ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Basel II Norms

Instead of perceiving it as a global initiative, the Indian banking sector needs to look at Basel II as an opportunity to keep its own house in order. It is a necessary framework to improve the stability and resilience of our rapidly evolving banking industry, currently at a critical phase in its expansion. However, it is unfortunate that the current Basel proposals do not explicitly incorporate the mutual benefits of international diversification for advanced as well as developing countries. There is also a fear that too much regulation under Basel II will adversely affect the risk appetite of Indian banks and their lending to credit-starved sectors. It will be a major challenge for the RBI to maintain a healthy credit momentum amid this tighter risk-sensitive framework.

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