MONEY AND BANKING

SUBMITTED BY
SAHIBZADA AZMAT ULLAH

CLASS : BB (HONS)
SEMESTER 6TH
SECTION : B
ROLL : NO : 84

SUBMITTED TO
MR .AMIR HUSSAIN
 ASSIGNMENT
BASEL COMMITTEE ,BASEL I ,BASEL II ,BASEL III
Introduction of Basel Committee :

 Basel is a city in Switzerland which is also the headquarters of Bank for International Settlement
(BIS).
 The Bank for International Settlements (BIS) established on 17 May 1930, is the world's oldest
international financial organization. There are two representative offices in the Hong Kong and
in Mexico City.
 In Basel-Governors of central Bank's of G10 countries had a meeting and they formed a
committee Named (BCBS) BASEL COMMITTEE ON BANKING SUPERVISION, Formed in
1974
 The Group of Ten is made up of eleven industrial countries (Belgium, Canada, France, Germany,
Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom and the United States)
which consult and co-operate on economic, monetary and financial matters.
OBJECTIVE OF BASEL COMMITTEE :

 The purpose of the committee is to ensure that financial institutions (FI) have
enough capital to absorb unexpected losses.
 Car and rwa:

 CAR/CRAR-Capital Adequacy Ratio/Capital to Risk Weighted Asset Ratio RWA-Risk Weighted

Assets

 ➡Formulae for CAR = Total Capital * 100

RWA
 Risk in Home Loan (HL). -50%
 Risk In Government Loan (GL) -0%
 Risk in Gold Loan. - 10%
 BASEL-I

 Implemented in 1988
 Main focus on Credit Risk (Other Risks were not Focused)
 Minimum Capital i.e. CAR is 8%
 India Adopted BASEL I in 1999
 BASEL-II

 Implemented in 2004
 Banks should maintain a minimum CAR of 8% of risk assets
 Banks were needed to develop and use better risk management techniques in monitoring and
managing all the three types of risks

THE THREE TYPES OF RISK ARE :

Operational Risk :
 Risk of loss Resulting from inadequate or failed internal processes, people and system
 BASEL-II:

Market Risk :
 The Risk where Investment Value will decrease due to fluctuations in the market
 In this risk there are many events on which we have no control.
 Eg Spread of Corona Virus, Political Instability, Floods, Corona Virus, Economic Sanctions

Capital Risk :
Capital risk is the potential of loss of part or all of an investment.
 Banks need to mandatory disclose their risk exposure, etc to the central bank.
 BASEL-II:

THE THREE PILLARS OF BASEL-2

MCR SRP MD
Minimum Capital Supervisory Market Discipline
Requirement Review Process
Here MCR to be RBI will analyse the Banks, that In this case, banks will
maintained in the weather they are maintaining disclose all the details of
form of CAR same as the CAR or not their History to RBI
BASEL1 Norms If not, RBI will take required Eg:-Total loans given
actions Total RWA etc etc
 BASEL-III

 Implemented in Dec 2010, Fully developed and functional in 2011

 introduced in response to the financial crisis of 2008.
 MEASUREMENT- Improve the banking sector ability to absorb shocks arising from
financial and economical stress
 Minimum Capital i.e. CAR is 9%