Basel Framework

Other Resources

Basel III Accord: Enhanced Risk Management

Basel III was developed in a response to the deficiencies in financial regulation revealed by the global financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.

Basel III builds on the Basel I and Basel II and seeks to improve bank ability to deal with financial and economic stress, improve risk management and improve transparency. A focus of Basel III is to foster greater resilience at the individual bank level in order to reduce the risk of system wide shocks. The difference between the total capital requirement of 8.0% and the Tier 1 requirement can be met with Tier 2 capital.

Basel III strengthens the three Basel II pillars, particularly Pillar 1 with enhanced minimum capital and liquidity requirements. Pillar 2 under Basel III calls for enhanced supervisory review process for risk management and capital planning. Pillar 3 under Basel III calls for enhanced risk disclosure and market discipline.

Tier 1 Capital Ratio - 6%
Core Tier 1 capital ratio - 4.5%

Core Tier 1 Capital Ratio Implementation Calendar:

Before 2013 - 2%
Jan 1, 2013 - 3.5%
Jan 1 2017 - 4%
Jan 1 2017 - 4.5%