Basel III is a global regulatory framework that aims to strengthen bank capital requirements and introduces new regulations on bank liquidity and leverage. It seeks to raise the quality of capital held by banks and strengthen their ability to absorb losses. The document outlines the key components of Basel III, including higher capital requirements, a new leverage ratio, and liquidity standards. It also discusses the potential macroeconomic impact and advantages of Basel III, as well as country-level implementations like in the US.

1. A guide to
BASEL III
Under the guidance of
Mr. Manohar Dansingani
By :
Tejas Karandikar
Shantanu kothawle
Shivanshu Sharma

2. What are BASEL norms?
• Basel guidelines refer to broad supervisory
standards formulated by these groups of central
banks called the Basel Committee on Banking
Supervision (BCBS).
• The set of the agreement by the BCBS, which
mainly focuses on risks to banks and the financial
system is called Basel accords/Basel Norms.

3. Introduction to BASEL III
• Basel III is a global, voluntary regulatory
framework on bank capital adequacy, stress
testing, and market liquidity risk.
• It was agreed upon by the members of the Basel
Committee on Banking Supervision in 2010-11.
• The Basel Committee on Banking Supervision
published the first version of Basel III in late 2009.

4. Three Pillars

5. Overview
• The Basel III standard aims to strengthen the
requirements from the Basel II standard on
bank's minimum capital ratios.
• It introduces requirements on liquid asset
holdings and funding stability, there by seeking to
mitigate the risk of a run on the bank.

7. Advantages
• The quality, consistency, and transparency of the
capital base will be raised
• The risk coverage of the capital framework will be
strengthened.
• A leverage ratio will be introduced as a
supplementary measure to the Basel II risk-based
framework.
• A series of measures is introduced to promote
the buildup of capital.

8. Macroeconomic Impact
• The medium-term impact of Basel III
implementation on GDP growth would be in the
range of −0.05% to −0.15% per year.
• Economic output would be mainly affected by an
increase in bank lending spreads, as banks pass a
rise in bank funding costs
• The estimated effects on GDP growth assume no
active response from monetary policy.

9. New innovations:
1. Liquidity Requirements
2. Longer-term ratio
3. Additional proposals for systemically
important banks.

10. Key Principles
• Capital Requirements.
• Leverage Ratio.
• Liquidity Requirements.

11. US Implementation
• The US Federal Reserve announced in December
2011 that it would implement substantially all of
the Basel III rules.
• It made clear that they would apply not only to
banks but also to all institutions with more than
US$50 billion in assets.
• As of January 2014, the US has been on track to
implement many of the Basel III rules, despite
differences in ratio requirements and
calculations.

12. THANK YOU