Volume : 9, Issue : 4, April - 2020

The Issues, Challenges and Suitability in Implementation of Basel-III Regulations

Dr. Sanjay Kumar Hooda

Abstract :

Bureau of International Settlement (BIS,) was established to enhance the financial stability and the quality of banking supervision by improving cooperation among Central Banks of the Group of 10 Countries. In 1974, a Committee was established by the Governors of Central Banks of the Group of 10 Countries after the major financial crisis globally. Later on, the committee was renamed as Basel Committee on Banking Supervision (BCBS). In 1988, the BCBS evolved formal framework of banks capital structure of the introduction to the “International Convergence of Capital Measurement and Capital Standards”, worldwide known as Basel-I. In 2004, Basel Committee on Banking Supervision (BCBS) came out a comprehensive framework of capital regulation after several discussions and revising multiple drafts which known as Basel-II. But after the world-wide financial crisis in 2007-08, the Basel-II became inappropriate to cover the different types of hurdles and risks in the banking supervision. To get over that major problem, the BCBS introduced Basel-III framework of year 2010 and further revised in June 2011. The main aim of the implementation of Basel-III were to improving the banks loss absorption capacity, increase in the short term liquidity coverage, to remove the capital growth barriers, increase the ROE and ROA and proper implementation of conservation buffer and counter cyclical buffer with the comparison of 0% level of Retained Earnings (Conservation Ratios).