Which of the following statements correctly describes

Solution

The Risk-Based Supervision (RBS) framework of the RBI was introduced in 2012 following the recommendations of the K. C. Chakrabarty Committee. Its features include: • Risk-centric approach: It emphasizes probability of failure of banks and the impact of such failure on the financial system. • Continuous monitoring: Unlike the CAMELS approach (Capital adequacy, Asset quality, Management, Earnings, Liquidity, Sensitivity), which is a one-time evaluation, RBS uses ongoing data analysis for supervision. • Objective: Ensuring financial stability, protection of depositors’ interests, customer protection, and sound financial health of banks and FIs. • Supervisory process: Involves continuous risk identification, control evaluation, capital adequacy review, impact assessment, and formulation of supervisory stance and corrective actions. Thus, all the statements given are correct.