Question 1

The Basel Committee on Banking Supervision (BCBS) is headquartered in which country?

Accepted Answer

Switzerland. The Basel Committee is based in Basel, Switzerland, at the Bank for International Settlements. It was established by the central bank governors of the Group of Ten (G10) countries in 1974. The committee sets the global standards for the prudential regulation of banks.

Question 2

In the context of Basel Norms, what does the acronym 'BCBS' stand for?

Accepted Answer

Basel Committee on Banking Supervision. BCBS stands for the Basel Committee on Banking Supervision. It is the primary global standard setter for the regulation of banks. Its members include central banks and authorities from major financial centers around the world.

Question 3

The first set of international banking standards, known as Basel I, was introduced in which year?

Accepted Answer

1988. Basel I was introduced in 1988 with a primary focus on credit risk. It established a minimum capital requirement of 8% for banks. This accord was designed to strengthen the stability of the international banking system.

Question 4

The Basel III norms were introduced primarily as a response to which global event?

Accepted Answer

2008 Global Financial Crisis. Basel III was developed following the financial crisis of 2007-08. It aimed to improve the banking sector's ability to absorb shocks from financial and economic stress. It introduced more stringent capital and liquidity requirements compared to previous versions.

Question 5

What is the minimum Capital Adequacy Ratio (CAR) prescribed under the Basel III norms globally?

Accepted Answer

8%. Under Basel III, the global minimum capital adequacy ratio is set at 8%. This ratio represents the protection for depositors and promotes stability in financial systems. The RBI in India has historically set a slightly higher requirement of 9% for Indian banks.

Basel Norms — Set 1