Implementation of Basel Capital Ratios by Indian Banks

In 2010, central banks, in conjunction with the Basel Committee on Banking Supervision, proposed new capital standards: Basel III, to supplement Basel I and II. Guidelines issued by the Reserve Bank of India required Indian banks to begin following Basel III standards in 2013. Full implementation is expected by 2019. This study examines Basel I, II and III’s impact on Indian banks. We find transitioning from Basel I to Basel II had the greatest impact on foreign banks because the new standards required additional capital reserves for market and operational risk.