Banks have been allowed to implement the special fund (Net Stable Funding Ratio-NSFR) standards to be used from October 1 this year in case of any volatility. Till now this standard was to come into force from 1st April this year.
Similarly, a separate capital conservation buffer (CCB) timeline for banks has also been increased from 31 March to 30 September this year. This exemption means that banks will not have to separate the excess money from their existing business and keep it in a special fund for the time being. In view of the challenges arising for the banking system in the coming days, the Reserve Bank of India has given many relief to the banks for following the Basel-III rules.
Significantly, the international Basel-3 standard has been postponed for another year on Saturday itself. It will now come into force from January 2023. The Central Bank Governors and Heads of Supervision (GHOS), the monitoring body of the Basel Committee, has taken the decision in view of the corona virus crisis. Earlier these rules were to come into force from January 2022.
Basel standards were introduced to strengthen the financial position of banks around the world and protect them from immediate risks. The flaws of the Basel-2 standards came to the fore during the global economic downturn of 2007-08 and the bad condition of banks. In view of this, the Basel-3 standard was prepared, which was to be implemented only last year. But it was deferred for January, 2022. Basel standards are being implemented gradually in India since 2013.
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