Compliance and Regulatory Manager Interview Questions and Answers

Off balance sheet items in banks are financial instruments or contingent liabilities that do not appear on the bank's balance sheet.

• Loan commitments

• Letters of credit

• Derivatives contracts

• Securitization transactions

• Standby letters of credit

LCR & NSFR are regulatory requirements that banks must meet to ensure they have enough liquidity to withstand financial stress.

• LCR stands for Liquidity Coverage Ratio and measures a bank's ability to meet its short-term obligations with high-quality liquid assets.

• NSFR stands for Net Stable Funding Ratio and assesses a bank's long-term stability by comparing available stable funding to required stable funding.

• The purpose of LCR and NSFR is to ensure banks have enough liquidity...read more

A forward rate agreement (FRA) is a financial contract between two parties to exchange interest rate payments based on a specified notional amount and a predetermined interest rate.

• FRA is a derivative contract where one party agrees to pay a fixed interest rate while the other party agrees to pay a floating interest rate based on a notional amount.

• It helps in hedging against interest rate risk by locking in a future interest rate.

• FRAs are typically settled in cash at the begi...read more