2019
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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4%
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4.8%
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3.5%
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3.8%
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Detailed explanation-1: -The Reserve Bank of India (RBI) relaxed the Leverage Ratio (LR) for banks to 3.5%. This is done to help them in order to expand their lending activities.
Detailed explanation-2: -2019 where in it was decided that Non - Domestic Systemically Important Banks (DSIBs) have to maintain a leverage ratio of 3.5% w.e.f 01.10. 2020. Bank’s Leverage Ratio as of 31.12. 2020 is 3.55 % as against 3.50 % as stipulated by RBI.
Detailed explanation-3: -A ratio above 5% is deemed to be an indicator of strong financial footing for a bank.
Detailed explanation-4: -The leverage ratio is a measure of the bank’s core capital to its total assets. The ratio uses tier 1 capital to judge how leveraged a bank is in relation to its consolidated assets whereas the tier 1 capital adequacy ratio measures the bank’s core capital against its risk-weighted assets.
Detailed explanation-5: -Basel III introduced a minimum “leverage ratio". The leverage ratio was calculated by dividing Tier 1 capital by the bank’s average total consolidated assets; the banks were expected to maintain a leverage ratio in excess of 3% under Basel III.