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  1. Home
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International Relations·Easy

Consider the following statements with respect to Basel III norms, prescribed by the Basel Committee on Banking Supervision: 1. It requires banks to maintain sufficient capital in order to meet an unexpected default. 2. It requires banks to maintain capital to cover risks like cyber-attack on bank server. Which of the statements given above is/are correct?

Consider the following statements with respect to Basel III norms, prescribed by the Basel Committee on Banking Supervision:

1. It requires banks to maintain sufficient capital in order to meet an unexpected default.

2. It requires banks to maintain capital to cover risks like cyber-attack on bank server.

Which of the statements given above is/are correct?

Options

  1. a.

    1 only

  2. b.

    2 only

  3. c.

    Both 1 and 2

    Correct answer
  4. d.

    Neither 1 nor 2

Explanation

• Basel III norms prescribe banks to hold capital to cover 3 types of risks, including

• Credit risk: Risk of defaults;

• Market risk: Risks that may arise out of market risks, as banks hold risky assets, including ones in the equity market.

• Operational risk: Including fraud, cyber threats, physical threats, etc.

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