Compliance of Basel Norms

Abstract

Economic growth and sustainable development is not possible without the role of banking newlinesector. Approximately 40% of the national savings deployed in bank deposits, thus, the newlinedependency on banking is consistently mounting day-to-day which ensures high risk newlinesensitivity for the banks to manage its financial obligations. Competition, market newlinevolatility, time liability etc., leads to financial crisis as an impact of under-estimation of newlinerisk. Countries like America and other developed nations had already experienced this. As newlinea result, a reactive measure required to reinforce the stability of the financial system newline(especially banks). Consequently, concerned government and respective institutions newlineentered with prudential norms (Banking Regulation) indulge a goal to ensure financial newlinestability of individual institution and a safe and sound banking in order to protect the newlineinterest of the depositors and to promote healthy and stable investment environment in the newlinefinancial system. In this backdrop, capital adequacy obligations possess critical role in newlineaugmenting the banks efficacy. newlineWith the global co-ordination (G-10 countries), Basel I, a capital adequacy requirement, newlineformed by the Basel Committee on Banking Supervision (BCBS), under the auspices of the newlineBank for International Settlements (BIS). Due to the external environmental forces and newlineeconomic shocks results strong amendments in the consequent years. At last, the Basel newlinecommittee have proposed Basel III regime to ensure that financial institutions maintain newlinesufficient capital and liquidity buffers. newline