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Question

Based on the following case study, answer the following 4 questions.  Over the years, the role of the AIFIs (EXIM Bank, NABARD, NHB & SIDBI) in the Indian financial system has undergone significant change reflecting the changes in their business models. As the Indian economy grows further, the AIFIs are increasingly being seen as key institutions to promote the flow of direct or indirect credit to the economic sectors they cater to. It has been decided, therefore, to extend Basel III Capital framework to the AIFIs as detailed in the following paragraphs.  

What is the minimum Capital adequacy ratio including capital buffer, proposed for All India Financial Institutions by RBI?

A 10.5% Correct Answer Incorrect Answer
B 11.5% Correct Answer Incorrect Answer
C 12.0% Correct Answer Incorrect Answer
D 12.5% Correct Answer Incorrect Answer
E 15.0% Correct Answer Incorrect Answer

Solution

AIFIs are required to maintain a minimum Pillar 1 Capital to Risk-weighted Assets Ratio (CRAR) of 9% on an on-going basis (other than capital conservation buffer and countercyclical capital buffer etc.). These institutions should have minimum total capital at 9 per cent from 1 April 2022.  

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