Quiz on Basel Norm 1

What year was Basel Norm 1 first introduced?

• 1985

• 1992

• 1988

• 1990

What was a primary aim of Basel Norm 1?

• Reduce interest rates

• Strengthen the global financial system

• Increase bank profits

• Eliminate all banking risks

If the CAR is 9% and RWA is 60Cr, How much is the total capital ?

• 5.4 Cr

• 5.6 Cr

• 54 Cr

• 6 Cr

What was a significant issue in banking before Basel Norm 1?

• Excessive regulation

• Lack of standardized capital requirements

• High transparency

• Standardized capital requirements

What is the minimum Capital Adequacy Ratio required by Basel Norm 1?

• 6%

• 10%

• 8%

• 12%

What was one disadvantage of Basel Norm 1?

• Improved capital adequacy

• Overly simplified risk measures

• Increased transparency

• Enhanced stability

How is the Capital Adequacy Ratio calculated?

• CAR = (Tier 1 capital)/Total Assets

• CAR = (Tier 2 capital)/Total Assets

• CAR = Total Liabilities/ Total Assets

• CAR = (Tier 1 capital + Tier 2 capital)/RWA

What was a consequence of increased capital requirements under Basel Norm 1?

• Higher profits for banks

• Lower lending

• Increased lending

• More investment opportunities

Which of the following was a factor that drove the introduction of Basel Norm 1?

• Reduced need for regulation

• Decreased international banking

• Increased financial instability

• Stable financial markets

What did Basel Norm 1 fail to address adequately?

• Bank capital

• Systemic risk

• Transparency

• International cooperation