BASEL III NORMS AND INDIAN BANKS –A NEW DEFINITION OF RISK MANAGEMENT

The Reserve Bank of India is a member of BASEL committee based in Basel, Switzerland. Basel III norms are the guidelines which are framed by this committee. The main aim of Basel III is to overcome the loopholes of previous norms and to tighten up the banking system all over the world .The three pillars of Basel II still standing in Basil III i.e. Capital requirement ,Supervisory Review and Market discipline .Basel III focus towards the risk in banking sector. It aims to fill up the gaps in Basel II guidelines. These guidelines will ensure that the banks are sufficiently capitalized, have better liquidity and are ready to manage all types of risks, thereby strengthening the banks transparency. The Basel III norms are notified by RBI on May 2012, made effective from January 2013 in a phased manner and will be implemented fully from 31st March 2018.The components of Basel III are Capital Ratio Targets, RWA Requirements and Liquidity standards.