Basel III and Basel IV in India — RBI Implementation Guide

Basel III was phased in by RBI since 2013 and reached full implementation in 2019. Basel IV — formally called 'finalised Basel III' or 'Basel 3.1' — was finalised by BCBS in 2017 with a global deadline extended to January 2025. RBI has not yet announced India's formal Basel IV timeline; consultation is expected during 2026. The framework rests on three pillars: Pillar 1 prescribes minimum capital requirements across CET1, Tier 1 and Total Capital. Pillar 2 requires Supervisory Review and Internal Capital Adequacy Assessment Process (SREP / ICAAP). Pillar 3 mandates market discipline via standardised public disclosures. India-specific capital requirements (excluding any countercyclical buffer): • Minimum CET1: 5.5 % | Tier 1: 7 % | Total Capital: 9 % • + Capital Conservation Buffer (CCB): 2.5 % • Effective floors: CET1 8 % · Tier 1 9.5 % · Total Capital 11.5 % • D-SIB surcharge: additional 0.2 % – 0.8 % on the top 3 systemically important banks Key Basel IV changes vs Basel III: a revised Standardised Approach (SA) for credit risk that reduces internal-model leeway; a 72.5 % output floor (a bank's RWA cannot fall below 72.5 % of the SA-computed figure); and a new Standardised Measurement Approach (SMA) for operational risk replacing AMA and the three older SAs.

• Globally harmonised capital adequacy improves cross-border lending confidence
• Three-pillar structure forces both quantitative capital + qualitative supervisory review
• CCB acts as a counter-cyclical shock absorber during stress
• D-SIB framework explicitly handles too-big-to-fail risk in India
• Pillar 3 disclosures give analysts and depositors transparent solvency view

• Basel IV timeline for India still unannounced — banks plan capital around moving deadlines
• Output floor 72.5 % significantly squeezes internal-model banks; impact studies still in progress
• Operational risk SMA may overcharge mid-size NBFCs vs the BIA they currently use
• Co-operative banks remain outside the Basel III perimeter — separate regime

• SBI, ICICI, HDFC Bank — all maintain CET1 well above the 8 % effective floor; H2-2026 disclosures show 13-15 % range
• Public-sector bank consolidation (e.g. BoB, PNB) post-merger required ICAAP recalibration
• Yes Bank's 2020 reconstruction triggered a Pillar 2 add-on by RBI on the residual entity
• RBI's 2024 stress test cycle showed all SCBs maintained CET1 ≥ 11.5 % under the severe-adverse scenario

• Publish India's Basel IV implementation roadmap with phase-in dates
• Issue a Quantitative Impact Study (QIS) for Indian banks under output-floor rules
• Extend Basel-III-lite capital framework to large UCBs and NBFC-UL tier