CURRENT AFFAIRS

Detailed explanation-1: -The risk weight of 75 per cent will apply to all fresh exposures and also to existing exposures where incremental exposure may be taken by the banks upto the revised limit of ₹ 7.5 crore.

Detailed explanation-2: -The capital-to-risk-weighted assets ratio for a bank is usually expressed as a percentage. The current minimum requirement of the capital-to-risk weighted assets ratio, under Basel III, is 10.5%, including the conservation buffer.

Detailed explanation-3: -Banks calculate risk-weighted assets by multiplying the exposure amount by the relevant risk weight for the type of loan or asset. A bank repeats this calculation for all of its loans and assets, and adds them together to calculate total credit risk-weighted assets.

Detailed explanation-4: -Note: In regard to off-balance sheet items, the following transactions with non- bank counterparties shall be treated as claims on banks and carry a risk-weight of 20%.

Detailed explanation-5: -Riskier assets, such as unsecured loans, carry a higher risk of default and are, therefore, assigned a higher risk weight than assets such as cash and Treasury bills. The higher the amount of risk an asset possesses, the higher the capital adequacy ratio and the capital requirements.