MANAGEMENT

Detailed explanation-1: -The following three approaches are specified by Basel II, for credit risk: The standardized approach. The Foundation Internal Ratings Based (IRB) approach. The advanced IRB approach.

Detailed explanation-2: -The term standardized approach (or standardised approach) refers to a set of credit risk measurement techniques proposed under Basel II, which sets capital adequacy rules for banking institutions.

Detailed explanation-3: -Under Basel II, banks are required to maintain a total capital ratio (Tier 1 + 2 + 3) of minimum 8%.

Detailed explanation-4: -Standardised Credit Risk Assessment Approach (SCRA) The SCRA requires banks to classify bank exposures into one of three risk-weight buckets (ie Grades A, B and C) and assign the corresponding risk weights in Table 7. 15 For the purposes of the SCRA only, “published minimum regulatory requirements” in CRE20.

Detailed explanation-5: -For operational risk, there are three different approaches – basic indicator approach or BIA, standardized approach or TSA, and the internal measurement approach (an advanced form of which is the advanced measurement approach or AMA).