IBPS Career Question , Sbi Question Important ,Basel III Committee on Banking Supervision

Basel III Committee on Banking Supervision

In terms of regulatory requirements, this effort has been concentrated in proposals envisaging three

areas where constraints are being substantially overhauled: regulatory capital, liquidity and leverage.

These proposals were summarized in two Consultation Papers issued by the Basel Committee on Banking

Supervision (BCBS) In December 2009

Basel III proposes many new capital, leverage and liquidity standards to strengthen the regulation, supervision and risk management of the banking sector.

The capital standards and new capital buffers will require banks to hold more capital

and higher quality of capital than under current Basel II rules. The new leverage ratio introduces a non-risk based measure

to supplement the risk-based minimum capital requirements. The new liquidity ratios ensure that adequate funding is

maintained in case of crisis.

Basel III  measures ?

 improve the banking sector's ability to absorb shocks arising from financial and economic stress, whatever the source

improve risk management and governance

 strengthen banks' transparency and disclosures.

Basel  accords deal with risk management aspects for the banking sector.   In a nut shell we can say that Basel iii is the global regulatory standard (agreed upon by the members of the Basel Committee on Banking Supervision)  on bank capital adequacy, stress testing and market liquidity risk.

Basel-III norms, with its underlying proposition of insulating banks from adverse shocks by adequately enhancing the amount of its own capital holding compared to overall deposits and other borrowing can be regarded as an improved and standard set of rules over the existing Basel-II norms.

The new rule comprehensively entails how to assess risks and capital management. A consensus was reached with focus on prevention of any further International Credit Crisis with provisioning more than triple of top quality capital as reserve for addressing any meltdown sort of occurrences.