A Study Of Impact Of Basal Norms In Managing Non Performing Assets In Public Sector Banks In India

Journal Name: 
Indian Journal of Management
Vol. 5 - No. 2
Author Name Designation Organization
Mona Jain

The Indian Banking system has been following strong belief in attaining the confirmation of appropriateness of the debts and  maintaining the stipulated norms, which enable the banking sector to be at the safer side. In 1988, when BASAL Accord I was introduced it was presumed that some important concerns and problems relating to the risks inherent in the banking industry would be attended to by managing credit risk. Though later on market risk was added to the aforesaid Accord, yet the kind of 'one size fits all'  approach which it carried, made it effective in addressing the changing scenario of the banking industry. Hence the need to revise the accord was felt and BASAL II was introduced in the year 2004. Though the basic guidelines were kept intact still due weightage was given to operational risk, along with the credit and market risks. Further more consideration was given to the credit worthiness of the borrower and the main parameters to assign risk weightage were altered. With the occurrence of the financial crisis in year 2008, the entire global economy was affected a which raised questions on the effectiveness of Basel II in controlling and monitoring the risks in banking sector. This led to the introduction of the Basel Accord III by the Basal Committee on Banking Supervision (BCBS), under which most of the loopholes of the earlier two accords were attempted to be corrected and proper provisioning has been made for banks to function under more rigid liquidity conditions.