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Consider the following statements regarding Domestic Systemically Important Banks (D-SIBs) in India:
1. A bank must have assets exceeding 2% of the national GDP to be classified as a D-SIB.
2. D-SIBs are required to maintain a higher proportion of risk-weighted assets as Tier-I equity compared to non-D-SIBs.
3. The classification of D-SIBs into buckets determines the level of government intervention required during economic crises.
Which of the statements given above is/are correct?
  • a)
    1 Only
  • b)
    1 and 2 Only
  • c)
    1 and 3 Only
  • d)
    1, 2 and 3
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements regarding Domestic Systemically Imp...
1. Statement 1 is correct. According to the guidelines, a bank must indeed have assets exceeding 2% of the national GDP to be classified as a Domestic Systemically Important Bank (D-SIB). This criterion helps in identifying banks that are large enough to pose systemic risks to the economy.
2. Statement 2 is correct. D-SIBs are required to maintain a higher proportion of risk-weighted assets as Tier-I equity compared to non-D-SIBs. This requirement is part of the regulatory framework to ensure these banks have additional capital buffers to mitigate systemic risks and reduce the likelihood of their failure.
3. Statement 3 is incorrect. The classification of D-SIBs into buckets is related to the extent of additional capital they are required to maintain, not directly to the level of government intervention required during economic crises. The bucket system helps determine the additional Common Equity Tier 1 (CET1) capital that D-SIBs must hold, with higher buckets requiring more capital.
Therefore, the correct answer is Option B: 1 and 2 Only, as both statements 1 and 2 are correct, while statement 3 is incorrect.
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Consider the following statements regarding Domestic Systemically Important Banks (D-SIBs) in India:1. A bank must have assets exceeding 2% of the national GDP to be classified as a D-SIB.2. D-SIBs are required to maintain a higher proportion of risk-weighted assets as Tier-I equity compared to non-D-SIBs.3. The classification of D-SIBs into buckets determines the level of government intervention required during economic crises.Which of the statements given above is/are correct?a)1 Onlyb)1 and 2 Onlyc)1 and 3 Onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer?
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Consider the following statements regarding Domestic Systemically Important Banks (D-SIBs) in India:1. A bank must have assets exceeding 2% of the national GDP to be classified as a D-SIB.2. D-SIBs are required to maintain a higher proportion of risk-weighted assets as Tier-I equity compared to non-D-SIBs.3. The classification of D-SIBs into buckets determines the level of government intervention required during economic crises.Which of the statements given above is/are correct?a)1 Onlyb)1 and 2 Onlyc)1 and 3 Onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Domestic Systemically Important Banks (D-SIBs) in India:1. A bank must have assets exceeding 2% of the national GDP to be classified as a D-SIB.2. D-SIBs are required to maintain a higher proportion of risk-weighted assets as Tier-I equity compared to non-D-SIBs.3. The classification of D-SIBs into buckets determines the level of government intervention required during economic crises.Which of the statements given above is/are correct?a)1 Onlyb)1 and 2 Onlyc)1 and 3 Onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Domestic Systemically Important Banks (D-SIBs) in India:1. A bank must have assets exceeding 2% of the national GDP to be classified as a D-SIB.2. D-SIBs are required to maintain a higher proportion of risk-weighted assets as Tier-I equity compared to non-D-SIBs.3. The classification of D-SIBs into buckets determines the level of government intervention required during economic crises.Which of the statements given above is/are correct?a)1 Onlyb)1 and 2 Onlyc)1 and 3 Onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer?.
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