A Study on Effectiveness of Basel Iii Norms on Indian Banking Industry

Abstract

The BCBS implemented Basel III norms on December 2010 with the sake of protecting the banking companies from the financial and economic crisis and to intensify the banks supervision, regulation and ability to manage the risk. 2007-08 global financial crisis which adversely affected the banking sector, led to the advent of Basel III norms to safeguard the banks against the recurrence of such crisis. As per the RBI guidelines India decided to operationalize the Basel III norms from 31st March, 2015 in different stages and expected to implement entirely by 31st March 2018. But that was a challenging task for Indian banks as well as for the government of India. Hence the complete execution of Basel III norms in India is still pending and RBI decided to extent the timeline of complete enactment of Basel III guidelines within 31st March 2020.In this paper, we have evaluated the likely effect of Basel III implementation on Indian banking industry by establishing the relationship between the parameters suggested by Basel III accord with the total advances, net profits and net non-performing assets. However, India being still under the phase of implementation, the actual impact of Basel III norms on Indian banking companies can be analysed after its complete implementation.