whichever is lower. d all the above
27 The net stable funding ratio (NSFR) under Basel-III will be implemented in India from:
a 01.01.2017, b 01.04.2017, c 01.01.2018, d 01.04.2018
28. Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach, does not match in respect
of which of the following:
a. Fund & non-fund based claims on Central Govt. 0%, b Fund and non-fund based Central Govt. guaranteed claims — 0%, c
Fund and non-fund based State Govt. guaranteed claims — 0%
D Fund and non-fund based claims on State Govt. — 0%.
29 Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach, does not match in respect
of which of the following:
a) Claims on RBI or DICGC 0%, b) Claims on Credit Guarantee Fund Trust for MSE — 0%, c) Claims on Credit Risk
Guarantee Fund Trust for Low Income Housing — 0%, d) Claims on ECGC — 0%.
30. Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach, does not match for claims
on foreign governments (based on rating of international rating agencies such as S & P, Fitch, Moody's Rating), in respect of which of
the following:
AAA to AA rating — 0%, b: BBB rating — 20%, c: Below B rating — 150%, d: unrated — 100%
31. Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach, does not match for claims
on foreign public sector enterprises (based on rating of S & P, Fitch, Moody's Rating), in respect of which of the following:
a: AAA to AA rating — 20%, b: A rating — 20%, c: BBB to BB rating — 100%, d: unrated — 100%.
32. Under Basel III, what is the risk weight for capital charge for credit risk on the basis of standardized approach, for claims on
Bank for International Settlements, International Monetary Fund, Multi lateral Development Banks:
a: 0% b: 10%, c: 20%d: 50%.
33. Under Basel III, the risk weight is % for capital charge for credit risk on the basis of standardized approach, for claims
on banks incorporated in India and foreign bank branches in India, where they meet the level of common equity Tier I capital
and applicable CCB: a: 0% b: 10%, c: 20% d: 50%
34.Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach, does not match for claims
on foreign banks (based on rating of international rating agencies such as S & P, Fitch, Moody's Rating), in respect of which of the
following: a) AAA to AA rating — 20% b) BBB rating — 50%, c) Below B rating — 150% d) unrated — 150%,
35. Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach for long term loans, does
not match for claims on domestic corporates, AFC and NBFC-IFC (based on rating of internal rating agencies such as CRISIL, CARE,
ICRA etc.), in respect of which of the following:
a) AAA rating — 20%, b) A rating — 50%, c) BBB —100%, d) unrated — 150%
36. Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach for short term loans, does
not match for claims on domestic corporates, AFC and NBFC-IFC (based on rating of internal rating agencies such as CRISIL, CARE,
ICRA etc.), in respect of which of the following: a) Al+ - 20%, b) A2 — 50%, c) A3 — 75%, d) A4 —150%
37. Under Basel III, the risk weight is % for capital charge for credit risk on the basis of standardized approach, for
claims included in regulatory retail portfolio: a 20% b: 50%, c 75% d: 100%
38. Under Basel III, which of the following is part of the regulatory retail portfolio (1) mortgage loans which qualify as claim
secured by residential property or commercial real estate (2) consumer credit or personal loans or credit card receivables
(3) capital market exposure (4) venture capital exposure.
a) I and 3 only, b) 2 and 4 only, c) 1 to 4 all, d) none of the above
39. Under Basel III, to consider a claim as part of regulatory retail portfolio, which of the following condition is stated correctly:
(1) orientation criteria i.e. the exposure to individual person or to small business, where total average annual turnover in small
business is less than Rs.50 or (2) granularity criteria i.e. no aggregate exposure to one counterpart is more than 02% of overall
regulatory retail portfolio (3) maximum retail exposure to one counterpart does not exceed the threshold limit of Rs. I cr.
a) 1 to 3 all, b) 1 and 2 only c) I and 3 only, d) 2 and 3 only
40. Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach for home loan up to Rs.20
lac where loan to value (LTV) ratio is 90% is : a) 20% b) 50%, c) 75% d) 100%.
41. Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach for home loan of above
Rs.20 lac up to Rs.75 lac, where loan to value (LTV) ratio is 80% is : a) 20% b: 50%, c 75% d: 100%
42. Under Basel III, the risk weight for capital charge for credit risk as per standardized approach for home loan
of above Rs.75 lac, where loan to value (LTV) ratio is 75% is :- a) 20% b: 50%, c 75% d: 100%
43. Under Basel III, the risk weight is for capital charge for credit risk on the basis of standardized approach
for commercial real estate — residential housing: a) 20% b: 50%, c) 75% d: 100%.
44. Under Basel III, the risk weight is for capital charge for credit risk on the basis of standardized approach for exposure to
commercial real estate:- 20% b: 50%, c: 75% d: 100%.
45. Under Basel III, for home loan purpose, the loan to value ratio (LTV) ratio is calculated as :
a) (principal + other charges) / (realizable value of mortgage property), b) (principal + accrued interest + other charges) /
(realizable value of mortgage property) c) (principal + accrued interest) / (realizable value of mortgage property), d) (principal +
accrued interest + other charges) / (cost of mortgage property)
46. Bank's exposure for dwelling unit to an individual shall be treated as exposure to commercial real estate, as per Basel III:- a:
2nd
b: 3rd, c 4th d: 5th
47. As per BaselIII implementation, the risk weight for unsecured portion of NPA for credit risk as per standardized approach is
% if the specific provision is less than 20% of the outstanding in NPA account:- a. 150%, b: 100%, c: 75% d: 50%
48. As per BaselIII implementation, the risk weight for unsecured portion of NPA for credit risk as per standardized approach is
% if the specific provision is at least 20% of the outstanding in NPA account:- a 150% b: 100%, c: 75% d: 50%
49. As per BaselIII implementation, the risk weight for unsecured portion of NPA for credit risk as per standardized approach is
% if the specific provision is at least 50% of the outstanding in NPA account:- a 150% b: 100%, c: 75% d: 50%
50. Under Basel III, the risk weight for capital charge for credit risk on the basis of standardized approach for which of the following
exposure, does not match: a) venture capital — 150% b) consumer credit or personal loans— 125%, c) credit card -
125%, d) capital market exposure 100
Ans::
1 C 2 B 3 A 4 B 5 C 6 B 7 C 8 C 9 D 10 D
11 B 12 D 13 D 14 A 15 B 16 D 17 C 18 D 19 A 20 A
21 A 22 A 23 A 24 B 25 A 26 D 27 C 28 C 29 D 30 B
31 B 32 C 33 C 34 D 35 D 36 C 37 C 38 D 39 B 40 B
41 B 42 C 43 C 44 D 45 B 46 B 47 A 48 B 49 D 50 D
