Tuesday, 11 February 2025

Liquidity Coverage Ratio (LCR)

 Netzarim Corridor

As part of the Israel-Hamas ceasefire agreement, Israel has agreed to withdraw its forces from the Netzarim corridor.

About the Netzarim Corridor:

  • The Netzarim corridor is a 6-kilometer-long stretch that controls key access points between northern and southern Gaza.
  • It stretches from the Israeli border in the east to the Mediterranean Sea in the west.
  • The corridor runs through the center of the Gaza Strip and is situated just south of Gaza City.
  • Other Corridors: Philadelphi Corridor and Rafah Corridor.

Liquidity Coverage Ratio (LCR)

The Reserve Bank of India (RBI) has deferred the implementation of Liquidity Coverage Ratio (LCR) norms by one year, providing significant relief to banks.

About LCR:

  • The Liquidity Coverage Ratio (LCR) is a crucial reform under Basel III, a set of international banking regulations developed by the Basel Committee on Banking Supervision. These norms focus on capital adequacy, risk management, and financial stability.

  • Objective: To ensure banks maintain an adequate stock of High-Quality Liquid Assets (HQLAs) to meet liquidity needs during a 30-day stress scenario.

  • Purpose: To enhance the short-term resilience of banks' liquidity risk profiles.

  • Impact: The LCR reduces the money supply by requiring banks to hold a larger proportion of highly liquid assets.

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