This document discusses various risks faced by banks such as credit risk, liquidity risk, market risk, and operational risk. It summarizes Basel I, Basel II, and Basel III capital adequacy frameworks which establish minimum capital requirements for banks. It outlines the key components of Tier 1 and Tier 2 capital and how risk weighted assets are calculated to determine the capital adequacy ratio. The Reserve Bank of India requires banks to maintain a minimum capital to risk-weighted assets ratio of 9% under Basel II norms.
This presentation provides complete study ofcredit risk management,how it was performed in yester years ,how it is taken care nowadays and what is the road ahead in future
This presentations chalks out in detail information about ALM in Indian Bank. It starts with the basics of Balance sheet; applicability of ALM in real life; Evolution and then starts with main topics of ALM like structured statement; Liquidity risk, its management; currency risk and finally ends with Interest Risk management.
Links to Video’s in the ppt
Balance Sheet
http://www.investopedia.com/terms/b/balancesheet.asp
NII/NIM
http://www.investopedia.com/terms/n/netinterestmargin.asp
www.abhijeetdeshmukh.com
A set of international banking regulations put forth by the Basel Committee on Bank Supervision, which set out the minimum capital requirements of financial institutions with the goal of minimizing credit risk. Banks that operate internationally are required to maintain a minimum amount (8%) of capital based on a percent of risk-weighted assets.
MODULE 3:
Credit Risks Credit Risk Management models - Introduction, Motivation, Funtionality of good credit. Risk Management models- Review of Markowitz’s Portfolio selection theory –Credit Risk Pricing Model – Capital and Rgulation. Risk management of Credit Derivatives.
This presentation is the one stop point to learn about Basel Norms in the Banking
This is the most comprehensive presentation on Risk Management in Banks and Basel Norms. It presents in details the evolution of Basel Norms right form Pre Basel area till implementation of Basel III in 2019 along with factors and reason for shifting of Basel I to II and finally to III.
Links to Video's in the presentation
Risk Management in Banks
https://www.youtube.com/watch?v=fZ5_V4RW5pE
Tier 1 Capital
http://www.investopedia.com/terms/t/tier1capital.asp
Tier 2 Capital
http://www.investopedia.com/terms/t/tier2capital.asp
Basel I
http://www.investopedia.com/terms/b/basel_i.asp
Capital Adequacy Ratio
http://www.investopedia.com/terms/c/capitaladequacyratio.asp
Basel II
http://www.investopedia.com/video/play/what-basel-ii/?header_alt=c
Basel III
http://www.investopedia.com/terms/b/basell-iii.asp
RBI Governor - Raghuram G Rajan on the importance if Basel III regulations
https://youtu.be/EN27ZRe_28A
This presentation provides complete study ofcredit risk management,how it was performed in yester years ,how it is taken care nowadays and what is the road ahead in future
This presentations chalks out in detail information about ALM in Indian Bank. It starts with the basics of Balance sheet; applicability of ALM in real life; Evolution and then starts with main topics of ALM like structured statement; Liquidity risk, its management; currency risk and finally ends with Interest Risk management.
Links to Video’s in the ppt
Balance Sheet
http://www.investopedia.com/terms/b/balancesheet.asp
NII/NIM
http://www.investopedia.com/terms/n/netinterestmargin.asp
www.abhijeetdeshmukh.com
A set of international banking regulations put forth by the Basel Committee on Bank Supervision, which set out the minimum capital requirements of financial institutions with the goal of minimizing credit risk. Banks that operate internationally are required to maintain a minimum amount (8%) of capital based on a percent of risk-weighted assets.
MODULE 3:
Credit Risks Credit Risk Management models - Introduction, Motivation, Funtionality of good credit. Risk Management models- Review of Markowitz’s Portfolio selection theory –Credit Risk Pricing Model – Capital and Rgulation. Risk management of Credit Derivatives.
This presentation is the one stop point to learn about Basel Norms in the Banking
This is the most comprehensive presentation on Risk Management in Banks and Basel Norms. It presents in details the evolution of Basel Norms right form Pre Basel area till implementation of Basel III in 2019 along with factors and reason for shifting of Basel I to II and finally to III.
Links to Video's in the presentation
Risk Management in Banks
https://www.youtube.com/watch?v=fZ5_V4RW5pE
Tier 1 Capital
http://www.investopedia.com/terms/t/tier1capital.asp
Tier 2 Capital
http://www.investopedia.com/terms/t/tier2capital.asp
Basel I
http://www.investopedia.com/terms/b/basel_i.asp
Capital Adequacy Ratio
http://www.investopedia.com/terms/c/capitaladequacyratio.asp
Basel II
http://www.investopedia.com/video/play/what-basel-ii/?header_alt=c
Basel III
http://www.investopedia.com/terms/b/basell-iii.asp
RBI Governor - Raghuram G Rajan on the importance if Basel III regulations
https://youtu.be/EN27ZRe_28A
best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website, best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website, best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website,
Capital adequacy requirements impose at least a minimum capital participation by bank owners,
usually expressed as a fraction of certain assets of the bank.
The Surrogacy (Regulation) Bill, 2016, cleared by the Cabinet, only allows “altruistic surrogacy” for childless couples who have been married for at least five years. Then too, the surrogate mother should be a “close relative” of the couple, should be married and have borne a child of her own
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
NO1 Uk Divorce problem uk all amil baba in karachi,lahore,pakistan talaq ka m...Amil Baba Dawood bangali
Contact with Dawood Bhai Just call on +92322-6382012 and we'll help you. We'll solve all your problems within 12 to 24 hours and with 101% guarantee and with astrology systematic. If you want to take any personal or professional advice then also you can call us on +92322-6382012 , ONLINE LOVE PROBLEM & Other all types of Daily Life Problem's.Then CALL or WHATSAPP us on +92322-6382012 and Get all these problems solutions here by Amil Baba DAWOOD BANGALI
#vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore#blackmagicformarriage #aamilbaba #kalajadu #kalailam #taweez #wazifaexpert #jadumantar #vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore #blackmagicforlove #blackmagicformarriage #aamilbaba #kalajadu #kalailam #taweez #wazifaexpert #jadumantar #vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore #Amilbabainuk #amilbabainspain #amilbabaindubai #Amilbabainnorway #amilbabainkrachi #amilbabainlahore #amilbabaingujranwalan #amilbabainislamabad
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
NO1 Uk Rohani Baba In Karachi Bangali Baba Karachi Online Amil Baba WorldWide...Amil baba
Contact with Dawood Bhai Just call on +92322-6382012 and we'll help you. We'll solve all your problems within 12 to 24 hours and with 101% guarantee and with astrology systematic. If you want to take any personal or professional advice then also you can call us on +92322-6382012 , ONLINE LOVE PROBLEM & Other all types of Daily Life Problem's.Then CALL or WHATSAPP us on +92322-6382012 and Get all these problems solutions here by Amil Baba DAWOOD BANGALI
#vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore#blackmagicformarriage #aamilbaba #kalajadu #kalailam #taweez #wazifaexpert #jadumantar #vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore #blackmagicforlove #blackmagicformarriage #aamilbaba #kalajadu #kalailam #taweez #wazifaexpert #jadumantar #vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore #Amilbabainuk #amilbabainspain #amilbabaindubai #Amilbabainnorway #amilbabainkrachi #amilbabainlahore #amilbabaingujranwalan #amilbabainislamabad
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
2. Banks in the process of financial
intermediation are confronted with various
kinds of financial and non-financial risks
viz.:
Credit Risk
Liquidity Risk
Market Risk
Operational Risk
3. Credit risk: In this case money is
being lent to the borrower, who does not
make the return payments as originally
agreed.
Liquidity Risk : Asset or Security
cannot be traded quickly enough so that
the value drops.
4. Market Risk : In this case an
investment or trading portfolio will
decrease in value due to change in the
price of portfolio in the market.
Operational risk: It raised from the
execution of a banking business functions.
This category can also include fraud risks,
physical risks, legal risks and
environmental risks.
5. Loans and advances given by the banks to
its customers is are an Asset to the bank.
A loan (an asset for the bank) turns as NPA
when the EMI, principal or interest
component for the loan is not paid within 90
days from the due date.
Thus a Bad Loan is an asset that
ceases to generate any income for the
bank
6. The non-performing assets of the
banking sector rose sharply to 1.28 per cent
in 2011-12 from 0.97 per cent a year ago due
to high interest rate and slowdown in the
economy.
The NPAs (non-perfomring assets) or bad
loans of the public sector banks rose to 1.53
per cent in 2011-12, up from 1.09 per cent in
the previous year, said the latest RBI report.
7. • The Basel Committee on Banking
Supervision was established in 1974, by
the Bank of International Settlements
(BIS). In order to help the banks to
recognize the different kinds of risks and
to take adequate steps
• An international organization founded in
Basel, Switzerland in 1930 to serve as a
Bank for Central banks.
8. As per Basel Committee guidelines issued
capital adequacy was considered panacea
for risk management.
All banks were advised to have Capital
Adequacy Ratio (CAR) at least 8%. CAR is
the ratio of capital to risk weighted assets
and it provides the cushion to the
depositors in case of bankruptcy.
9. Committee consisting of members from
each of the G10 countries. It is
represented by central bank governors of
each of the G10 countries.
Thirteen industrialized Nations that meet
on an annual basis to consult each other
on international financial matters.
10. The member countries are: France,
Germany, Belgium, Italy, Japan, the
Netherlands, Sweden, the United
Kingdom, the United States and Canada,
with Switzerland, Luxembourg, Spain
It meets regularly 4 times a year.
11. The basic approach of capital adequacy
framework is that a bank should have sufficient
capital to provide a stable resource to absorb
any losses arising from the risks in its business.
For supervisory purposes capital is split into
two categories:
Tier I and Tier II. These categories represent
different instruments’ quality as capital:
12. Tier I Capital consists:
Equity Capital (Shareholders'
Funds)
Disclosed Reserves:
◦ Premium over shares,
◦ Retained earnings,
◦ Legal reserve
It is a bank’s highest quality capital
because it is fully available to cover
losses.
13. Legal reserves are the only assets that
are permitted by government regulations.
Divided into The two asset categories:
Required Reserve (Vault cash & Reserve
deposits )
Excess Reserve (Reserve for loan purposes)
Legal Reserve:
14. Vault Cash (Required Reserve)
Paper bills and metal coins kept on the bank
premises, both the vault and teller drawers.
To satisfy currency withdrawal demands of
depositors.
Vault cash is not part of the official M1 money
supply.
M1 includes only the paper bills and metal coins
that is in circulation and held by the nonbank
public.
15. Reserve deposits are the one that
regulators require.
These are deposits that banks keep with
the Reserve Bank Of India System.
Required reserves are specified as a
fraction of outstanding deposits--usually
about 3 percent -15 percent
16. Any legal (or total) reserves over and
above those required by regulators are
excess reserves.
These excess reserves are used for loans,
which makes them exceedingly important
to the banking industry.
17. Tier II capital Consists:
Undisclosed reserves
Revaluation reserves
General provisions
Subordinated debt
Hybrid Instruments.
This capital is less permanent in nature.
The loss absorption capacity of Tier II capital
is lower than that of Tier I capital.
18. Undisclosed reserves are not common.
They are accepted by some regulators
where a bank has made a profit but this
has not appeared in normal retained
profits or in general reserves of the bank.
Many countries do not accept this as an
accounting concept or a legitimate form of
capital
19. Revaluation reserve is created when a bank
has an asset revalued and an increase in value
is brought to account.
Example: A bank owns the land and building of
its head-offices and bought them for $100 a
century ago.
A current revaluation is very likely to show a
large increase in value. The increase would be
added to a revaluation reserve.
20. Adequate care must be taken to ensure
that sufficient provisions have been made
to meet all known losses and foreseeable
potential losses before considering as part
of Tier II Capital.
21. Have some characteristics of both DEBT and
EQUITY.
These are close to equity in nature, in that they are
able to take losses on the face value without
triggering a liquidation of the bank, they may be
counted as capital.
Example: Preferred stock usually carries no voting
rights but may carry a dividend and may have
priority over common stock in the payment of
dividends and upon liquidation.
22. Such debt is referred to as subordinate, because
the debt providers (the lenders) have subordinate
status in relationship to the Normal debt.
A typical example for this would be when a
promoter of a company invests money in the form
of debt, rather than in the form of stock.
Subordinated debt has a lower priority than other
bonds of the issuer in case of liquidation during
bankruptcy. It has minimum maturity period is 5
years.
23. • Credit risk is most simply defined as the potential
that a bank’s borrower or counterparty may fail to
meet its obligations in accordance with agreed
terms.
• For most banks, loans are the largest and the
most obvious source of credit risk; however, other
sources of credit risk exist throughout the activities
of a bank like inter-bank transactions, trade
financing, foreign exchange transactions,
24. • Market Risk is the risk to the bank’s
earnings and capital due to changes in :
• Market level of interest rates
• Prices of securities
• Foreign exchange
• Equity Prices
25. The first accord was the Basel I. It was issued in 1988
and focused mainly on credit risk.
Banks with international presence are required to hold
capital equal to 8 % of the risk-weighted assets.
Carrying risk weights of zero (for gilts bond ), ten,
twenty, fifty, and up to one hundred percent ( Corporate
debt).
It standardizes risk-based capital requirements for
banks across countries as per following measurement:
26. A measure of a bank's capital. It is expressed as a
percentage of a bank's risk weighted credit
exposures.
CAR = Tier I + Tier II
Risk Weighted
Assets
27. • Risk weighted assets is a measure of the
amount of a banks assets, adjusted for risk.
• It can be arrived simply by multiplying it with
factor that reflects its risk.
• Low risk assets are multiplied by a low number,
high risk assets by 100% (i.e. 1).
28. Suppose a bank has the following assets:
Rs. 1bn. in gilts
Rs. 2 bn. secured by mortgages
Rs. 3bn of loans to businesses.
The risk weights used are: 0% for gilts (a risk free
assets)
50% for mortgages
100% for the corporate loans.
The bank's risk weighted assets are 0 × £1bn + 50% ×
£2bn + 100% × £3bn = £4bn.
29. • The main use of risk weighted assets is to
calculate Tier1 and Tier 2 capital adequacy
ratios.
• If its capital is 10% of its assets, then it can
lose 10% of its assets without becoming
Insolvent. (Insolvency is simply being
unable to pay liabilities; Liabilities >
Assets and liquidate it.
30. Basel II came into being in 2004.
Basel II is based on 3 pillars:
(i) Minimum capital requirements,
(ii) Supervisory review of an institution's capital
adequacy and internal assessment process;
(iii) Market discipline through effective disclosure
to encourage safe and sound banking practices.
31. Pillar 1 includes 3 risks now, operational risk +
credit risk + market risk to meet international
standards.
Commercial banks in India adopt Standardized
Approach (SA) for credit risk.
Standardized Approach, the rating assigned by
the eligible external credit rating agencies, largely
supports the measure of credit risk.
32. Banks rely upon the ratings assigned by the
external credit rating agencies chosen by the
RBI for assigning risk weights for capital
adequacy purposes. As:
a) Credit Analysis and Research Ltd.
b) CRISIL Ltd. c) FITCH Ltd. and d) ICRA Ltd.
International credit rating agencies :
a) Fitch; b) Moody's; and c) Standard & Poor's.
33. Banks must disclose the names of the
credit rating agencies that they use for the
risk weighting of their assets.
The risk weights associated with the
particular rating grades as determined by
RBI for each eligible credit rating agency
as well as the aggregated risk weighted
assets.
34. Pillar 2: Supervisory Review Process (SRP) —
The establishment of suitable risk management
systems in banks and their review by the
supervisory authority (RBI). As:
In terms of the Pillar 2 requirements of the New
Capital Adequacy Framework, banks are expected
to operate at a level well above the minimum
requirement.
35. Pillar 3: Market Discipline — seeks to achieve
increased transparency through expanded
disclosure requirements tor banks.
For such comprehensive disclosure, IT structure
must be in place for supporting data collection
and generating MIS which is compatible with
Pillar 3 requirements.
36. Basel II Tier I CRAR = Tier I capital / (Credit
Risk RWA + Operational Risk RWA + Market Risk
RWA)
Basel II Total CRAR = Total capital / (Credit
Risk RWA + Operational Risk RWA + Market Risk
RWA)
RWA - risk weighted assets
37. Capital to Risk Weighted Assets Ratio (CRAR) of
8% and Tier I capital of 6%.
The RBI has stated that Indian banks must have a
CRAR of minimum 9%, effective March 31, 2009.
The Government of India has stated that public
sector banks must have a capital cushion with a
CRAR of at least 12%, higher than the threshold
of 9% prescribed by the RBI.
38. Failure to adhere to Basel II can attract
RBI action including restricting lending
and investment activities.
However, private sector banks as well as
public sector banks are likely to comply
with Basel II norms since March 31, 2009
39. In order to strengthen risk management
mechanism:
“Indian banks should have minimum Tier-I
capital of 7 percent of risk-weighted
assets.
Total capital must be at least 9 percent of
risk-weighted assets.
40. Besides, it has also suggested for setting up of
the capital conservation buffer in the form of
Common Equity of 2.5 per cent of RWAs.
that takes the total capital requirement to 11.5%
higher than the BIS norm of 10.5%.
Implementation of the minimum capital
requirements will begin from January 2013 and
should be fully implemented by March 31, 2017.
S&P expects all banks that it rates in India to
meet the RBI's requirements within the stipulated
timeframe
41. Currently, RBI follows Basel II norms: As
Banks are required to maintain a minimum
Capital to Risk weighted Assets Ratio (CRAR) of
9 per cent.
Tier 1 capital should be at least 6 per cent of risk
weighted assets
On aggregate, banks are comfortably placed in
terms of capital adequacy, but a few individual
banks may fall short due to implementation of
Basel III norms.
42. It is proposed that the implementation period of
minimum capital requirements and deductions
from Common Equity will begin from January 1,
2013 and be fully implemented as on March 31,
2018.
The BIS has set the deadline for full
implementation as 2019; the RBI would like Indian
banks to comply by 2018.