• Basel norms, or Basel Accords, are the international banking regulations issued by the Basel Committee on Banking Supervision.
  • The Basel norms are an effort to coordinate banking regulations across the globe to strengthen the international banking system.
  • It is the set of agreements by the Basel Committee on Banking Supervision that focuses on the risks to banks and the financial system.

Norms 

  • Basel I Norms
    • The first Basel Accord, known as Basel I, was issued in 1988
    • It focused on credit risks and defined capital and the structure of risk weights for banks
    • The minimum capital requirement was fixed at 8% of the Risk-Weighted Assets (RWA)
  • Basel II Norms
    • It is the refined and reformed version of Basel I, which was published in 2004.
    • It defined 3 types of risks – Operational Risks, Credit Risks, and Market Risks.
    • Its 3 main pillars of Basel II were as follows:
  • Basel III Norms
    • Basel III guidelines were released in December 2010 in the backdrop of the financial crisis of 2008.
    • The guidelines aim to promote a more resilient banking system by focusing on four vital banking parameters, viz. capital, leverage, funding, and liquidity.

 

Source: The Hindu

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