Module: | MODULE B: RISK MANAGEMENT
Q441: Under the 2025/2026 Reserve Bank of India finalized framework for the Liquidity Coverage Ratio, a bank has 1,000 crore in stable retail deposits fully enabled with internet banking and UPI. It also has 1,000 crore in less stable retail deposits enabled with internet banking.
Calculate the total expected cash outflow assigned to these specific deposits in the Liquidity Coverage Ratio denominator.
✅ Correct Answer: B
The correct answer is B. Based on the Reserve Bank of India's recent regulatory updates operationalized in 2025/2026 to combat digital bank runs, retail deposits with internet and mobile banking (UPI) capabilities attract an additional 5% run-off factor.
Stable retail deposits with digital capabilities now attract a 10% run-off (up from the baseline 5%). Less stable retail deposits with digital capabilities attract a 15% run-off (up from 10%). For the 1,000 crore stable digital deposits, the expected outflow is 10% (100 crore). For the 1,000 crore less stable digital deposits, the expected outflow is 15% (150 crore). The total expected cash outflow required for the LCR denominator is 100 + 150 = 250 crore.
Stable retail deposits with digital capabilities now attract a 10% run-off (up from the baseline 5%). Less stable retail deposits with digital capabilities attract a 15% run-off (up from 10%). For the 1,000 crore stable digital deposits, the expected outflow is 10% (100 crore). For the 1,000 crore less stable digital deposits, the expected outflow is 15% (150 crore). The total expected cash outflow required for the LCR denominator is 100 + 150 = 250 crore.