Basel-III: Cost-Benefit analysis for Indian Banks

After the financial crisis of 2008-09, Basel Committee on Banking Supervision (BCBS) suggested implementing the Basel-III accord, which is expected to increase the banking sector’s ability to absorb shocks arising from macro-economic conditions. Basel-III mainly emphasizes the need for additional capital besides maintenance of liquidity and leverage ratios. The additional capital required will result in banks incurring an additional cost. Keeping this in mind, this study attempts to assess whether implementation of the Basel-III accord would yield the expected benefits.

This study quantifies the cost of Basel-III accord implementation to be incurred by Indian banks and macro-economic benefits
expected to be derived from its implementation.

Read Full Article