MCQ Test: Basel Norms - 1 - Bank Exams MCQ

Indian Bank has picked up a 13.27 percent stake in the proposed bad bank National Asset Reconstruction Company Ltd (NARCL).

• The lender has subscribed to 1,98,00,000 equity shares of NARCL for cash consideration of Rs. 19.80 crore.
• Three state-owned lenders -- SBI, Union Bank of India, and PNB -- had picked up over 12 percent stake each in NARCL on 30 September 2021.

Headquarters of some important banks:

Headquater of Bank of India is located in Bandra kulra Complex,Mumbai.

• The Bank of India was established on 07th September,1906.
• Bank of India was initially a private owned bank.
• It is under the ownership of Ministry of Finance, Government of India.
• Bank of India was founded on 7 September by a group of eminent businessmen from Mumbai, Maharashtra, India.

Central Bank of India launched a contactless ‘RuPay Select’ debit card in December 2020.

• It was launched in association with the National Payments Corporation of India.
• It was launched on the occasion of Bank’s 110th foundation day.
• The card was officially launched by then MD and CEO of the Central Bank of India, Pallav Mohapatra.

The Central Bank of India was founded on 21 December 1911. The headquarters of the Central Bank of India is located in Mumbai. Matam Venkata Rao is the current MD and CEO of the Central Bank of India.

The current capital of Sri Lanka is Sri Jayawardenepura Kotte.

• Sri Lanka’s President Gotabaya Rajapaksa has officially resigned, Speaker Mahinda Yapa Abeywardena announced Friday morning, ending days of uncertainty since the widely despised leader fled the island, dislodged by monumental public protests over a grave economic crisis. 
• Sri Lankan president Gotabaya Rajapaksa emailed his resignation letter Thursday night, sparking celebrations among protesters in Colombo.
• Shri Jayawardenepura Kotte is the administrative and Colombo is the executive and judicial capital of Sri Lanka. 

The current president of  Srilanka is Ranil Wickremesinghe. (As of Jan 2023).

Reserve Bank of India (RBI) Governor, Shaktikanta Das has addressed the Global Conference on Financial Resilience in Mumbai. 

• RBI Governor Shaktikanta Das will address the Global Conference on Financial Resilience in Mumbai.
• The conference is being organized by the College of Supervisors in collaboration with the Centre for Central Banking Studies (CCBS), Bank of England, London.
• The Reserve Bank of India has set up an academic advisory council called the 'College of Supervisors (CoS)' to strengthen supervision over regulated entities.
• The CoS is headed by former deputy governor N S Viswanathan, and it has five other members.
• The Bank of England's CCBS provides technical cooperation and assistance to equip central bankers and financial regulators with the expert knowledge they need to tackle challenges. 

 IIT Delhi to set up a campus in Abu Dhabi.

• The Indian Institute of Technology, Delhi (IIT-D) signed a Memorandum of Understanding (MoU) for establishment of IIT Delhi campus in Abu Dhabi.
• The MoU was signed in the presence of the Indian Prime Minister Narendra Modi and Sheikh Mohamed Bin Zayed Al Nahyan, President of the UAE.
• The Union Ministry of Education and Abu Dhabi's Education and Knowledge Department (ADEK) signed a memorandum of understanding (MoU) for setting up an IIT Delhi campus in the Gulf country.
• Prime Minister Narendra Modi was on an official visit to the United Arab Emirates (UAE).
• Indian Institute of Technology (IIT) Delhi is the second IIT to announce setting up an offshore campus after IIT Madras.
• Recently, IIT Madras has also signed an MoU for setting up a campus in Tanzania's Zanzibar.

Simplifai launches world-first generative AI tool for insurance.

• Simplifai, an AI automation solutions provider, launches Simplifai InsuranceGPT – a world-first custom-built GPT tool, fuelled by the company's revolutionary no-code AI-powered platform.
• The first custom-built AI GPT tool for insurers offers ChatGPT-like enhanced decision making for automated claims management, while maintaining privacy and data security.
• Founded in 2017, Simplifai is a secure AI solutions company.
• Its AI Automation platform is used to create Simplifai Archiver, Claims Handling, Document Handling, Debt Collection and Customer Service solutions.
• With its headquarters in Oslo, Norway, the company has offices in Pune, India, the Netherlands, Sweden and Ukraine.

The SARFAESI Act is not applicable to agricultural land. The act specifically excludes agricultural land from the definition of "security interest" under Section 2(zd). Therefore, banks and financial institutions cannot enforce the security interest on agricultural land under the provisions of the SARFAESI Act for the recovery of NPAs. However, the act is applicable to other types of assets such as house property, machinery, and financial assets like KVP (Kisan Vikas Patra).

In the context of PCR, 'P' stands for Provision. PCR stands for Provision Coverage Ratio, which is a financial metric used to assess the adequacy of provisions made by banks to cover potential losses on their loans and advances. The Provision Coverage Ratio represents the percentage of the provisions made by the bank in relation to its non-performing assets (NPAs) or bad loans. It is an important measure to determine the financial health and risk management practices of a bank.

In the context of CCCB, 'B' stands for Buffer. CCCB stands for Capital Conservation Buffer, which is a regulatory requirement imposed on banks by the Basel III framework. The Capital Conservation Buffer is an additional capital requirement that banks must maintain above their minimum regulatory capital requirements. It serves as a cushion or buffer to absorb losses during periods of financial stress and helps to ensure the stability and resilience of the banking system. If a bank's capital falls below the prescribed buffer level, it may face restrictions on capital distributions such as dividend payments and bonus payouts.

When the outstanding balance in an account exceeds the drawing power, and the borrower fails to regularize the account by making necessary payments, the account is considered as irregular. In other words, an irregular account refers to a situation where the borrower has defaulted on the repayment obligations or has breached the terms of the loan agreement. This non-compliance with repayment terms renders the account out of order or irregular. Banks and financial institutions closely monitor such irregular accounts and may take appropriate actions to recover the outstanding dues as per the provisions of the SARFAESI Act or other relevant regulations.

The implementation of Non-Performing Asset (NPA) guidelines by the Reserve Bank of India (RBI) began in 1992. The RBI introduced the concept of asset classification and provisioning norms for banks in India to address the issue of rising NPAs. These guidelines aimed to bring transparency and uniformity in recognizing and classifying non-performing assets, as well as establishing provisioning requirements for banks to mitigate potential losses. The NPA guidelines have evolved over time and have been periodically updated by the RBI to enhance the quality of assets and strengthen the banking system's stability.

As per the circular dated 1.07.2013 issued by the Reserve Bank of India (RBI), a provisioning coverage ratio (PCR) of 70% on gross non-performing assets (NPAs) was prescribed. This means that banks were required to set aside provisions equivalent to at least 70% of the value of their gross NPAs. The provisioning coverage ratio is an important indicator of the adequacy of provisions made by banks to cover potential losses on their loan portfolio. By mandating a PCR of 70%, the RBI aimed to ensure that banks maintain sufficient provisions to absorb potential losses and strengthen their financial resilience.

When a borrower intentionally and willfully fails to meet its payment obligations to the lender, even when it has the capacity to honor those obligations, they are referred to as a "Wilful Defaulter." In such cases, the borrower deliberately avoids repayment despite having the means to do so. This behavior is considered a serious breach of trust and financial discipline. The classification of a borrower as a wilful defaulter has significant implications, including restrictions on access to credit facilities from the banking system and legal consequences as per the guidelines and regulations set by the Reserve Bank of India (RBI).