Basel Norms

Basel Norms are international regulatory standards established by the Basel Committee on Banking Supervision to enhance capital adequacy, risk management, and overall stability in the banking sector.

Under Indian Economy

• They establish the structural framework for the Reserve Bank of India's prudential regulations regarding capital adequacy and liquidity management.
• Compliance with these norms directly affects the credit creation capacity of Indian commercial banks and shapes public sector bank recapitalisation strategies.
• They serve as a benchmark for assessing the resilience of the Indian financial system against domestic and global macroeconomic shocks.

UPSC typically frames questions around the tension between adhering to strict Basel III capital standards and maintaining credit flow to support domestic economic growth. Candidates are expected to analyze how these norms influence the resolution of non-performing assets and the regulatory framework enforced by the Reserve Bank of India.