General Studies · Basel III Norms

The management of Risk-Weighted Assets (RWA) is an essential factor to make continuous improvement in profitability sustainable, as mandated by the Basel III norms. Consider the following statements: 1. Under the Standardized Approach, corporate loans are typically assigned a higher risk weight (e.g., 100 percent) than gold loans (e.g., 50 percent), which means a bank must hold more capital for corporate loans. 2. By substituting a high-risk-weight loan with a low-risk-weight loan, a bank can reduce its total RWA and improve its Capital Adequacy Ratio (CRAR) without raising new capital. 3. The regulatory minimum for the Common Equity Tier 1 (CET1) ratio for Indian commercial banks is set at 5.5 percent of RWA, excluding the Capital Conservation Buffer (CCB). Which of the above statements is/are correct?