UPSC Prelims Practice Questions — U.S. Fed has told big banks not to push back on new capital rules

Q1. As characterised by the US Federal Reserve, the regulatory capital framework that applies to the largest US banks (the framework the 'Basel III Endgame' recalibration works within) rests on how many distinct 'pillars'?

  • A. Three
  • B. Four
  • C. Five
  • D. Six

Q2. The finalised set of post-crisis banking standards that the US 'Basel III Endgame' rulemaking seeks to domestically implement were originally drawn up and published by which body?

  • A. The Basel Committee on Banking Supervision (BCBS)
  • B. The Financial Stability Board (FSB)
  • C. The International Monetary Fund (IMF)
  • D. The Federal Reserve Board of Governors

Q3. Which one of the following best describes the principal role of the Basel Committee on Banking Supervision (BCBS)?

  • A. It is the primary global standard-setter for the prudential regulation of banks
  • B. It acts as the lender of last resort to globally systemic banks
  • C. It operates as a global deposit-insurance fund for cross-border banks
  • D. It issues a single, legally binding global banking licence

Q4. The final tranche of post-crisis Basel III reforms—whose US implementation is popularly termed the 'Basel III Endgame'—was published by the Basel Committee on Banking Supervision in which year?

  • A. 2010
  • B. 2013
  • C. 2017
  • D. 2019

Q5. The indicator-based methodology used to identify Global Systemically Important Banks (G-SIBs) assesses systemic importance across several categories. Consider the following: 1. Size 2. Interconnectedness 3. Cross-jurisdictional activity 4. Profitability Which of the above are correctly identified as assessment categories under this methodology?

  1. Size
  2. Interconnectedness
  3. Cross-jurisdictional activity
  4. Profitability
  • A. 1, 2 and 3 only
  • B. 1, 2 and 4 only
  • C. 3 and 4 only
  • D. 1, 2, 3 and 4

Q6. With reference to the G-SIB capital surcharge framework, consider the following statements: 1. The additional loss-absorbency surcharge ranges from 1% to 3.5% of additional Common Equity Tier 1 capital. 2. G-SIBs are designated annually using a Basel Committee indicator-based methodology. 3. The surcharge must be met with additional Common Equity Tier 1 capital. 4. The annual global list of G-SIBs is published by the International Monetary Fund. Which of the above statements is NOT correct?

  1. The additional loss-absorbency surcharge ranges from 1% to 3.5% of additional Common Equity Tier 1 capital.
  2. G-SIBs are designated annually using a Basel Committee indicator-based methodology.
  3. The surcharge must be met with additional Common Equity Tier 1 capital.
  4. The annual global list of G-SIBs is published by the International Monetary Fund.
  • A. 1 only
  • B. 2 only
  • C. 3 only
  • D. 4 only

Q7. With reference to the March 2026 re-proposal of the Basel III Endgame and GSIB surcharge rules in the United States, consider the following statements: 1. It was jointly issued by the Federal Reserve, OCC and FDIC on 19 March 2026. 2. It rescinded the strict 2023 Basel III Endgame proposal. 3. The comment period on the re-proposals closes on 18 June 2026. 4. It is expected to raise the aggregate level of capital across the US banking system. Which of the above statements are correct?

  1. It was jointly issued by the Federal Reserve, OCC and FDIC on 19 March 2026.
  2. It rescinded the strict 2023 Basel III Endgame proposal.
  3. The comment period on the re-proposals closes on 18 June 2026.
  4. It is expected to raise the aggregate level of capital across the US banking system.
  • A. 1, 2 and 3 only
  • B. 1 and 4 only
  • C. 2, 3 and 4 only
  • D. 1, 2, 3 and 4

Q8. The March 2026 re-proposed Basel III Endgame and GSIB surcharge capital rules in the United States were jointly issued by which set of agencies?

  • A. Federal Reserve, Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC)
  • B. Federal Reserve, Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC)
  • C. OCC, FDIC and National Credit Union Administration (NCUA)
  • D. Federal Reserve, US Treasury and Securities and Exchange Commission (SEC)

Q9. How many primary federal bank regulators share responsibility for the safety-and-soundness supervision of banks in the United States?

  • A. Two
  • B. Three
  • C. Four
  • D. Five

Q10. With reference to the Reserve Bank of India's implementation of Basel III, consider the following statements: 1. Basel III capital regulations have been implemented in India in a phased manner from 1 April 2013. 2. Banks in India must maintain a minimum total Capital-to-Risk-Weighted-Assets Ratio (CRAR) of 9%. 3. SBI, HDFC Bank and ICICI Bank are currently identified as Domestic Systemically Important Banks (D-SIBs). 4. The additional D-SIB capital requirement is to be met entirely out of Tier 2 capital. Which of the above statements are correct?

  1. Basel III capital regulations have been implemented in India in a phased manner from 1 April 2013.
  2. Banks in India must maintain a minimum total Capital-to-Risk-Weighted-Assets Ratio (CRAR) of 9%.
  3. SBI, HDFC Bank and ICICI Bank are currently identified as Domestic Systemically Important Banks (D-SIBs).
  4. The additional D-SIB capital requirement is to be met entirely out of Tier 2 capital.
  • A. 1, 2 and 3 only
  • B. 1 and 4 only
  • C. 2, 3 and 4 only
  • D. 1, 2, 3 and 4

Q11. In the US Federal Reserve, the office of 'Vice Chair for Supervision'—the post held by Michelle Bowman during the 2026 capital-rules episode—is primarily responsible for which of the following?

  • A. Developing policy recommendations for the supervision and regulation of banks
  • B. Setting the federal funds rate and conducting monetary policy
  • C. Insuring bank deposits and resolving failed banks
  • D. Chartering and supervising nationally chartered banks