Answer-What does the Net Stable Funding Ratio (NSFR) require?

Q: Answer-What does the Net Stable Funding Ratio (NSFR) require?

The Net Stable Funding Ratio NSFR requires banks to maintain a minimum ratio of 100 on an ongoing basis, ensuring they fund long-term, illiquid assets lasting over one year with stable, long-term liabilities. It promotes resilience by forcing banks to reduce dependency on short-term wholesale funding and manage liquidity risks over a one-year horizon.

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Question

What does the Net Stable Funding Ratio (NSF

R require?

A 100% coverage of operational costs Correct Incorrect

B Matching of liabilities with short-term assets Correct Incorrect

C Minimum 3% leverage ratio Correct Incorrect

D Stable funding > 100% of required funding over 1 year Correct Incorrect

E Dividend payout equal to capital gains Correct Incorrect

Detailed Solution

The Net Stable Funding Ratio (NSFR) requires banks to maintain a minimum ratio of 100% on an ongoing basis, ensuring they fund long-term, illiquid assets (lasting over one year) with stable, long-term liabilities. It promotes resilience by forcing banks to reduce dependency on short-term wholesale funding and manage liquidity risks over a one-year horizon.

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Bank of India Credit Officer Scale 1
Bank of India (BOI) Credit officer

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What does the Net Stable Funding Ratio (NSF

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