Question

    Scrapping age-old CAMELS based inspection, in 2014, RBI

    adopted a new inspection methodology and switched most banks to this. What is the new methodology called?┬а
    A Basel III Correct Answer Incorrect Answer
    B HORSES Correct Answer Incorrect Answer
    C LIONS Correct Answer Incorrect Answer
    D Risk Based Supervision Correct Answer Incorrect Answer
    E Market Based regulation Correct Answer Incorrect Answer

    Solution

    Risk Based Supervision (RBS) focuses on evaluating both present and future risks, identifying incipient problems and facilitates prompt intervention/ early corrective action as against the compliance-based and transaction testing approach (CAMELS) which is more in the nature of a point in time assessment. RBS benefits the bank supervisor by optimizing its use of supervisory resources and also helps the regulated entities in improving their risk management systems, oversight and controls.

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