A set of international banking-supervision standards issued by the Basel Committee on Banking Supervision, prescribing minimum capital that banks must hold against their risks.
- Issued by the Basel Committee, hosted at the Bank for International Settlements (BIS) in Basel, Switzerland; the standards are advisory, adopted by national regulators such as the RBI.
- Basel I (1988) focused on credit risk and a minimum capital-to-risk-weighted-assets ratio; Basel II (2004) added three pillars (minimum capital, supervisory review, market discipline); Basel III (from 2010, after the 2008 crisis) raised capital quality and added liquidity and leverage rules.
- The Capital to Risk-weighted Assets Ratio (CRAR) under Basel III is 8 percent globally; the RBI mandates a higher 9 percent for Indian banks, plus a capital conservation buffer.
- Basel III introduced the Liquidity Coverage Ratio, the Net Stable Funding Ratio and a leverage ratio to make banks resilient to shocks.
- Stronger capital buffers cushion losses from NPAs and protect depositors.
The three Basel versions, the BIS link, and the Indian CRAR of 9 percent (against the global 8 percent) are standard banking-regulation facts.
Basel norms (capital-adequacy standards from the BIS) versus the CRR and SLR (domestic reserve ratios set by the RBI); the CRAR is a risk-weighted capital ratio, not a cash reserve.
International capital-adequacy standards from the Basel Committee (BIS); Basel III CRAR is 8 percent globally and 9 percent for Indian banks.