Best Systemic and Prudential regulator

Keeping in check, the build-up of systemic risk in the system- safeguarding the so called “too big to fail” financial institutions, the collapse of any one of which can paralyze the entire financial system- is understood to be the job of the macro- prudential regulator responsible for the oversight of all deposit-taking institutions. This scorecard assesses how the regulator perceives its own role, whether it has the capability to carry out that role and if it does a good job in fulfilling that role. In this scorecard we rely heavily on the philosophy of looking at what the regulator does rather than the approach it uses as evidenced in evaluating dimensions that take into account, the health of the systemically important institutions being regulated.

Evaluating Dimension Weightage (%)
1. Self-defined scope of coverage 20
  Clarity in defining policy on intervention
  Transparency and consistency in conduct
2. Independence and governance 10
  Appointment procedures of senior staff of the agency
  Quality of accountability mechanisms (if any)
3. Profile of institutions regulated 10
  Number of institutions
  Total loans as a percentage of GDP
  Market share of top 10 ( if applicable) by total assets
4. Quality of institutions regulated 20
  Current average CAR (Tier 1) of the top banks representing more than 70% of the country’s total bank assets
  Current average NPL ratio of the top banks representing more than 70% of the country’s total bank assets
  Current average LTD ratio of the top banks representing more than 70% of the country’s total bank assets
5. Control of foreign institutions operating in the country 10
  No. of full license foreign institutions in the country
  Percentage of total assets of the banking system held by foreign institutions [More assets, system more susceptible to systemic risk]
6. Coordination with other agencies (central bank, government etc.) 10
7. Quality of recent systemic risk aversion exercise 20
  Was there one?
  Was it necessary?
  Was it handled well?
  Final Score 100
Related Events
 
Important Links
The Risk and Regulation Working Group
Award Winners 2016
   
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