- Basel norms aim to tackle the risk of bank failures.
- They ensure financial institutions have enough capital to meet obligations.
- They help absorb unexpected losses.
- Basel I focused on credit risk, setting minimum capital.
- Basel II added supervisory review and market discipline.
- Basel III further strengthened capital, leverage, funding, and liquidity.
- Higher Capital to Risk Weighted Asset Ratio (CRAR) means safer bank deposits.
- This reduces the likelihood of bank runs and systemic crises.