Impact of Basel III Regulation on Imputed Income of Banks in India-An Exploratory Study

The main stresses of Basel III guidelines are on higher level of quality of capital and high liquidity standard. Requirements of high quality capital along with high liquid assets may put pressure on lending and deposit rates of banks. Banking services output from financial intermediation services are imputed in nature. Basel III guidelines are being implemented phase wise in India also. This paper examines the likely impact of Basel III guidelines on imputed income of banks in India. It is observed that imputed income of the banks may come under some pressure under certain scenario considered in the paper. Banks however would be able to face the challenge if they adopt proper strategies on deployment of their credit and sourcing of their funds.