Question

With reference to the term ‘Domestic Systemically Important Banks (DSIBs)’,
consider the following statements.
1. Finance ministry in consultation with Reserve Bank of India (RBI)
describes certain banks as D-SIBs that are too big to fail.
2. Banks whose assets exceed 2% of GDP are considered part of this group.
3. The D-SIB categorization imposes additional capital requirements on the
banks classified as such.
Which of the statements given above are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3

Answer 1

a is ur answer...!!!

Answer 2

Answer:

Option A - 1 and 2 only is the correct answer.

Explanation:

• Some banks become systemically important as a result of their scale, cross-jurisdictional activity, complexity, lack of substitutability, and interconnection.
• The critical services that these banks provide to the banking system, as well as the broader economic activity, could be seriously disrupted by the uncontrolled failure of these banks.
• The continuous provision of important banking services to the real economy depends on the sustained operation of Systemically Important Banks (SIBs).
• Based on a study of the banks' size (based on Basel III Leverage Ratio Exposure Measure) as a proportion of GDP, the banks' systemic relevance will be calculated.
• In the sample, banks with a size greater than 2 per cent of GDP will be chosen.
• The most recent GDP statistic at market prices provided by the Central Statistical Office of the Government of India shall be utilized for this purpose.
• Due to the smaller size of their balance sheets, international banks in India would not all automatically be included in the sample.
• Foreign banks are very involved in the derivatives market, though, and the specialized services they offer might be difficult for domestic banks to replace.

Hence, 1. The Finance Ministry in consultation with the Reserve Bank of India (RBI) describes certain banks as D-SIBs that are too big to fail.

2. Banks whose assets exceed 2% of GDP have been considered part of this group are the correct options.

#SPJ3