లిక్విడిటీ (LCR, NSFR) & రిజులేటరీ రిపోర్టింగ్ – ముఖ్య పదాలు

Regulatory Reporting

A systematic process where banks collect, validate, and submit data in report format to meet statutory requirements imposed by regulatory bodies for specific periods.

Variance Analysis

A method used to identify differences (Variance = Actual − Budget) by comparing expected values in a budget with actual results, used for decision-making and resource allocation.

Backtesting

The process of testing the accuracy of a risk model by comparing its projected losses or P&L with actual results.

Stress Test

A method to estimate an institution's loss capacity under adverse conditions such as economic recession, market shock, or war.

Risk Weighted Assets (RWA)

Risk weights assigned to assets to determine a bank's capital requirement; a minimum of $8\%$ capital must be maintained.

Capital Adequacy Ratio (CAR)

$(Tier-1 + Tier-2 \text{ capital}) / RWA$; according to Basel regulations, it must be at least $8\%$ .

Liquidity Risk

The inability to meet short-term liabilities without incurring losses.

Funding Liquidity Risk

Difficulties faced in raising new funds or refinancing outstanding debts.

Market Liquidity Risk

The risk incurred when assets cannot be sold quickly without affecting their price.

Liquidity Coverage Ratio (LCR)

According to Basel III, HQLA / Net Cash Outflows $\geq 100\%$ is required to withstand a 30-day severe stress scenario.

High-Quality Liquid Assets (HQLA)

Assets that can be rapidly converted into cash during any market crisis (classified as Level 1, 2A, 2B).

Haircut

A percentage reduction applied to the asset value in collateral or liquidity calculations, not fully recognized (e.g., $15\%, 25\%$).

Level-1 HQLA

Cash, central bank reserves, AAA-rated government bonds; fully recognized with a $0\%$ haircut.

Level-2A HQLA

AA-rated sovereign or corporate bonds; $15\%$ haircut, can be safely converted in the market.

Level-2B HQLA

Lower-rated bonds, equities, MBS; $25-50\%$ haircut, higher volatility, decreased liquidity.

Total Net Cash Outflows

The value obtained by subtracting cash inflows or $75\%$ of outflows from projected cash outflows over 30 days, taking the minimum.

Net Stable Funding Ratio (NSFR)

Checking the effective stable funding for a 1-year period; ASF / RSF $\geq 100\%$ is required.

Available Stable Funding (ASF)

Customer deposits, long-term loans, equity.