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Abstract

BASEL III: Future of Risk management for banking sector

In this research paper, it discusses introduction, architecture and implementation guidelines of new BASEL Accord i.e. BASEL III along with its impact analysis over banking industry. It includes overall technical description and risk mitigation by proposed BASEL III compliance. The Basel Committee issued the Basel III rules , which presents the details of global regulatory standards on bank capital adequacy and liquidity agreed by the Governors and Heads of Supervision, and endorsed by the G20 Leaders at their November 2010 Seoul summit. The BASEL III framework approaches micro prudential and macro prudential elements of regulations of banking and financial institutions. Basel III is a capital adequacy standard evolved incrementally after Basel I & II. It endorses new risk regimes under systemic risk and additional capital buffer with increased capital adequacy ratio. The third of the Basel Accords was developed in a response to the deficiencies in financial regulation revealed by the global financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The accord is finalized to be implemented on 2013-2019 timeline under global commitment of its endorsement. The future of risk management in banking sector relies on the understanding and effective implementation of Basel III. The paper includes capital adequacy scenario of Indian banks having different ownership or capital holding structure and some global banks are observed and analyzed through available secondary data for impact analysis of post implementation phase of the new accord. The research paper will also illuminates the risk assessment and compliance readiness skill for future risk professionals of financial & banking industry and academia.

Purushottam Kumar Karna, MBA II , Brindavan College of Engineering ,VTU Bangalore.

Guide: Ms Harmeet Matharu, Lecturer Brindavan College of Engineering.

Reserachers Profile:

Purushottam Kumar Karna is a Computer Engineering graduate having work experience as IT Engineer in national level commercial bank (SBL) where Oracles core banking software implementation (techno functional) and OBIEE MIS report programming is the main responsibility. He is also the part of BASEL II implementation core team in capacity of IT analyst for which he had attended several training sessions and workshop seminars. After 3 years of exposure in banking industry, he is pursuing MBA in Finance specialization to aim risk professional in Banking as career.