What is the meaning of "hair cut" in Basel II? - ProProfs Discuss
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What is the meaning of "hair cut" in Basel II?



A. A haircut is a percentage that is subtracted from the PAR value of the assets that are being used as collateral
B. The size of the haircut depends on the riskiness of the security offered as collateral
C. Deduction from Capital
D. Deduction from risk weight
E. A & B above

This question is part of N.Rangarajans Model Online Test for Promotion in Banks (India)
Asked by Rajatvk, Last updated: Jan 22, 2020

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2 Answers

e.Ronald

E.Ronald

Answered Jan 03, 2018

It hasn’t been so long ago that banks were in trouble. I believe it was around 2008. Also don’t forget about the Great Depression and the run on banks back then. No one wants to ever...Read More
 

John Smith

John Smith

Answered Feb 22, 2017

A & B above
 

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