Letter to BS: RBI rejected govt offer to apply Basel-III norms to 4 banks

This refers to “RBI rejected govt proposal to apply Basel-III norms to 4 banks” (November 23). The Reserve Bank of India (RBI)’s hard stance over applying Basel norms to banks has been a matter of intense discussion over the last few weeks. Though the RBI is correct in enforcing strict regulatory norms, the importance of relatively easier credit flow to boost growth must not be lost sight of. The Basel guidelines were conceived taking into account the requirement of developed economies. Unlike developed countries, India, as a developing economy, needs a smoother credit ecosystem to bolster growth. Given the resource constraint, it is imperative that all available resources be utilised optimally. Instead of following the international regulatory framework completely, the RBI should devise its own regulatory norms, suited to Indian conditions, by striking a balance between facilitating easier credit and ensuring economic stability.

Sanjeev Kumar Singh, Jabalpur

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