(a) 'One of the major reasons the recent economic and financial crisis became so severe was that the banking sectors of many countries had built up excessive on- and off-balance sheet leverage. The Basel Committee proposed a complete reform package to address the lessons of the crisis. Through its reform package, the Committee in addition aims to enhance risk management and governance and strengthen banks' transparency and disclosures. The Committee's reforms are part of the global initiatives to strengthen the financial regulatory system which have been endorsed by the Financial Stability Board (FSB) and the G20 Leaders.' describe.
(b) How the Regulator restricts banks from granting credit facilities to a single borrower which would ultimately limit the concentration of risk?
The 'International Convergence of Capital Measurement and Capital Standards: A Revised Framework' also known as Basel II has brought some new approaches in measuring credit and operational risks. However, the benefits are only derived by internationally active banks in terms of lower capital charge through the adoption of the complex approach. Discuss.
The Banking Act is a significant legislation with the prime objectives to protect depositors and maintain financial stability in the country. How far you agree with this statement and critically elaborate on its effectiveness to attain these objectives.
‘The legal framework for protecting Borrowers who have taken credit facilities not exceeding two million rupees prevents banks from operating freely in democratic country where the rules of demand and supply aren’t taken in consideration’. describe.
'The legal framework (Financial Services Act, Insurance Act, Securities Act, and so on.) in which the non-banking financial institutions operate are of international standards and aligned to IAIS (International Association of Insurance Supervisors) and IOSCO (International Organization of Securities Commission) requirements.' Critically describe.