CMA Final · Risk Management in Banking and Insurance · Liquidity Risk Management
A bank has high quality liquid assets (HQLA) of ₹900 crore. Under a 30-day stress scenario, projected cash outflows are ₹1,500 crore and projected cash inflows are ₹600 crore. Assume inflows are within the permitted cap. What is the Liquidity Coverage Ratio?
The LCR is 100%. Net cash outflows over 30 days equal ₹1,500 crore minus ₹600 crore, which is ₹900 crore. Dividing HQLA of ₹900 crore by this net outflow gives exactly 100%, meeting the minimum requirement.
- A100%Correct
- B60%
- C150%
- D75%
Explanation
Net cash outflows = 1,500 − 600 = ₹900 crore. LCR = 900 / 900 = 100%. Dividing by gross outflows (1,500) gives 60%, which ignores the inflow offset.
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