I can vouch and say that Basel III is the best risk management framework till now and that can be suggested for banks....But,the catch here is that "Indian Banks are not ready for such a robust framework"
An international bank that is sitting on a cushion of corpus of funds can implement this overnight which is not case with many new/ weak commercial banks of an EME like India.
Indian banks have a long way. With the pressure of 50% priority sector lending, Other developmental pressures, Indian commercial banks cannot sustain or maintain the huge capital requirements of Basel III.
Indian banks are given deadline till 2014 to implement Basel II. Kudos to the central bank in observing the implementation closely, but again.. it cannot push the banks to do this. Even if the deadlines(I would say time-lines) are met, it takes few more years for the banking system to absorb one more pill.
Last point: I dont know how far I am right here, for a country like India which is looking towards expansion in debt markets and more leverage interms of capital from overseas, Basel III norms will reduce the leverage hence the returns on equity would be less which might impact the growth of banking sector seems a paradox to me...
An international bank that is sitting on a cushion of corpus of funds can implement this overnight which is not case with many new/ weak commercial banks of an EME like India.
Indian banks have a long way. With the pressure of 50% priority sector lending, Other developmental pressures, Indian commercial banks cannot sustain or maintain the huge capital requirements of Basel III.
Indian banks are given deadline till 2014 to implement Basel II. Kudos to the central bank in observing the implementation closely, but again.. it cannot push the banks to do this. Even if the deadlines(I would say time-lines) are met, it takes few more years for the banking system to absorb one more pill.
Last point: I dont know how far I am right here, for a country like India which is looking towards expansion in debt markets and more leverage interms of capital from overseas, Basel III norms will reduce the leverage hence the returns on equity would be less which might impact the growth of banking sector seems a paradox to me...
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