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RMFI Math Solution | AIBB | Leverage Ratio | RMFI #leverage #leverageratio
(AIBB), Banking Diploma Exam.

Question:8(B) Based on the following information A Bank please calculate the Liquidity Coverage Ratio(LCR) for 2019 & 2020 and make your comment on the adequacy of the ratios as per Basel III accord
(Figure in crore)
Description year 2019 year 2020
High Quality Liquid Assets 1265 1430
Average Monthly Withdrawal 594 550
Expected Monthly Net Outflow in a 1100 1320
stress scenario

Solution:8(b)
Liquidity Coverage Ratio(LCR) = (Stock of High-Quality Liquid Assets / Total Net Cash outflow over the next 30 Calendar Days)

LCR for the Year 2019 = (1265/1100) * 100 = 115 %

LCR For the Year 2020 =( 1430/1320)*100 =108.3333333 %

Comments: According to the Basel III accord Bank has to Maintain an LCR of 100% or More, Both LCRs are Accepted because both the year's LCR is more than 100%. LCR for the year 2020 has decreased and that’s why LCR for the year 2019 is more well than 2020. So LCR 2019 is Accepted.