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Q5: If a foreign bank operating as a branch in India is designated as a Global Systemically Important Bank (G-SIB) by its home regulator, how is its additional Common Equity Tier 1 (CET1) capital surcharge in India determined?

A
It is exempt from Indian surcharges as it is regulated by its home country.
B
It must maintain a flat 1.00% surcharge in India regardless of its G-SIB status.
C
It must maintain an additional surcharge in India proportionate to its Risk Weighted Assets (RWAs) in India.
D
It must maintain the same absolute capital amount in India as it does in its home country.
✅ Correct Answer: C
Foreign G-SIBs must maintain additional CET1 capital in India.
This is calculated based on the G-SIB surcharge prescribed by their home regulator, applied to their Indian operations' Risk Weighted Assets (RWAs), ensuring parity with the Domestic Systemically Important Bank (D-SIB) rules.
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