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Swamy, V. Estimating the Basel III Capital Requirement for Indian Banks. Applied Economics Quarterly, 64(3), 253-277.
Swamy, Vighneswara "Estimating the Basel III Capital Requirement for Indian Banks" Applied Economics Quarterly 64.3, , 253-277.
Swamy, Vighneswara: Estimating the Basel III Capital Requirement for Indian Banks, in: Applied Economics Quarterly, vol. 64, iss. 3, 253-277, [online]


Estimating the Basel III Capital Requirement for Indian Banks

Swamy, Vighneswara

Applied Economics Quarterly, Vol. 64 (2018), Iss. 3 : pp. 253–277

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Article Details


Author Details

Swamy, Vighneswara, Professor, IBS-Hyderabad, ICFAI Foundation for Higher Education – A deemed university, Dontanapally, Shankarapally Road, Hyderabad – 504201, Telangana, India.



The study estimates the Basel-III capital requirement for Indian banks employing the methodology incorporating the reported tier-1, tier-2 capital, total capital and risk-weighted assets (RWAs) sourced from the Basel disclosures made by the banks on their websites. In order to understand the strategy and the response of different bank groups based on their ownership styles, this study, groups the banks into scheduled commercial banks, public sector banks group, and private banks and considers the data for the period 2002 – 2011. The results suggest that with an assumed growth of RWAs at 10%, banks in India would require additional minimum tier-1 capital of INR 2.51 trillion. With an assumed RWAs growth at 12% and 15%, the requirement would be in the order of INR 3.36 trillion and INR 4.74 trillion respectively.

JEL classifications: E44, E61, G2, G21, G28

Keywords: Basel III, capital and liquidity, commercial banks, capital, countercyclical capital buffers, financial (in)stability

Table of Contents

Section Title Page Action Price
Vighneswara Swamy: Estimating the Basel III Capital Requirement for Indian Banks 253
Abstract 253
1. Introduction 253
2. Related Literature 255
3. Prudential Regulation in Indian Banking 258
3.1 Basel III Capital Requirements 260
4. Data and Methodology 253
5. Results and Discussion 253
6. Conclusion 253
References 253
Annex 1: Elements of Tier 1 and Tier 2 Capital 254
Annex 2: Modeling the Estimation of Additional Capital Requirement 254