Basel III is a comprehensive set of regulation measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector. It is an improvement of the previous Basel II. An important feature of Basel III is that it aims to increase the capital requirement to make financial institutions healthy. Similarly, it introduces robust liquidity ratios and leverage ratios to make financial institution safer. Higher capital requirement for banks in terms of their systemic importance (GSIFIs and DSIFIs) and requirement for counter cyclical capital buffer are other chief features of Basel III. The capital standard recommends higher quantity of Tier I capital to protect banks.
Transitional period for full implementation of Basel III Capital Regulations in India is extended upto March 31, 2019.
