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CS Professional · IFSCA - Regulations, Listing and Compliances · Banking Services and Finance Companies in IFSC

An IBU of Sagar Bank at GIFT IFSC has risk-weighted assets of USD 400 million. The IBU's compliance officer checks capital adequacy. Under the framework, the IBU's capital adequacy is assessed by reference to which standard?

IBUs follow Basel III based capital adequacy norms specified by IFSCA, measured against the IBU's own risk-weighted assets. The parent's domestic ratio alone is not enough, and exchange listing rules have no role in determining bank capital requirements.

  1. AOnly the parent bank's domestic RBI capital ratio, with no separate IBU computation
  2. BBasel III norms as applicable to the IBU, as specified by IFSCA, on its risk-weighted assetsCorrect
  3. CA fixed leverage cap unrelated to risk-weighted assets
  4. DThe listing norms of the international exchange at GIFT IFSC

Explanation

IFSCA prescribes Basel III based prudential norms for IBUs, including capital adequacy on the IBU's risk-weighted assets. Relying only on the parent's domestic ratio is wrong because the IBU has its own prudential requirements. Exchange listing norms do not govern bank capital.

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