Yogesh Satpute! and Pradip Kumar Sinha*

ABSTRACT

Reserve Bank of India has stipulated the Capital Adequacy guidelines on the basis of global capital adequacy norms as specified by BIS. The objective is to improve the ability of banks to withstand periods of economic and financial stress by prescribing more strong capital requirements. In the times of stressed episodes, the bank should be able to sustain and the capital should be sufficient to absorb the losses. Indian capital adequacy norms are stricter capital adequacy regime as compared to some of the international counterparts since the regulatory norms on Capital Adequacy in India are already more stringent, and also because most Indian banks have historically maintained their core and overall capital well in excess of the mandatory level. Risks starts from customer default, funding a gap of assets and liabilities or adverse movements of markets in terms of interest or foreign exchange rates, moreover operational events may also become catastrophic can cause the bank to halt its operations. Over the period from initial Basel regime till date the guidelines have evolved, moreover regulators have made some sincere attempts to bring prudential and supervisory norms conforming to international bank practices with an intention to strengthen the stability of the banking system. This paper attempts to have a study of capital adequacy pertaining to Selected Private Sector Banks in India. KEY WORDS: BCBS, Capital Adequacy, Tier I, Tier II, Risk Capital, Basel.