BANKING AFFAIRS

Detailed explanation-1: -Basel III is an international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector by requiring banks to maintain certain leverage ratios and keep certain levels of reserve capital on hand. Begun in 2009, it is still being implemented as of 2022.

Detailed explanation-2: -What are Basel norms? Basel norms or Basel accords are the international banking regulations issued by the Basel Committee on Banking Supervision. The Basel norms is an effort to coordinate banking regulations across the globe, with the goal of strengthening the international banking system.

Detailed explanation-3: -Basel III is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision and risk management of banks.

Detailed explanation-4: -The BASEL norms have three aims: Make the banking sector strong enough to withstand economic and financial stress; reduce risk in the system, and improve transparency in banks. After the 2008 financial crisis, there was a need to update the BASEL norms to reduce the risk in the banking system further.

Detailed explanation-5: -The Basel III accord increased the minimum Basel III capital requirements for banks from 2% in Basel II to 4.5% of common equity, as a percentage of the bank’s risk-weighted assets. There is also an extra 2.5% buffer capital requirement that brings the total minimum requirement to 7% in order to be Basel compliant.