Saturday, August 11, 2012

RBI Releases Guidelines on Implementation of Basel III

The RBI has released the final guidelines on implementation of Basel III Capital Regulations in India on 2nd May, 2012. Basel III will be implemented in India over a sufficiently long transition period to avoid any unintended consequences on growth and lending activities of banks.

The quantum of capital that would be required by Indian banks due to implementation of Basel III capital standards depends on factors like:
  • actual economic growth in the real sector,
  • growth in the Risk Weighted Assets of the banks,
  • profitability of banks and the extent of retained earnings,
  • level of non-performing assets,
  • growth in capital markets,
  • investors’ risk appetite and their confidence in the banking sector.