India has stricter regulatory norms: Basel

  1. According to the findings of the Basel Committee on Banking Supervision (BCBS),Reserve Bank of India’s(RBI) norms on large exposures(LEX) for banks are compliant with the Basel requirements.
  2. The assessment was conducted by the Regulatory Consistency Assessment Programme(RCAP).
  3. The assessment focused on the completeness and consistency of the domestic regulations enforced by RBI on commercial banks in India.
  4. The report has said that while Basel large exposures framework limits the sum of all exposures of a bank to a single counterparty to 25% of Tier 1 capital,Indian regulations establish the large exposure limit at 20%.
  5. Further,Indian banks exposures to global systemically important banks are subject to stricter limits which is in line with the letter and spirit of the Basel Guidelines.
  6. Basel Committee on Banking Supervision(BCBS) is the primary global standard setter for the prudential regulation of banks.It has 45 members comprising central banks and bank supervisors from 28 jurisdictions.
  7. Basel III is an internationally agreed set of measures developed by the BCBS in response to the financial crisis of 2007-09.The measures aim to strengthen the regulation, supervision and risk management of banks.
  8. RCAP was established by the Basel Committee in 2011.RCAP assessments aim to ensure that each member jurisdiction adopts the Basel Framework in a manner consistent with the Framework’s letter and spirit.