ALL ABOUT BASEL 3 TOTAL 25 QUESTION SEE THE ARTICLE

Basel regulation has evolved to comprise three pillars concerned with minimum capital requirements (Pillar 1), supervisory review (Pillar 2), and market discipline (Pillar 3). Today, the regulation applies to credit risk, market risk, operational risk and liquidity risk.

 

1>When did Basel 3 start?

Basel III is an international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector by requiring banks to maintain certain leverage ratios and keep certain levels of reserve capital on hand. Begun in 2009, it is still being implemented as of 2022.

 

2>What are Basel 1 2 3 norms?

The Basel Accords are a series of three sequential banking regulation agreements (Basel I, II, and III) set by the Basel Committee on Bank Supervision (BCBS). The Committee provides recommendations on banking and financial regulations, specifically, concerning capital risk, market risk, and operational risk.

 

3>Why is Basel necessary?

The goal of Basel III is to force banks to act more prudently by improving their ability to absorb shocks arising from financial and economic stress by requiring them to maintain a much larger capital base, increasing transparency and improving liquidity

 

4>What is RWA calculation?

Calculating risk-weighted assets

Banks calculate risk-weighted assets by multiplying the exposure amount by the relevant risk weight for the type of loan or asset. A bank repeats this calculation for all of its loans and assets, and adds them together to calculate total credit risk-weighted assets.

 

 

5>What are Pillar 3 requirements?

Pillar 3 requires firms to publicly disclose information relating to their risks, capital adequacy, and policies for managing risk with the aim of promoting market discipline.

 

6>What are the main features of the Basel III?

Key Principles of Basel III

The Basel III accord raised the minimum capital requirements for banks from 2% in Basel II to 4.5% of common equity, as a percentage of the bank's risk-weighted assets. There is also an additional 2.5% buffer capital requirement that brings the total minimum requirement to 7%

 

7>What is the difference between Basel 3 and 4?

Basel 4 refers to the finalisation of the Basel 3 reform package which had taken more than a decade to develop and was split into two pieces – the final amendments elements being agreed by the Basel Committee in December 2017.

 

8>What is the Basel III leverage ratio?

The Basel III leverage ratio is defined as the capital measure (the numerator) divided by the. exposure measure (the denominator), with this ratio expressed as a percentage: Leverage ratio = Capital measure. Exposure measure.

 

9>What is Pillar 1 and Pillar 2 capital?

While pillar 1 of the Basel regulatory capital framework deals only with the capital requirements for credit, market, and operational risk as well as regulatory liquidity ratios calculated according to more or less sophisticated regulatory approaches; pillar 2 focuses on the economic and internal perspective of banks

 

10>What is meant by Tier 1 capital?

Tier 1 capital refers to the core capital held in a bank's reserves and is used to fund business activities for the bank's clients. It includes common stock, as well as disclosed reserves and certain other assets.

 

11>Does Basel 3 apply to all banks?

Like all Basel Committee standards, Basel III standards are minimum requirements which apply to internationally active banks. Members are committed to implementing and applying standards in their jurisdictions within the time frame established by the Committee.

 

12>How does Basel III affect banks?

The Results. The paper provides evidence suggesting that Basel III causes risk to migrate from banks to the overall economy. Specifically, the findings show that borrowers increase their risk-taking after incurring higher borrowing costs resulting from these banking regulations.

 

13>What is the difference between Basel II and Basel III?

The key difference between the Basel II and Basel III are that in comparison to Basel II framework, the Basel III framework prescribes more of common equity, creation of capital buffer, introduction of Leverage Ratio, Introduction of Liquidity coverage Ratio(LCR) and Net Stable Funding Ratio (NSFR)

 

14>Is Basel III fully implemented?

The implementation date of the Basel III standards finalised in December 2017 has been deferred by one year to 1 January 2023. The accompanying transitional arrangements for the output floor have also been extended by one year to 1 January 2028.

 

15>What is CRR in Basel?

The overarching goal of the Basel III agreement and its implementing act in Europe, the Capital Requirements Regulation (CRR) and Directive (CRD), is to strengthen the resilience of the banking sector across the European Union (EU) so it would be better placed to absorb economic shocks while ensuring that banks .

 

16>Can Basel III prevent financial crisis?

Probably far from it. Banking crises are inevitable. So, while the Basel standards cannot prevent all future crises, they can seek to mitigate their likelihood and impact

17>Do we have Basel 4?

Basel IV is the informal name for a set of proposed banking reforms building on the international banking accords known as Basel I, Basel II, and Basel III. It is also referred to as Basel 3.1. It is scheduled to begin implementation on Jan. 1, 2023

 

18>Has Basel 4 been implemented?

Originally due to be implemented in January 2022, Basel 4 has been delayed until January 2023, but that does not mean that banks can sit on their laurels as there is still much work to be done to prepare for the new deadline

 

19>What is the minimum capital requirement under Basel III?

Under Basel III, the minimum capital adequacy ratio that banks must maintain is 8%.

 

20>What is a Tier 3 bank?

Tier 3 capital is capital banks hold to support market risk in their trading activities. Unsecured, subordinated debt makes up tier 3 capital and is of lower quality than tier 1 and tier 2 capital.

 

21>What are Pillar 2 risks?

The Pillar 2 supervisory review process is an integral part of the Basel Framework. It is intended to ensure that banks not only have adequate capital to support all the risks in their business but also develop and use better risk management techniques in monitoring and managing these risks.

 

22>What is PRA buffer?

The PRA buffer is an amount of capital that firms should maintain in addition to their total capital requirements to absorb losses that may arise under a severe stress scenario, while avoiding duplication with the combined buffers.

 

23>What is the difference between capital and liquidity?

Liquidity is a measure of the cash and other assets banks have available to quickly pay bills and meet short-term business and financial obligations. Capital is a measure of the resources banks have to absorb losses

 

24>Is Basel III in force?

Following a one-year deferral to increase the operational capacity of banks and supervisors to respond to COVID-19, these reforms will take effect from 1 January 2023 and will be phased in over five years. The FSB has designated Basel III as one of the priority areas for implementation monitoring.২

 

25>Is Basel III enough?

With Basel III, we have laid the foundation with a strong set of minimum standards. But they are exactly that – minimum standards. They are necessary, but not sufficient: Basel III cannot be relied upon to deliver stability on its own

 

26>What is CRR and SLR?

Cash Reserve Ratio (CRR) is the percentage of money, which a bank has to keep with RBI in the form of cash. Whereas, Statutory Liquidity Ratio (SLR) is the proportion of liquid assets to time and demand liabilities.

If the title deed holder died, can legal heir mortgage his deed

If the title deed holder died, can legal heir mortgage his deed

 

• 1>Who can create equitable mortgage

An Individual or trust is financing a company. To secure loan, the lender (Individual/trust) wants to charge on an immovable asset of the company. The company is also ready to deposit title deeds of that property with the individual/trust. My question is can equitable mortgage be created in favour of an individual/trust

As I understand what you asking, can a person who inherits a property sell it to someone and carry the mortgage?
Sure. If they become the owner of the property, the bundle of rights included in “ownership” include the rights to sell, rent, or hypothecate, eg; pledge the property as collateral for a loan. (let’s not confuse the RIGHT to borrow against the property with the notion of SELLING the property and CARRYING the loan) The heir has the right to sell the property. He/she can sell it for cash, or, he/she can sell the property and agree to be “the bank” and accept payments from a buyer. That would be a nice thing to do if the heir wants a long term income stream.
I once bought a piece of property where I had rented half of a duplex for 10 months on a one year lease. 10 months in, the owner called me and said “I want to sell this property. You’ve made timely payments all this time. I own it outright. I want $300K. No bargaining. You write me a check for $30K and start making payments to me on a loan of $270K. I will be the bank. And that’s that. Want to buy it?” She DID engage a realtor, just to make sure the various disclosures and legalities were properly addressed.


As per my knowledge, Mortgage deed can be done by the title holder or power of attorney holder. It can not be done by legal heir.( in case of urban land, if village land, then the procedure is simple to transfer the property name)
In this case, you should transfer the property in legal heir’s name by doing all legal procudure completion.
I suggest you to meet your advocate in this regard and talk in details. He will guide you best option available (although it will cost you) and will be helpful in next course of action.

Equitable mortgage deed can be created.
An equitable mortgage in which the lender is secured by taking possession of all the original title documents of the property that serves as security for the mortgage. It gives the mortgagee the right to foreclose on the property, sell it, or appoint a receiver in case of nonpayment.
The biggest advantage of equitable mortgage is it doesn't attract stamp duty as it is an oral transaction. In certain states of India acts have been passed to register equitable mortgage to avoid fraudulent transactions.

n an equitable mortgage, the owner has to transfer his title deed to the lender, thereby creating a charge on the property. The owner also orally confirms the intent of creating a charge on the property. An equitable mortgage is also known as an implied or constructive mortgage. No legal procedure is involved in an equitable mortgage, but it is considered mortgage in the interest of justice (under equity). The borrower obtains money from the bank/lender with an agreement that his property, on which the equitable mortgage is created, will act as security for the loan.
The borrower has to submit his title deed to the lender as security for the money borrowed.
No formal, legal document is executed or registered in the records of the registrar, but it can be created at notified places. Stamp duty and charges are comparatively low, relative to a registered mortgage.

It is mostly created with banks and financial institutions being lenders but the said things are not mandatory. Individual should be registered money lender for advancing monies.
In an equitable mortgage, the owner has to transfer his title deed to the lender, thereby creating a charge on the property. The owner also orally confirms the intent of creating a charge on the property. An equitable mortgage is also known as an implied or constructive mortgage. No legal procedure is involved in an equitable mortgage, but it is considered mortgage in the interest of justice (under equity) . The borrower obtains money from the bank/lender with an agreement that his property, on which the equitable mortgage is created, will act as security for the loan.
The borrower has to submit his title deed to the lender as security for the money borrowed.
No formal, legal document is executed or registered in the records of the registrar, but it can be created at notified places. Stamp duty and charges are comparatively low, relative to a registered mortgage.

2>Equitable mortgage can be created at notified places. My doubt is perhaps this simple way of creating mortgage is available only when availing loan from Banks/Financial Institutions not from any individual or trust. Please clarify my doubt.

1) The company should have power to borrow – any object clause as contained in the Memorandum of Association of the company
2) The Board of Directors should pass a resolution for borrowing and to mortgage the property
3) Only authorized Director/person should execute the mortgage documents
.4) Charge on the immovable property of the company is registered with the Registrar of Companies by filing E Form No.8 with the Registrar of Companies within 30 days of creation of charge.
 
5) equitable mortgage can be created in favour of individual 

Insolvency and Bankruptcy Code is not a win-win mechanism.

Insolvency and Bankruptcy Code is not a win-win mechanism.

Financial Creditors are at the 'receiving end' losing heavily. For every Rs.100, Banks are losing Rs.69 and realising only Rs.31!

Debtors are often benefitted.

Companies and Corporations, sellers and buyers become gainers.

Google has removed over 200 loan apps from India Play store

Adani Group Debt Profile

 The business or industry is run by this company only with borrowed funds without adequate security. That is why Banks often write off their loans and the Govt is forced to infuse capital due to capital adequacy norms.

Bank privatisation: The key parameters the RBI did not talk about

There is always a buzz around bank privatisation. Every budget is surrounded by anticipation on why PSU is likely to be privatised, particularly state-run banks. Policymakers have often dwelt on the subject.

Recently, a policy paper authored by Poonam Gupta, NCAER Director General and member of the Economic Advisory Council to the Prime Minister (PMEAC), and Arvind Panagariya, former NITI-Aayog Vice Chairman and Columbia University professor, recommended the privatisation of all public sector banks (PSBs) except State Bank of India. Earlier, NITI-Aayog had recommended the privatisation of three PSB — Bank of Maharashtra, Indian Overseas Bank and Punjab and Sind Bank. In 2021, Finance Minister Nirmala Sitharaman, in her budget speech, indicated that two banks would be privatised.

Meanwhile, bank employee unions have been protesting vociferously against the privatisation plans, even resorting to strikes.

Financial service Institutions bureau recommended the name for Executive Director of PSBs see the ist