Basel Norms on Capital Adequacy, the Banking Sector and Impact on Credit for SMEs and the Poor in India

Abstract

The new Basel norms for capital adequacy have been drawing a lot of attention in India, not just in banking circles but also among the general public and the media. Much of this revived interest is due to the changes with the introduction of Basel II. In this environment, one observes an over-emphasis on financial stability as a goal in itself, even when it goes contrary to distributional norms as well as growth potentials of the economy, which are no less relevant.¹