Artical About Finance

News Article: Basel III guidelines could strengthen credit profiles of banks: S&P

Date: January 13, 2012

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/basel-iii-guidelines-could-strengthen-credit-profiles-of-banks-sp/articleshow/114786

Banks in India are suffering from capital and credit profiles and only the proposed prudential guidelines based on Basel III guidelines can strengthen them. Recently, the Reserve Bank of India (RBI) draft guidelines on financial management used by the Indian Banks is not working effectively. Probably, it will only benefit the stand-alone credit profiles of the banks. This simply explains that in the world of financial management and banking, an effective guideline to ensure stability of the banking operations is needed will improve not only the Stand-Alone Credit Profiles but also most importantly to improve generally the capital and credit profiles of all government and private banks to support the growth of the economy. Banks in India today has high economic risks because the conservative approach does not enhance capitalization in a country. The banks needed capital at present to improve Indian banks’ risk-adjusted capital ratios, the lowest among its Asian peers. India has the RBI’s guidelines on capitalization, which is more stringent than the Basel Committee on Banking Supervision proposal. In addition, RBI’s has conservative guidelines compare with its Asian peers and banks can meet its requirements in a relatively short period, hence the problem can be given a solution immediately so it will not cripple the banking industry in India. The issue is for the government to choose the best proposal and guideline, which can immediately yield results because the risk in the stability of India banking reaches an alarming level. However, many countries in the world have their governments interfering with the decision to choose, which guideline is the best and this is true in...