It contains History of BASEL objective of RBI guidelines of RBI ON various sectors

1. History of BASEL
Sudhakaran T
M.Com 1st year
APS college of commerce
bengaluru
Presented By-

2. Content
 Introduction
 History of BASEL
 BASEL 1
 BASEL 2
 BASEL 3
 Objectives of RBI
 Guidelines of RBI

3. BASEL
Basel is a set of international banking regulations establishe
the Basel Committee on Banking Supervision (BCBS). It
prescribes minimum capital requirements for financial
institutions, with the goal of minimizing credit risk. Under Ba
banks that operate internationally were required to mainta
least a minimum amount of capital (8%) based on their risk
weighted assets. Basel I is the first of three sets of regulation
known individually as Basel I, II, and III, and collectively as
the Basel Accords.

4. story of BASEL

5. Failure of Bretton wood system
Bretton Woods System – 1944
- -IMF
- - World Bank
- - System of fixed exchange rates
- In 1973, Bretton Woods System led to causalities in
German Banking System and UK's Banking system
with huge amount of foreign exchange exposures
which was more than the capital of the banks.

6. BASEL committee-1974
 The central bank governors of the G10 countries established
a Committee on Banking Regulations and Supervisory
Practices.
 The group of ten countries consist of Belgium, Canada,
France, Germany, Italy, Japan, the Netherlands, Sweden, the
United Kingdom and the United States, Switzerland was
also included as part of the group.
 Later renamed as the Basel Committee on Banking
Supervision (BCBS).
 The Basel Committee on Banking Supervision provides a
forum for regular cooperation on banking supervisory
matters.
 Its mandate is to strengthen the regulation, supervision and
practices of banks worldwide with the purpose of
enhancing financial stability.

7.  Basel Committee on Banking Supervision (BCBS)
came into being under the patronage of Bank for
International Settlements (BIS), Basel, Switzerland.
 The Committee formulates guidelines and provides
recommendations on banking regulation based on
capital risk, market risk and operational risk.
● Currently there are 27 member nations in the
committee.
● Basel guidelines refer to broad supervisory
standards formulated by this group of central
banks- called the Basel Committee on Banking
Supervision (BCBS).
● The set of agreement by the BCBS, which mainly
focuses on risks to banks and the financial system
are called Basel accord.

8.  The purpose of the accord is to ensure that financial
institutions have enough capital on account to meet
obligations and absorb unexpected losses. India has
accepted Basel accords for the banking system.
 Credit Risk - Credit risk is most simply defined as
the potential that a bank's borrower or counterparty
may fail to meet its obligations in accordance with
agreed terms.
 Market Risk - Market risk refers to the risk to a bank
resulting from movements in market prices in
particular changes in interest rates, foreign
exchange rates and equity and commodity prices.

9. bjectives
RBI

10. ● The Reserve Bank of India was set up with the primary maxim
of managing all the banks in India. The goal was to hold
under control the reserves as well as the issue of
banknotes.
● Along these lines, it was done to make sure about the
financial stability and in this way to work the credit system
and currency of the nation for its potential benefit.
● The essential objective for the Reserve Bank of India is to
direct the different financial functions for India in the money
market. Therefore, they concentrate especially on issuing
new notes.
● Consequently, the RBI was set up with the point of being a
banker's bank and similarly the bank for the government. It
aimed to expand the economic progress of the nation
through different structures and economic policies of the
government.

11. ● To manage the monetary and credit system of India.
● To stabilize internal and external value of rupee.
● To balance and systematically develop the banking
sector in India
● To develop organized money market in India
● To properly arrange for agricultural and industrial
finance.
● To manage public debt.
● To establish monetary relations with other countries
and international financial institutions.

12. Guidelines of RBI
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RBI

13. Know Your Customer (KYC)
Norms Guidelines
1. The objective of KYC guidelines is to prevent banks from being used,
intentionally or unintentionally, by criminal elements for money, KYC
procedures also enable banks to know/understand their customers
and their financial dealings better.
2. Banks should keep in mind that the information collected from the
customer for thepurpose of opening of an account is to be treated as
confidential (not for crossselling or any other purposes).
3. Banks should ensure that the provisions of Foreign Contribution
(Regulation) Act,wherever applicable, are strictly followed.
4. Banks should obtain only the mandatory' information required for
KYC purpose the time of opening the account/during periodic
updation.

14. …….contd
1. KYC PolicyBanks should frame their KYC policies incorporating
the following four key elements:
(a) Customer Acceptance Policy:
(b) Customer Identification Procedure:
(c) Monitoring of Transactions; and
(d) Risk Management.

15. HOUSING FINANCE GUIDELINES
Banks could deploy their funds under the housing finance allocation in any of
the three categories, i.e.,
1. DIRECT HOUSING FINANCE Direct Housing Finance refers to the finance
provided to individuals or groups of individuals including co-operative
societies.
The following types of bank finance may be included under Direct Housing
Finance:
 Bank finance extended to a person who already owns a house in
town/village where he resides, for buying/ constructing a second house in
the same or other town/ village for the purpose of self occupation.
 Bank finance extended for purchase of a house by a borrower who
proposes to let it out on rental basis on account of his posting outside the
headquarters or because he has been provided accommodation by his
employer.

16. ……..contd
(iii) Bank finance extended to a person who proposes to buy an old
house where he is presently residing as a tenant.
(iv) Bank finance granted only for purchase of a plot, provided a
declaration is obtained from the borrower that he intends to construct a
house on the said plot, with the help of bank finance or otherwise, within
such period as may be laid down by the banks themselves
2. INDIRECT HOUSING FINANCE Banks should ensure that their indirect
housing finance is channeled by way of term loans to housing finance
institutions, housing boards, other public housing agencies, etc, primarily
for augmenting the supply of serviced land and constructed units
3.Investment in bonds of NHB/HUDCO, or combination thereof.
• NHB-National Housing Bank
 HUDCO - Housing and Urban Development Corporation Ltd.

17. Licensing-Regional Rural Banks
(RRBs)
 The opening of branches by banks is governed by the provisions of the
Banking Regulation Act. In terms of these provisions, banks cannot open a
new place of business in India or abroad or change otherwise than within the
same city, town or village, the location of the existing place of business
without the prior approval of the Reserve Bank of India (RBI)
 It is mandatory for RRBs to seek prior approval / license from Rural Planning
and Credit Department (RPCD) of RBI before opening of new branches /
offices.
 RRB should fulfill the following conditions, to become eligible to open new
branches
 No default in maintenance of SLR and CRR during the last two years:
 Operational profits are being made:
 Net worth shows improvement;
 Net NPA ratio does not exceed 8 per cent.

18. ……..contd
Relaxation in Branch Licensing Policy:
RRBs are permitted to open branches in Tier 2 to Tier 6 centers (with
population of up to 99,999 as per Census 2011) without having the need
to take permission from RBI in each case, provided they fulfill the
following conditions as per the latest inspection report:
i) CRAR of at least 9%
ii) Net NPA ratio less than 5%
iii) No default in CRR/SLR for the last year:
iv) Net profit in the last financial year
v) CBS compliant

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