ANALYSIS OF CAPITAL TO RISK ASSETS RATIO (CRAR) AND BASEL NORMS

This paper revisits the implementation of Basel I, II, and III by the RBI in the Indian banks. The global financial crisis in 2007, the Basel Committee on Banking Supervision (BCBS) proposed specific reforms to strengthen global capital and liquidity regulations to promote a more resilient banking sector.[i] India introduced Basel III norms in March 2019. The Basel III reforms have been proposed to be implemented from 1 January 2023 and will be spread over five years. The paper has three sections. Section I emphasizes the need for and determination of Capital Adequacy Ratio (CAR) with an example of 3 banks having a different capital base, deposits, loan/ advances, income, and expenses. Section II includes a comparison of Basel I, II, and III. Conclusions and suggestions are presented in Section III.