Economics

Question 1

Capital to risk-weighted assets ratio (CRAR):

Answer 1

t is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities. Basel III norms stipulated CRAR 8%.

Question 2

Provision coverage ratio (PCR)

Answer 2

Banks are required to set aside a portion of their profits as a provision against bad loans. This is called PCR.

Question 3

Sovereign debt:

Answer 3

overeign debt refers to the financial liability of the government of
a sovereign nation to its foreign and domestic creditors

Question 4

TRADE INTENSITY INDEX

Answer 4

share of one country’s exports going to a partner divided by the share of world exports going to the same partner.

Question 5

Reserve Money

Answer 5

The gross amount of the following six segments of money at any point of time is known as the Reserve Money (RM) for the economy or the government:

RBI’s net credit to the Government;
RBI’s net credit to the Banks;
RBI’s net credit to the commercial banks;
Net forex reserve with the RBI;
Government’s currency liabilities to the Public;
Net non-monetary liabilities of the RBI.

Question 6

partial capital account convertibility,

Answer 6

Since India has partial capital account convertibility, this implies that private foreign denominated

debt also needs to be met by either private export earnings or India’s forex reserves.

There is no correlation between capital account convertibility and sovereign credit rating.