Basel 3 and the Indian Banks

It was supposed to be implemented from the very first day of 2013. Yes, the Basel 3 norms which had been planned to come in to affect from 1^st January has now been postponed till April 1. But what are the Basel 3 norms and why do the Indian Banks need it. This article will give a complete overview about the Basel 3 norms that are going to be introduced in our country within a few months time.

Well, the name Basel is derived from a place that is located in Switzerland. The Basel norms were introduced in the aftermath of the 2008 bubble crisis so that Banks all over the world posses the financial strength to absorb any kind of financial shocks. The idea behind introducing the Basel 3 was taken after the European Debt Crisis shattered the economy and its disastrous impact on the Banks. The Basel 1 and 2 norms are already in effect and now in order to tighten the banks liquidity as well as the leverage of Indian Banks. The Reserve Bank of India which is a member of the Basel Committee on Banking Supervision urged upon the need to implement the Basel 3 norms will come in to effect from April 1, 2013.

Now lets see the Basel 3 norms for Indian Banks

·         The Banks need to maintain a 4.5% of common equity that is 6% of the Tier 1 capital of the risk weighted class. Common equity means the equity and the retained earnings of the bank.

·         They need to have a capital conservation buffer of 2.5% within March 31, 2008.

·         Capital adequacy ratio must be 11.5%. This ratio determines the capacity of the bank to meet the time liabilities and other risks such as credit and operational risk. It is calculated by the following formula:

CAR=Tier 1 capital +Tier 2 capital/RWA

·         A leverage ratio of 4.5% must be maintained.

The reason as to why the implementation of the Basel 3 norms was delayed was due to the fact that currently the Indian banks do not qualify for the capital requirements of these norms. The Government needs to implement at least Rs 90,000 crores  as equity to retain its stake in the Public Sector Banks. The Finance Ministry has recently decided to inject of Rs 12,000 crore in 12 public sector banks including State Bank of India, Central Bank of India and the United Bank of India in the form of investments. Out of the proposed Rs. 12000 crores SBI will get 0.56 %, CBI will get 0.99 % and UBI will get 0.73 %. Well, the impact of these norms will have a positive impact on the Indian banks as the equity requirement will go up to Rs 3.2 to 4 trillion in the next six years. According to the credit rating agency ICRA, the return on equity could drop by 1.4% which can be compensated by raising the lending yields.

Below is the image of the three pillars of Basel 3 norms

Delhi Gang Rape- The other aspect of it

2012 ended with the greatest irony ever with the rape of a 23 year old girl Damini. It really pained us a lot to accept the fact that in spite of making every possible efforts we could not save the girl. Today, we claim ourselves to be a developing country and claim to be one of the developed countries of the world and an incident like this and that too in the capital of a country is a real shame. There have been protests all over India urging the Government to take strict steps towards the rapists. Even some of the MP's sexist comments have ended them up in a controversial arena and have found their places in the breaking news of every news channel. Assurances have been given by the Government to tighten up the security for the girls all over the country as it launched the helpline number 181 which in the first place suffered a technical snag.

Now, there have been several recommendations suggested from the different people of the country some said girls should master martial arts, some said we have to change our mind set. Well, all these are accepted but i think we are overseeing or rather need to take up another issue which is very vital and that is we need to suggest or rather alert some of our film directors and script writers not to glorify SEXUAL CONTENT so heavily in the films. Using a PORN star in the film, using abusive language in the dialogues and claiming a film as a family film by showing a school girl as a bikini clad woman. Doesn't that encourage rape in our Society?. Well, if we lay stress on these things, then a lot can be improved in a country like India where we eat and live BOLLYWOOD.

NOTE: All the opinion expressed above are personal, others might not agree with it.

Love Your Child

One Norwegian Couple was recently sent to jail by the Government of their country for scolding their child. In India there were three cases respectively in Jaipur, Hyderabad and Jammu reported last week where a child was physically assaulted on petty reasons. In the Jammu incident an 8 year old girl was beaten with a rod just because of the fact that she was late to school. Now all these type of abrupt behavior shows that the persons taking such type of actions are either mentally disturbed or have become animals who in the name of nurturing a child can go to any extreme. This is not the first instance where a child was thrashed badly by the teacher or the elder, few years ago a boy was beaten to death by his father just because of the fact that he was not being able to perform better in the tennis match. It is really shameful in a country like India where every now and then we claim that children are the future of the country and is the path leaders of a developing India and on the other hand every day or the other we get to hear such type of incidents happening around us.

Now the big question that might arise in one’s mind is “So what is the solution then, should one stop scolding or beating their child even if they are doing wrong?” Well, the answer is, the parents or the teachers should at least scold their child without using harsh or abusive words but should not physically assault them. The mind of a child is fragile, innocent and is immature they cannot think rationally and decide what is right or what is wrong, it is we the parents, teachers and the elders who are always there to guide them and teach them, make them understand what are the good or the bad effects of doing a particular thing. Over and above the relationship between children and their parents should that be of friends and same goes for the teacher or the elders. Thrashing a child, verbally abusing them will only create fear in the mind of the child and this is quite dangerous for them because these type of actions creates a sense of insecurity in the mind of the child and it creates a distance between the child and the parents which is quite harmful. Hence, treat your children as one of your best friend hold their hands tightly and guide them towards the right path.

Well, this was the solution of one aspect of the problem, on the other hand most of the parents are a working couple with child and subsequently they are not able to give adequate amount of time to their child. After a long stress full day in their respective workplaces they are hardly able to spend quality time with their child and therefore the parents should take out ample amount of time from their working schedule and spend it with their children. All the views expressed here are solely my opinion different people might have different reason.

Digitization of Cable

With the Government making it mandatory to go digitized within October 31^st  for all the metropolitan cities of India including Delhi the people of all the states had gone completely haywire, moreover the flashing of “Go digital by October 31^st or else go blank” had almost snatched away the sleep of the housewives who eat and live with the typical Saas Bahu soaps and the ever talked about reality shows like big boss,  India’s got talent and many more. Though most part of the India as a matter of fact is digitized but recent reports suggests that the Government is even planning to extend the date of digitization deadline like in Chennai the Information and the Broadcasting Ministry has extended the deadline till December 31^st , 2012.But a very common query which might arise  in a common man’s mind is that what was the need of digitization from the present analog process.  Let us know it in full detail.

Broadcasting of programs in Television is done in two modes one is analogue and the other being digital. In the analogue category there are three types of systems that are used namely NTSC,PAL and SECAM. In the digital category also there are four similar systems namely DVB-T, ATSC, ISDB-T and DTMB. In case of digitization the signal transmits the information in binary code taking less bandwidth and thereby enabling the broadcasters to provide more number of channels. In addition to this it also provides several other information like program guides, additional language options subtitles and most importantly providing high definition picture quality which makes watching television a live experience. All the countries across the world are switching over to digitization and also in India it will be fully implemented in almost all the states in stages. The switch off mode of your remote disables analogue TV from receiving broadcasts and hence you need to install set top boxes which acts as a converter to digital.

Well, I have recently installed the set top box in my home and there are as many as 899 channels and I am still not able to decide which channels I should see which I should not. So go digital this winter and watch your favorite programs.