BASEL III REQUIREMENTS AND COMPLIANCE BY THE INDIAN BANKING SECTOR

Abstract

The formal framework for banks capital structure evolved in 1988 with an introduction of Basel I followed by Basel II, and the latest guidelines, Basel III. Basel III requirements require banks to enhance their capital structure and hold more reserves to face the credit risk prudently. It was perceived that compliance of Basel III would be a challenge for Indian banking industry and hence the study of compliance of Basel III accord was demanded. The present paper aims to compare the implemented Basel III requirement for Public and Private Banks in India with the stipulated requirements as specified by the RBI and the compliance after the adoption of Basel III. Our result shows that the Indian banks, across both sectors have high compliance of the Basel III than those prescribed by the RBI. The new literature we add on capital and credit risk will help to undertake precautionary steps to manage credit risk and capital prudently, and also aid the bank regulators in revising their policies.