India: Financial Sector Assessment Program—Detailed Assessments Report on Basel Core Principles for Effective Banking Supervision
IMF Staff Country Reports, August 29, 2013
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Bibliographic details
- Published: August 29, 2013
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484339787.002
Summary findings
- The paper discusses the findings of the assessments on Basel Core Principles for Effective Banking Supervision in India.
- The Reserve Bank of India is commended for a tightly controlled regulatory and supervisory regime characterized by:
- higher than minimum capital requirements;
- frequent, hands-on, and comprehensive onsite inspections;
- a conservative liquidity risk policy and restrictions on banks’ capacity to take on more volatile exposures.
- Despite strong performance, several gaps and constraints in the implementation of the regulatory and supervision framework remain.
- The most significant gaps are in the area of international and, to a lesser extent, domestic supervisory information sharing and cooperation.
Policy implications and recommendations (as implied by findings)
- Continue maintaining higher than minimum capital requirements to support banking sector resilience.
- Persist with frequent, hands-on, and comprehensive onsite inspections to ensure supervisory effectiveness.
- Retain conservative liquidity risk policies and restrictions on volatile exposures to limit systemic risk.
- Prioritize strengthening international supervisory information sharing and cooperation.
- Enhance domestic supervisory information sharing and cooperation where deficiencies exist.
Scope and thematic coverage
- Subject areas: Bank supervision; Banking; Capital adequacy requirements; Commercial banks; Financial institutions; Financial regulation and supervision; Market risk; Operational risk.
- Keywords (as listed): Bank supervision, banking company, banking group, board of directors, business strategy, Capital adequacy requirements, Commercial banks, CR, credit risk, Global, interest rate, internal audit, ISCR, legal power, managing director, Market risk, Operational risk, RBI examiner, risk management, senior management.