📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    âš¡ Month End Offer - Flat 52% Off On All Courses! Enroll Now âš¡
    00:00:00 AM Left

    Question

    Which of the following statements correctly describes

    the Risk-Based Supervision (RBS) framework of RBI?
    A RBS was introduced in 2012 on the recommendation of the K. C. Chakrabarty Committee. Correct Answer Incorrect Answer
    B It focuses on supervisory analysis of the probability of failure of a bank and its systemic impact. Correct Answer Incorrect Answer
    C It differs from the CAMELS approach by being a continuous monitoring mechanism rather than a point-in-time assessment. Correct Answer Incorrect Answer
    D The objective is to ensure depositor protection, customer safety, financial stability, and the soundness of banks. Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    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.

    Practice Next
    More Accounts Questions

    Relevant for Exams:

    ask-question