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Mrunal (Economy Q) Basel III Norms - Tier 1 and Tier 2 Capital Meaning Use Print
Mrunal (Economy Q) Basel III Norms - Tier 1 and Tier 2 Capital Meaning Use Print
Mrunal (Economy Q) Basel III Norms - Tier 1 and Tier 2 Capital Meaning Use Print
Mrunal [Economy Q] Basel III Norms: Tier 1 and Tier 2 Capital meaning use Print
[Economy Q] Basel III Norms: Tier 1 and Tier 2 Capital meaning use
Keep in mind friends, for a regular Government job recruitment exam [UPSC, State PSC] or MBA admission GDPI, you need to have only a basic idea about BASEL. No need to dwell into extreme details such as exact numbers of Tier 1 and Tier 2, credit valuation adjustment or Net Stable Funding Ratio.
What is BASEL?
It is a city in Switzerland.
3/6/13
Mrunal [Economy Q] Basel III Norms: Tier 1 and Tier 2 Capital meaning use Print
Overnight entire banking sector will collapse and You already know about the sub-prime crisis etc: the aftershocks were felt everywhere in every sector. Here comes BASEL in picture The BASEL Norm is kinda safeguards / backup plan for Banking sector. It provides internationally accepted detailed guidelines about how much money should a bank keep aside, to deal with such financial crisis. Even if loan-takers run away without paying, Bank should have money to give back to deposit holders. More risk the bank takes, more money it has to keep aside in reserve to counter the risk.
3/6/13
Mrunal [Economy Q] Basel III Norms: Tier 1 and Tier 2 Capital meaning use Print
Governor of RBI signs on this BASEL agreement, comes back home and forces all the Indian banks to follow these norms. Same thing will be done by French, Chinese, Americans etc. and thus banks in every country will function prudently thus preventing another Global financial crisis. Latest is BASEL III accord, came in 2010. It has stringent provisions keeping in mind the sub-prime crisis.
Criticism of BASEL
1. One shoe doesnt fit all. 2. Just because American Banks were so imprudent in their functioning and ran into trouble, doesnt mean WE the Indian banks need be so overcautious and keep so much of money aside for safety, it could be used for giving loans to needy people. 3. Already existing complex Monetary policies of Central Banks in each country (example RBIs CRR, SLR, Repo etc.) make it difficult to uniformly implement BASEL norms.
mrunal.org/2012/02/economy-q-basel-iii-norms-tier-1-and.html/print/
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