Question

As per RBI's discussion paper on ECL model for banks what is the recommended treatment for the transitional adjustment amount in relation to the adoption of the ECL approach?

Q: Answer-As per RBI's discussion paper on ECL model for banks what is the recommended treatment for the trans...

It is proposed that the transitional adjustment amount, i.e., the difference between the accounting provisions held on adoption of ECL approach as on the effective date and the provisions computed as per the extant provisioning norms, net of tax effects, may be allowed to be added back to the Common Equity Tier 1 CET 1 capital. This benefit shall be phased out over a maximum five years. Banks may also choose to spread the transition over a shorter period.

A The transitional adjustment amount should be deducted from the Common Equity Tier 1 (CET 1) capital.

B The transitional adjustment amount should be excluded from the calculation of capital ratios.

C The transitional adjustment amount should be added back to the CET 1 capital.

D The transitional adjustment amount should be treated as a separate provision and accounted for separately.

E The treatment of the transitional adjustment amount is not specified in the proposal.

Practice Next

More Financial Management Questions

A company earns good profit before the close of the financial year and declares dividend. This dividend is called:
What is the purpose of a 'quality circle'?
The ICAAP is required to form an integral part of the management and decision-making culture of a bank. What does ICAAP stands for?
Which of the following statements about IPOs is/are not correct? 1)It provides a company access to funds through the public capital market. 2)Companies iss...
A banking company has to submit to Reserve Bank under Section 25(1) of the Banking Regulation Act, a return regarding its assets in India. The frequency of...
To ensure that employees are satisfied with their performance appraisals, supervisors should ascertain that employees ____________
From the following information calculate the amount of sales to earn a desired profit of Rs.6,000 Fixed Cost: 12,000 Selling Price: 12 per unit Variable...
What is an expectation for proficiency in Microsoft Word?
When was the Samadhaan Portal launched for monitoring and resolving outstanding dues to MSEs?
What is the Capital to Risk (Weighted) Assets Ratio (CRAR) of IIFCL as of 31st March 2025?

Relevant for Exams:

Bank of India Credit Officer Scale 1
Union Bank of India Credit Officer
PNB SO Credit Officer Scale 1
UBI Assistant Manager Credit Officer 2025
Bank of India (BOI) Credit officer

Hey! Ask a query

As per RBI's discussion paper on ECL model for banks what is the recommended treatment for the transitional adjustment amount in relation to the adoption of the ECL approach?

Detailed Solution

More Financial Management Questions

Relevant for Exams:

Hey! Ask a query

Please Register/Login