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      Question

      Under the proposed framework for adoption of an expected loss-based approach for provisioning by banks in India, which of the following is NOT a key requirement?  

      A Classifying financial assets into one of the three categories - Stage 1, Stage 2, and Stage 3 Correct Answer Incorrect Answer
      B Making necessary provisions based on the assessed credit losses Correct Answer Incorrect Answer
      C Formulating principle-based guidelines without regulatory backstops Correct Answer Incorrect Answer
      D Keeping regional rural banks and smaller cooperative banks out of the framework Correct Answer Incorrect Answer
      E None of these Correct Answer Incorrect Answer

      Solution

      Formulating principle-based guidelines without regulatory backstops     Explanation: The proposed approach includes formulating principle-based guidelines supplemented by regulatory backstops wherever necessary. This means that while the guidelines will be principle-based, there will be regulatory measures to ensure compliance and effectiveness.  

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