RBI reschedules date for Basel III implementation

The Reserve Bank of India (RBI) has rescheduled the date for implementation of Basel III norms to 1 April from the earlier deadline of 1 January 2013.

The move would be welcomed by banks as Basel III norms require the equity capital of a bank to be not less than 5.5 per cent of risk-weighted loans, as per the RBI's draft guidelines.

Earnings of banks are expected to come under pressure due to the higher capital requirements for the implementation of the new global risk mechanism.

RBI said it would be closely monitoring the progress on Basel III implementation in other countries, particularly the major ones that are members of the Basel Committee.

The RBI had issued guidelines on implementation of Basel III capital regulation in India as far back as on 2 May 2012. These were to be implemented from 1 January 2013 in a phased manner and were to be fully implemented by 31 March 2018.

The implementation of Basel III norms was expected to start on 1 January 2013, even though the financial year starts on 1 April considering the internationally accepted implementation schedule as agreed to by the Basel Committee on Banking Supervision (BCBS).