Basel III Norms and Indian Banking System

International financial markets were facing a rough time in 1970s. In response of this, the central bank governors of G 10 countries established a Committee on Banking Regulations and Supervisory Practices which was later renamed as Basel Committee on Banking Supervision. This committee works for enhancing the financial stability by improving the quality of banking supervision worldwide. In 1988, Basel I norms were adopted to strengthen the soundness and stability of the international banking system and to mitigate competitive inequalities. In June, 2004, BCBS published Basel II guidelines, which were based on three parameters-Capital adequacy requirements, supervisory review and market discipline. In 2010, Basel III guidelines were released in response of the financial crisis of 2008, to strengthen the banks which were under-capitalised, over-leveraged. The present paper begins with building a common understanding of the concept of Basel norms, then an attempt is made to understand the impacts of Basel norms on banking system in India.