Technical Paper National level Management Conference, Brindavan College, Bangalore

Basel III: Risk Management in Banking Sector

Author Purushottam Kumar Karna MBA-VTU-3rdSem Brindavan College of Engineering

Date: October 14, 2011

Executive Summary:

After US banking crisis 2008, the banking industry observed some unprecedented outcomes which was resulted from many new risk factors that was neither addressed before by any existing regulations or management practice. These risks are beyond control of much hyped risk management BASEL II accord. So the G20 nations and BIS (Bank for International Settlement) meeting drafted some new measures to handle systemic risk, special forward looking provision for shock absorber , liquidity benchmarks and macro prudential regulations to forewarn banking system against any more crisis in near future.

The concept of Risk management is widened in broader aspect for sustainable banking as new model of bankingservices and complex banking instruments had innovated. This introductory report of BASEL III will provide the holistic study of risk management architecture with its proposed timeframe for implementation. The report also illuminates the capital quality and its ratio, systemic risk and, global liquidity management standard. Finally it gives glimpses about industry preparedness of BASEL III for quality and quantity of regulatory capital of Indian Banks.

Table of Contents

Abstract 1.0 Introduction: Risk management in Banking sector

1.1.0 Risk Management in banking sector 1.2.0 Risk Analysis of Banking sector in Indian Economy

1 2

2.0 BASEL norms in Risk management 2.1.0 BASEL I: Capital Adequacy Framework 2.2.0 BASEL II: 3 pillar approach 3.0 BASEL III: Macro prudential accord 3.1.0 BASEL III: Introduction 3.2.0 BASEL III in Indian banking sector 3.2.1 3.2.2 3.2.3 3.2.4 BASEL III readiness assessment in PSU banks BASEL III readiness assessment in Private banks BASEL III readiness assessment in Foreign banks RBI viewpoint on BASEL III 8 11 12 14 16 17 18 6 4 4

3.2.3 Issues in BASEL III norms 4.0 Conclusion 5.0 Future Enhancement References Researchers Profile: