Financial Awareness - Risk, Stability & Emerging Finance
Which of the following reforms was introduced to improve the capital adequacy of Indian banks as per Basel III norms?
Which of the following reforms was introduced to improve the capital adequacy of Indian banks as per Basel III norms?
easy Q3 of 15
Step-by-Step Solution
Step 1: Understand Basel III norms
Basel III norms require banks to maintain a minimum Capital to Risk-weighted Assets Ratio (CRAR) to ensure capital adequacy.Step 2: Analyze options
CRR is a liquidity tool, Priority Sector Lending targets relate to credit distribution, and KYC norms are for customer identification, not capital adequacy.Final Answer:
Maintenance of minimum Capital to Risk-weighted Assets Ratio (CRAR) → Option BQuick Check:
Basel III = minimum CRAR for capital adequacy ✅
Quick Trick: Basel norms focus on CRAR, not CRR or KYC.
Common Mistakes:
- Confusing CRR with capital adequacy or mixing KYC with Basel norms.
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