Basel Norms : An Introduction

Basel Norms : An Introduction

Bureau of International Settlement (BIS) headquarters at Basel, Switzerland appointed a committee to supervise and to set some standards for International Banks. This committee was named after the location of BIS headquarter , Basel, i.e. Basel Committee on Bank Supervision (BCBS). The rules and regulations for Banks issued by this committee were called Basel Accord or Basel Norms. There are three Basel
Norms, Basel I, II and III .

First Basel Accord (Basel I) :

This was issued in 1988. This accord focused on the capital adequacy of financial institutions. Banks that operate internationally are required to have a risk weight of 8% or less. India adopted Basel I Norms in the year 1999.

Second Basel Accord (Basel II) :

This is the second of the Basel Accords, published in the year 2004. This consists of the recommendations on Banking Laws and Regulations issued by BCBS.

Third Basel Accord (Basel III) :

Basel III guidelines were released in the year 2010. This is to enhance the banking regulatory framework. It builds on the Basel I and Basel II documents and seeks to improve the banking sector's ability to deal with financial and economic stress, improve risk management and strengthen the bank and its transparency. Basel III is aimed at greater resilience at the individual bank level to reduce the risk of system wide shocks.
The deadline for implementation of Basel III accord in India is March 2019 .


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