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Capital Adequacy Regime in India - An Overview

Author

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  • Mandira Sarma

    (Indian Council for Research on International Economic Relations)

  • Yuko Nikaido

Abstract

In this paper we present an analytical review of the capital adequacy regime and the present state of capital to risk-weighted asset ratio (CRAR) of the banking sector in India. In the current regime of Basel I, Indian banking system is performing reasonably well, with an average CRAR of about 12 per cent, which is higher than the internationally accepted level of 8 per cent as well as Indias own minimum regulatory requirement of 9 per cent. As the revised capital adequacy norms, Basel II, are being implemented from March 2008, several issues emerge. We examine these issues from the Indian perspective.

Suggested Citation

  • Mandira Sarma & Yuko Nikaido, 2007. "Capital Adequacy Regime in India - An Overview," Finance Working Papers 22258, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:financ:22258
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    Cited by:

    1. Sreejata Banerjee, 2012. "Basel I and Basel II Compliance: Issues for Banks in India," Working Papers 2012-068, Madras School of Economics,Chennai,India.

    More about this item

    Keywords

    Capital Adequacy Ratio; Basel I; Basel II; Reserve Bank of India; SMEs lending;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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