This document discusses assessing capital adequacy according to Basel III norms using data mining. It provides background on capital adequacy, Basel III, and the objectives of Basel III. It then compares the requirements under Basel II and Basel III. The document defines data mining as analyzing data from different perspectives to obtain useful information. It outlines the proposed work of analyzing bank balance sheet data using data mining tools to predict the appropriate capital adequacy ratio a bank should maintain according to Basel III norms.

1. ASSESSING CAPITALADEQUACY ACCORDING
TO BASEL III NORMS USING DATA MINING
UNDER THE GUIDANCE OF
Dr.S.Sudalai Muthu
Associate Professor
Dept. of Banking Technology
By
HARIKRISHNAN K(14381022)
(MBA-BT II YEAR)

2. CAPITAL ADEQUACY
 Measure of a Bank Financial Strength.
 Capital Adequacy Ratio (CAR) is the ratio that measures a bank capacity to meet time
liabilities and risk.
 RBI prescribes a minimum capital of 9% of risk weighted assets.
 National regulators track a bank's CAR to ensure that it can absorb a reasonable amount
of loss and complies with statutory Capital requirements. It is a measure of a bank's
capital.

3. BASEL III
 Basel III (or the Third Basel Accord) is a global, voluntary regulatory framework on
bank capital adequacy, stress testing, and market liquidity risk
 Basel 3 is only a continuation of effort initiated by the Basel Committee on Banking
Supervision to enhance the banking regulatory framework under Basel I and Basel II
 Basel III has essentially been designed to address the weaknesses that become too
obvious during the 2008 financial crisis world faced

4. OBJECTIVE OF BASEL III
 Improve the banking sector's ability to absorb shocks arising from financial and
economic stress.
 Improve risk management and governance
 Strengthen banks' transparency and disclosures.

5. COMPARISON
Requirements
Under Basel
II
Under Basel III
Minimum Ratio of Total Capital To RWAs 8% 10.50%
Minimum Ratio of Common Equity to RWAs 2% 4.50% to 7.00%
Tier I capital to RWAs 4% 6.00%
Core Tier I capital to RWAs 2% 5.00%

6. DATA MINING
 Process of analyzing data from different perspectives and summarizing it into useful
information - information that can be used to increase revenue, cuts costs, or both.
 Data mining software is one of a number of analytical tools for analyzing data.
 Elements
1). Extract, transform, and load transaction data onto the data warehouse
system.
2). Store and manage the data in a multidimensional database system.
3). Provide data access to business analysts and information technology
professionals.
4). Analyze the data by application software.
5).Present the data in a useful format, such as a graph or table.

7. PROPOSED WORK
 Analyze the bank data (Balance Sheet of the Bank).
 Predict the appropriate CAR(capital Adequacy Ratio) using
data mining tools (R tool ) that should bank maintain
according to the Basel III norms.