Basel Norms and Differential Performance of Banks in India – A Study of Post–Liberalisation Period 1991-92 to 2019-20

Abstract

Basel 1, 2, and 3 norms have enabled improvement in the banking sector across the globe. In India, these norms along with recommendations of the Narasimham and Khan committees report have led to changes in the functions of the banks for better performance. The present study aims to make a comparative differential analysis of four types of banks in India. It is hypothesised that the performance of all the four types of banks – Public Sector Banks (PSBs), Private Sector Banks (Pvt _SBs), Foreign Banks (FBs), and All Scheduled Commercial Banks (ASCBs) have been one of statistical significance. This means that with the introduction of new norms, there is better coverage of management and risks of banks. The data for the study has been collected from the Basel website, websites of banks annual reports, RBI website, EPWRF India Time Series database, and the like.

The main result of this study is that Basel norms are implemented in letter and spirit and have led to a higher level of performance of all the variables considered for the study. Given the global conditions of the threat of Bitcoins and other informal banking systems, there is an emergent need for Basel 4 norms.