RBI to issue guidelines for Basel III implementation

"The RBI is examining the Basel III regulations and will issue guidelines to the extent applicable for banks operating in India in due course of time," the RBI's annual report said.

Basel III is the new regulatory framework designed to correct the deficiencies in regulation that led to the global financial crisis of 2008.

It is to be noted that in the wake of financial crisis, the Basel Committee on Banking Supervision (BCBS) has initiated several post-crisis reform measures, mainly in terms of building on the Basel II capital adequacy framework.

Though Basel III can be viewed as a modification of the Basel II framework, it differs significantly in terms of its comprehensiveness, it said.

"The RBI would adhere to internationally agreed phase-in period starting in January 1, 2013, for implementation of Basel III," it said.

Implementation of the Basel III norms is scheduled to commence from January 1, 2013, and has to be completed by January 1, 2019.

Apart from revising the definition of regulatory capital, it said Basel III is much wider in terms of its risk coverage clauses and encompasses measures to address systemic risks.
The RBI observed that implementation of Basel III has thrown up significant challenges for both banks and banking supervisors alike.

It said that availability of an adequate amount of capital, both in terms of quality and quantity, "provides significant comfort to begin implementation of the new framework" as per the time schedule fixed by the BCBS.