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    Question

    RBI recently mandated that the NBFCs must constitute

    nomination and remuneration committee (NRC) and this NRC will ensure the implementation of ICAAP- a process to assess bank’s associated risks. What does the “C” stand for in ICAAP?
    A Cost Correct Answer Incorrect Answer
    B Capital Correct Answer Incorrect Answer
    C Consumer Correct Answer Incorrect Answer
    D Credibility Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    RBI issued guidelines for compensation of key managerial personnel and senior management of non-banking finance companies, RBI said that the finance companies have to constitute a nomination and remuneration committee (NRC), which will have the mandate to oversee the framing, review and implementation of compensation policy of the company with the approval of the board. NRC may ensure that compensation levels are supported by the need to retain earnings of the company and the need to maintain adequate capital based on Internal Capital Adequacy Assessment Process (ICAAP). ICAAP (Internal Capital Adequacy Assessment Process) notifies the Board of the current assessment of the bank's risks, how the bank plans to alleviate those risks, and the quantity of current and future capital is needed.

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