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Questions and Answers
What is the primary purpose of AT1 bonds for banks?
What is the primary purpose of AT1 bonds for banks?
- To reduce their liquidity
- To augment their core equity base (correct)
- To reduce their net demand and time liabilities
- To increase their cash reserve ratio
What is the key characteristic of AT1 bonds?
What is the key characteristic of AT1 bonds?
- They are senior to all other debt
- They are perpetual in nature (correct)
- They have a fixed maturity date
- They have a fixed rate of return
What happens to AT1 bonds in the event of an institutional failure?
What happens to AT1 bonds in the event of an institutional failure?
- The issuer is required to pay more interest
- The issuer can stop paying interest or write down the bonds (correct)
- The bonds are converted to equity
- The interest rate increases
What is the purpose of the Cash Reserve Ratio (CRR)?
What is the purpose of the Cash Reserve Ratio (CRR)?
What is the current CRR requirement for banks in India?
What is the current CRR requirement for banks in India?
What is the purpose of the Incremental Cash Reserve Ratio (ICRR)?
What is the purpose of the Incremental Cash Reserve Ratio (ICRR)?
What was the primary reason behind the RBI's decision to impose an additional cash reserve ratio?
What was the primary reason behind the RBI's decision to impose an additional cash reserve ratio?
What is the primary function of the Repo Rate?
What is the primary function of the Repo Rate?
Under what circumstances does the RBI use the Variable Repo Rate (VRR)?
Under what circumstances does the RBI use the Variable Repo Rate (VRR)?
What is the minimum duration for borrowing under the Variable Repo Rate (VRR)?
What is the minimum duration for borrowing under the Variable Repo Rate (VRR)?
What was the amount of liquidity that the RBI infused into the economy via the Variable Repo Rate (VRR) auction?
What was the amount of liquidity that the RBI infused into the economy via the Variable Repo Rate (VRR) auction?
Why does an increase in liquidity in the economy lead to inflation?
Why does an increase in liquidity in the economy lead to inflation?
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