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C8 Flashcards

1
Q

Working Group to Review the System of On-site Supervision of Banks

A

Chairman: S. Padmanabhan, 1995

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2
Q

Working Group on Consolidated Accounting and Other Quantitative Methods to Facilitate Consolidated Supervision

A

(Chairman: Vipin Malik, 2001

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3
Q

Working Group on Monitoring of Systemically Important Financial Intermediaries (Financial Conglomerates)

A

(Convener: Smt. Shyamala Gopinath, 2004)

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4
Q

the High Level Steering Committee for Review of Supervisory Processes for Commercial Banks

A

(Chairman: K C Chakrabarty, 2012),

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5
Q

Inter-Regulatory Working Group on FinTech and Digital Banking

A

Chairman: Shri Sudarshan Sen, 2018)

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6
Q

Working Group on digital lending including lending through online platforms and mobile apps

A

(Chairman: Shri Jayant Kumar Dash, Executive Director, 2021).

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7
Q

there are currently _________ core principles covering supervisory powers and responsibilities, supervisory expectations of banks, emphasising the importance of good corporate governance and risk management, as well as compliance with supervisory standards.

A

29

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8
Q

attributes of good supervision? An IMF Staff Position note titled “The Making of Good Supervision: Learning to Say ‘No’”,

A

First, Good supervision is intrusive. Second, Good supervision is sceptical but proactive. Third, Good supervision is comprehensive. Fourth, Good supervision is adaptive. Finally, Good supervision is conclusive.

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9
Q

First, Good supervision is intrusive

A

i.e., the supervisor should have a thorough understanding of the supervised entity’s business model, its risk culture and governance structure. A hands-off approach is not advisable when it comes to bank supervision

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10
Q

Second, Good supervision is sceptical but proactive.

A

Supervisors should not take things for granted and question bank’s actions even in good times.

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11
Q

Third, Good supervision is comprehensive.

A

Supervision should not be restricted to only the bank and its core activities. It should encompass subsidiaries, off-balance sheet vehicles or structures, etc. Often the risk may emanate from the periphery rather than from the core and the supervisor must be vigilant.

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12
Q

Fourth, Good supervision is adaptive.

A

Given the high level of innovation in financial industry, the supervisors should continuously upgrade their skills to stay in touch to identify emerging risks.

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13
Q

Finally, Good supervision is conclusive.

A

Supervisors must follow-through and ensure that supervisory findings are taken to a logical conclusion.

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14
Q

In order to bring about good supervision, according to the IMF note, two supporting pillars are necessary:

A

the ability to act and the will to act.

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15
Q

the inspection of banks under section

A

35 of B.R. Act

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16
Q

RBI set up the Board for Financial Supervision (BFS), a sub-committee of the Central Board of RBI, in

A

1994

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17
Q

BFS

A

Board for Financial Supervision

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18
Q

Chairman of the BFS

A

The Governor, RBI

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19
Q

Vice chairman of BFS

A

Deputy Governor in charge of banking supervision,

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20
Q

ex-officio members and non-official directors of BFS

A

The other deputy governors of the Reserve Bank and four non-official directors from the Central Board of the RBI are co-opted as members for a term of two years

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21
Q

non-official directors from the Central Board of the RBI are co-opted as members of BFS for a term of

A

two years

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22
Q

Secretariat of the BFS

A

DoS

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23
Q

DoS acts as the Secretariat of the BFS, which normally meets ___________________

A

once every month

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24
Q

Prior to 1993, the ____________ was responsible for the supervision and regulation of commercial banks.

A

Department of Banking Operations & Development (DBOD)

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25
Q

In ________ , the Department of Supervision (DoS) was carved out of the DBOD, with the objective of segregating the supervisory role from the regulatory functions of RBI.

A

1993

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26
Q

DoS was split into

A

Department of Banking Supervision (DBS), Department of Non-Banking Supervision (DNBS) and Department of Co-operative Bank Supervision (DCBS).

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27
Q

In ____________ it was decided to integrate the supervision function into a unified Department of Supervision (DoS).

A

November 1, 2019

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28
Q

An effective system of banking supervision requires the supervisor to develop and maintain a forward-looking assessment of the risk profile of individual banks and banking groups, proportionate to their systemic importance; identify, assess and address risks emanating from banks and the banking system as a whole; have a framework in place for early intervention; and have plans in place, in partnership with other relevant authorities, to take action to resolve banks in an orderly manner if they become non- viable.”

A

Principle 8 of Effective Banking Supervision issued by the Basel Committee on Banking Supervision (BCBS)

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29
Q

CAMELS

A

Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to Market Risk) Model

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30
Q

In the Indian context, S in the CAMELS acronym stood for

A

Systems and Control

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31
Q

Under CAMELS model, onsite examination is carried out on an ___________ basis supported by offsite surveillance

A

annual

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32
Q

The CAMELS approach was focused on

A

solvency and liquidity of the banks and primarily aimed at limiting the risk of loss to depositors.

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33
Q

a risk-based approach to supervision was implemented from

A

2013 onwards in a phased manner

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34
Q

RBS

A

Risk-based Supervision

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35
Q

substantive objectives of supervision, risk-based or otherwise, are two-fold:

A

Ensuring safety and soundness of the individual banks and thereby protecting the interest of depositors; and Safeguarding the stability of the financial system

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36
Q

CALCS

A

Capital Adequacy, Asset Quality, Liquidity, Compliance, Sys and Control) was the supervisory rating model used for foreign banks

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37
Q

The RBS framework as adopted by RBI is called

A

SPARC (Supervisory Program for Assessment of Risk and Capital).

38
Q

The three key objectives of SPARC are

A

(1) to apply differentiated supervision based on risk profile of the bank. i.e., different banks will be subjected to varying degrees of supervision; (ii) focus on areas deemed as higher risk for the bank. i.e., within a bank the focus will be given to areas that are identified to have significant material risks; and (iii) to help banks in improving their risk management systems, oversight and controls.

39
Q

A risk-based supervisory framework has two dimensions:

A

First, the risk of failure and second, the impact of failure

40
Q

A major part of the on-site examination involves

A

Talks with Bank Leaders: Discussing how the bank operates, including its products, policies, and procedures with key bank officials. 2. Checking Data Accuracy. 3. Evaluating Risk Controls. 4.Board and Management Review and 5. Compliance Check

41
Q

SSM)

A

Senior Supervisory Manager

42
Q

The creation of _________ is primarily aimed at having a single point of supervisory contact for banks within RBI

A

Senior Supervisory Manager

43
Q

key benefits of a risk-based framework for supervision are:

A

(i) optimal use of scarce supervisory resources, (ii) a dynamic and ongoing assessment of risks faced by regulated entities; (iii) early identification and recognition of emerging risks; (iv) a structured and consistent framework for evaluating risks based on separate assessment of both inherent risks and risk management controls. This also enables in a system-wide assessment of banking sector risks as all the entities are evaluated under the same model with less subjectivity; and (v) a better understanding of a bank’s business, systems, processes, human resource, etc.

44
Q

FS

A

Full Scope Supervision (

45
Q

Full Scope Supervision (FS

A

Involves the most detailed and intrusive supervisory approach, both on-site and off-site, covering all the material risks of a bank

46
Q

SS):

A

Select Scope Supervision

47
Q

Select Scope Supervision (SS):

A

Off-site supervision plays the major role in this approach with on-site examination a function of concerns emerging from off-site analysis. Moreover, on-site examination shall be centred around operations that are critical to the functioning of the bank, such as IT/Cyber risks in respect of private banks, compliance in the case of small finance banks, etc.

48
Q

TA

A

Thematic Assessment

49
Q

Thematic Assessment

A

This approach is aimed at assessing topical themes, such as asset quality, cyber risk, etc., with the assessment covering a group of banks or all banks.

50
Q

TS

A

Targeted Scrutiny

51
Q

Targeted Scrutiny

A

Under this approach, scrutiny is undertaken to examine specific aspects of a bank based on supervisory or market intelligence inputs

52
Q

(SAKAR) Framework

A

Supervisory Assessment of KYC/AML Risks (SAKAR) Framework -

53
Q

Supervisory Assessment of KYC/AML Risks (SAKAR) Framework implemented in the supervisory cycle

A

2020-21

54
Q

MDA):

A

Micro Data Analysis

55
Q

RAR

A

Risk Assessment Reports

56
Q

ASAG):

A

Advanced Supervisory Analytics Group

57
Q

The principle criteria used to categorize banks is

A

market share of their reported assets.

58
Q

OSMOS)

A

Off-site Monitoring and Surveillance (OSMOS) system

59
Q

CIMS)

A

Centralised Information Management System

60
Q

CIMS replaced OSMOS in

A

June 2023

61
Q

CRILC)

A

Central Repository of Information on Large Credits

62
Q

Central Repository of Information on Large Credits (CRILC) has been introduced in

A

2014

63
Q

All users concerned access off-site data through the

A

CIMS- Database on Indian Economy (DBIE) site

64
Q

CFR)

A

Central Fraud Registry

65
Q

Keeping this objective in mind, a Central Fraud Registry (CFR) has been operationalised with effect from

A

January 20, 2016

66
Q

RFA)

A

red flagging of accounts

67
Q

Expert Panel on Cyber Security and IT Examination was constituted with ____________ as the Chairperson.

A

Executive Director In-Charge of Department of Banking Supervision

68
Q

A dedicated Cyber Security & IT Examination Cell (CSITE Cell) was also established in

A

2015

69
Q

(CSITE Cell

A

Cyber Security & IT Examination Cell

70
Q

Reserve Bank’s Advanced Supervisory Monitoring System

A

DAKSH

71
Q

Reserve Bank’s Advanced Supervisory Monitoring System (DAKSH) was launched by the Governor, RBI on

A

October 6, 2022.

72
Q

Early warning indicators at macro level to identify systemic risk

A

credit- to-GDP ratio, economy-wide debt service ratios (DSRs), etc.,

73
Q

DSR

A

debt service ratios

74
Q

Early warning indicators At a micro level, banks are subject to

A

stress testing, capital planning, asset quality review, liquidity monitoring, etc.

75
Q

This EWI framework provides an early warning in terms of breaches of critical thresholds across a set of —————————- ratios

A

18 significant ratios

76
Q

CCO)

A

chief compliance officer

77
Q

The “Core Principles for Effective Banking Supervision” drawn up by the Basel Committee in

A

1997,

78
Q

Accordingly, a system of Prompt Corrective Action (PCA), based on pre-determined rule-based structured early intervention, was put in place in

A

December 2002

79
Q

PCA does not applies to

A

Small Finance Banks, Payment Banks and Regional Rural Banks

80
Q

The key areas for monitoring banks under the revised PCA framework are

A

capital, asset quality and leverage.

81
Q

The indicators tracked for capital, asset quality and leverage are

A

CRAR/Common equity Tier 1 ratio, Net NPA ratio and regulatory min Tier 1 leverage ratio respectively.

82
Q

Mandatory actions under PCA include

A

restriction on dividend distribution, branch expansion, higher provisions, etc.

83
Q

CRAR)

A

capital to risk-weighted assets ratio

84
Q

In __________-, RBI issued guidelines on stress testing and made it mandatory for all banks to carry out stress tests involving shocks prescribed in the guidelines at a minimum.

A

December 2013

85
Q

With experience gained and in order to have a modular approach to the components of comprehensive supervisory processes, the supervisory outcomes are broken down to

A

(i) Risk Assessment Reports (RAR) taking care of unexpected losses of the banks; (ii) Inspection Report (IR) covering the expected losses of the banks through (a) Assessment of Regulatory Operations i.e compliance review and (b) Capital Review involving assessment of available capital; and (iii) Assessment of Conduct of Business covering issues relating to bank’s customer and market conduct.

86
Q

Supervisory Colleges for six major banks

A

(State Bank of India, Bank of Baroda, Bank of India, ICICI Bank Ltd., Axis Bank Ltd. and Punjab National Bank)

87
Q

During the year, conferences were held for the Directors on the Boards of PSBs and PVBs with the theme of____________________, which were attended by the Governor and top management of the Reserve Bank.

A

‘Governance in Banks - Driving Sustainable Growth and Stability’

88
Q

Inter-Regulatory Forum for monitoring Financial Conglomerates (IRF) was set up in

A

August 2012

89
Q

Inter-Regulatory Forum for monitoring Financial Conglomerates (IRF) was set up in August 2012 under the aegis of

A

Sub-Committee of Financial Stability and Development Council.

90
Q

Inter-Regulatory Forum for monitoring Financial Conglomerates (IRF) chaired by the

A

Deputy Governor-in-Charge of Department of Supervision, Reserve Bank of India (RBI)

91
Q

Inter-Regulatory Forum - whole time members

A

RBI, Securities and Exchange Board of India, Insurance Regulatory & Development Authority of India, Pension Fund Regulatory and Development Authority and NHB.

92
Q

CRAR

A

Capital to risk weighted assets ratio

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