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Certain recent policy proposals of the Basel Committee (on Banking Supervision) are contrary to the goal of encouraging and supporting growth, according to the International Banking Federation.
The London-based Federation cautioned that high capital hurdles resulting from new proposals over and above Basel III might make it more difficult for banks to extend their products and services to creditworthy customers and clients.
IBFed has 12 leading banking associations, including the Indian Banks’ Association (IBA), from across the world as its members. It is an advocacy body and engages with the global standard-setters in the field of finance. IBA hosted the spring meeting of the Federation’s Board in Mumbai on November 4 and 5.
Wim Mijs, Chairman, IBFed, said, “…we feel that around the world the biggest worry is that Basel III is built for the most sophisticated and biggest banks in the world and it is being executed throughout all banks in the world.
“So, you have issues such as smaller and community-based banks facing high compliance cost just to deal with the supervisory requirements, on one hand, and banks in developing economies that need to have capital levels that are designed for very sophisticated banks, on the other.” ‘Basel III’ is a comprehensive set of reform measures developed by the Basel Committee on Banking Supervision to strengthen regulation, supervision and risk management of the banking sector.
These measures aim to improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source; improve risk management and governance; and strengthen banks’ transparency and disclosures.
Referring to the implementation of Basel III, Mijs said: “In Basel III, you have a phase-in effect and that should be now be worked through.
“What they are now trying to do is (sometimes the feeling is) that they have designed the house, asked the contractor to build it and now they are constantly re-designing while we are building.”
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