Question

Why did the Reserve Bank of India (RBI) ask banks to set aside incremental provisioning and capital requirements for exposures to entities with unhedged foreign currency exposures?

a.

To encourage banks to take more risks

b.

To discourage banks from lending to entities with unhedged exposures

c.

To ensure that banks are prepared for potential losses due to exchange rate movements

d.

To increase the profitability of banks

Posted under IC 89 Management Accounting

Answer: (c).To ensure that banks are prepared for potential losses due to exchange rate movements Explanation:The RBI asked banks to set aside incremental provisioning and capital requirements to ensure that banks are prepared for potential losses due to exchange rate movements.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. Why did the Reserve Bank of India (RBI) ask banks to set aside incremental provisioning and capital requirements for exposures to entities with unhedged foreign currency exposures?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. How can entities with unhedged foreign currency exposures affect the health of the banking system?

View solution

Q. What is the Exchange Rate (ER)?

View solution

Q. What is the main objective of the Foreign Exchange Market (FEM)?

View solution

Q. Which of the following is NOT a type of transaction in the foreign exchange market?

View solution

Q. In a spot transaction, when is the settlement date relative to the transaction date?

View solution

Q. What is a characteristic of a Forward Transaction?

View solution

Q. What is the "Spread" in the foreign exchange market?

View solution

Q. What does "Cross rates" refer to in the foreign exchange market?

View solution

Q. Which of the following is NOT a technique of Exchange Rate forecasting?

View solution

Q. What is the first level of the Foreign Exchange Market (FEM)?

View solution

Q. What is Purchasing Power Parity (PPP)?

View solution

Q. In case of US dollar what will be the settlement date in a spot transaction?.

View solution

Q. Which of the following type of forecasting is greatly used by MNCs for prediction of future value?

View solution

Q. What is the ISO code for US dollar?

View solution
View All MCQs on IC 89 Management Accounting

Recommended Subjects

Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!

Analytical Instrumentation

Dive into the world of precise measurements with our Analytical Instrumentation...

Logical Reasoning

Enhance your logical thinking and decision-making abilities with our Logical...

Mechanical Engineering

Explore the world of Mechanical Engineering with our specialized category. Dive into...

Biochemical Engineering

Master the synergy of biology and engineering with our Biochemical Engineering...

DC Machines

Dive into the fundamentals of direct current (DC) machines with our specialized...

UIDAI Aadhaar Supervisor Certification

Prepare for the UIDAI Aadhaar Supervisor Certification with our specialized category....

IC22 Life Insurance Underwriting

Prepare for success in the Insurance Institute of India (III) examination with IC22...

Mass Transfer

Delve into the science of Mass Transfer with our specialized category. Explore...

Fluid Mechanics

Unlock the mysteries of fluids and their behavior with our Fluid Mechanics category....