This assessment will be underpinned by the Central Bank’s enhanced Consumer Protection Risk Assessment model which helps us determine how financial firms identify and manage consumer risks, including the risk that a firm’s culture does not promote and support the protection of consumers.
After such requirement is imposed, the banks that have inadequate capital and have difficulties in strengthening their capital base must reduce the growth of their risk assets. Without effectively lowering the risk weight of the assets, they will have to tighten their balance sheets. So they may offer lower interest rate on the deposits. Third, further relaxing the regulation on interest rates.