BASEL NORMS
Basel committee is named after the Basel city in Switzerland where Bank for International Settlements(BIS) headquartered.After 1930 recession .it's increase to assist to central bank and internatnational monetary policy creation.
Recommendations framed by the Basel Committee but by the National law Bas-el committee consists of representatives of central bank and regulatory authori-ty of ten member countries
BaselCommitee has given three Basel Norms named Basel I, Basel II and Basel III.
1. Basel I:-Basel I is also known as 1998 Basel Accords. As in 1998 Basel Committee on Banking Supervision (Risk Wrighted Assets) published a set of minimum capital requirement of banks with a goal of minimizing capital risk.it's defined 8% on teir1&tier2.
India adopted Basel recommendati-ons in 1991
2. Basel II:-It is the second international banking regulatory accord. Basel II is the expanded rules for minimum capital requirement established under Basel Committee on Banking Supervision.
Basel II accord based on the three pillars: Minimum capital requirement, supervisory review and market discipline.
Minimum Capital Requirement: it is the first pillar of Basel I accord. Under this regulatory capital is maintained which is calculated for the major components of risk that a bank faces. The risk involved is credit risk, operational risk and market risk.
Supervisory View: It is the second pillar of Basel II accord. It provides framework for national regulatory bodies to deal with various types of risk such as systematic risk, liquidity risk and legal risk.
Market Discipline: It provides various disclosure requirement for the bank such as risk exposures, risk assessment process and capital adequacy.
In India Basel II norms are impleme -nted by Reserve Bank o f India on 31 March 2009.
3. Basel III:-In late 2009 the first version of Basel accord is published by Basel Committee on Banking Supervision. It aims to promote a more flexible banking system by focusing on four vital banking parameters viz. capital, leverage, funding and liquidity.it's rate defined for private bank 12% Public bank for 9%.
Purpose:
To improve banking sector’s ability to deal with financial stress
To improve risk management
To strengthen the bank’s transparency
In India Reserve Bank of India has extended the timeline for full implementation of the Basel III capital regulations by the year to 31 March 2019.
Recommendations framed by the Basel Committee but by the National law Bas-el committee consists of representatives of central bank and regulatory authori-ty of ten member countries
BaselCommitee has given three Basel Norms named Basel I, Basel II and Basel III.
1. Basel I:-Basel I is also known as 1998 Basel Accords. As in 1998 Basel Committee on Banking Supervision (Risk Wrighted Assets) published a set of minimum capital requirement of banks with a goal of minimizing capital risk.it's defined 8% on teir1&tier2.
India adopted Basel recommendati-ons in 1991
2. Basel II:-It is the second international banking regulatory accord. Basel II is the expanded rules for minimum capital requirement established under Basel Committee on Banking Supervision.
Basel II accord based on the three pillars: Minimum capital requirement, supervisory review and market discipline.
Minimum Capital Requirement: it is the first pillar of Basel I accord. Under this regulatory capital is maintained which is calculated for the major components of risk that a bank faces. The risk involved is credit risk, operational risk and market risk.
Supervisory View: It is the second pillar of Basel II accord. It provides framework for national regulatory bodies to deal with various types of risk such as systematic risk, liquidity risk and legal risk.
Market Discipline: It provides various disclosure requirement for the bank such as risk exposures, risk assessment process and capital adequacy.
In India Basel II norms are impleme -nted by Reserve Bank o f India on 31 March 2009.
3. Basel III:-In late 2009 the first version of Basel accord is published by Basel Committee on Banking Supervision. It aims to promote a more flexible banking system by focusing on four vital banking parameters viz. capital, leverage, funding and liquidity.it's rate defined for private bank 12% Public bank for 9%.
Purpose:
To improve banking sector’s ability to deal with financial stress
To improve risk management
To strengthen the bank’s transparency
In India Reserve Bank of India has extended the timeline for full implementation of the Basel III capital regulations by the year to 31 March 2019.
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