![For the T+1 settlement, RBI revised banks' capital market exposure norms For the T+1 settlement, RBI revised banks' capital market exposure norms](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ4DrliO4yubJWMVhKNT1bldbNwmKP1YdeUTQ-8McwdWgm_IUQCEll__CJvewxYcRs5y51msk2M6WX7wD_1Q3R_yaz5wU9g7ctDAEMX_Xg-iZMdT9vDNZlvCeyw_bAOWQIvzvS3pfANWe-BlFh6jyqF-ikfVmgMBf3zRTcC41yDYDHu4eC7GitpcmivD_g/w320-h192-rw/Copy%20of%20Copy%20of%20Copy%20of%20Copy%20of%20Copy%20of%20Untitled%20(500%20%C3%97%20300%20px)%20(500%20%C3%97%20280%20px)%20(500%20x%20300%20px)%20(1).png)
- Here’s what the new rules say:
- Banks can only risk up to 30% of the money they are moving around in the stock market in a day.
- This 30% limit is based on the possibility that stock prices could fall by 20% in a day, with an extra 10% buffer just in case.
- Banks can only promise to pay money (issue IPCs) if they have a right to the stocks that are being bought or sold.
- If a transaction is pre-funded, which means the money is already available, then the bank doesn’t need to have a right to the stocks.
- If a bank has paid a margin in cash, then its exposure is reduced by the amount of the margin paid.
- If any exposure remains at the end of the day, the bank needs to have enough capital to cover it.
Question:
Q.1 According to the new rules, what is the maximum risk banks can take in the stock market in a day?a. 10%
b. 30%
c. 20%
d. 40%