The IUP Journal of Bank Management


the implementation of Basel III norms, there are logical points of view that higher capital requirements lead to (i) a healthier financial system through a reduced risk of bank failure, (ii) lower systemic risk, and (iii) lower social costs as a result of the elimination of the moral hazard. On the other hand, the counterarguments highlight that higher capital requirements will escalate the costs of financing for banks as equity financing is more expensive than debt financing, leading to (i) a slowdown in credit growth and the potential detrimental effects on the economies concerned, and (ii) a decrease in profitability, preventing the future accumulation of capital via retained earnings and ruling out future expansion of banks? operations. To meet the higher capital requirements, one of the approaches the banks can adopt is to increase their retained earnings by raising their average lending rates, besides keeping their dividends unchanged. However, the overall objective of Basel III norms is to strengthen the global capital, liquidity, and risk assessment rules and enhance the resilience of the banking sector.

The first paper, ?The Impact of Basel III Norms on Indian Public Sector Banks: A Review of Empirical Studies?, offers a critical literature review for a comprehensive understanding of the different dimensions of the topic. The authors, Krishan K Boora and Savita, state that the profitability of Public Sector Banks (PSBs) is negatively impacted by the Basel III norms implementation. They opine that financially strong banks can easily adopt the new Basel Accord, and the financially weak banks face problems in smoothly implementing the Basel III norms. The authors state that most of the Indian PSBs have achieved an RBI prescribed capital adequacy ratio of more than 11.5%, and only a few banks are near to 11%. The profitability of PSBs is declining due to a negative return on assets and return on equity. Banks are also facing the problem of higher risk-weighted assets. The authors observe that the government is consolidating PSBs and reducing its shareholdings in PSBs.

The ?quality of governance?, notwithstanding the regulations, in banking institutions plays an important role in their stability and financial soundness. Although the importance of governance in banks is well-documented, the questions as to what constitutes governance and how to best identify the parameters which can be used as measures of ?quality of governance? require a thorough investigation. In the second paper, ?An Empirical Analysis of Key Governance Indicators of Scheduled Urban Cooperative Banks in India?, the authors, Ashish Srivastava and Nitu Saxena, investigate the key governance indicators of scheduled Urban Cooperative Banks (UCBs) in India as there have been concerns about the quality of their governance in these institutions. The authors argue that a sound governance structure signifies the trust of depositors in the bank?s ability to safely keep their funds and honor its commitments and liabilities. The study shows that all the three components of governance in UCBs?democratic structure, professional management, and control systems?constitute the quality and effectiveness of overall governance. A well-timed red-flagging of governance deficiencies is crucial for supervisory effectiveness. The authors conclude that supervisory processes should focus on the core governance features to help in economizing on the supervisory resources and improving the effectiveness. They conclude by stating that due attention to features of governance can help in improving the corporate governance standards of UCBs and thereby strengthen cooperative banking in India.

The final paper, ?The Economic Impact of SHG-BLP on the Empowerment of Rural Women in India?, explores the impact of the Self-Help Group (SHG)-Bank Linkage Program (BLP) on women empowerment. The authors, Vanishri R Hundekar and M M Munshi, study the responses of 25 rural SHGs and 120 SHG members under the Stree Shakti Scheme of Belagavi district of Karnataka. This primary study empirically investigates the economic conditions of the members pre and post participation in SHG-BLP, and assesses the impact of the SHG-BLP on social empowerment and economic empowerment of members. The study observes that participation in the SHG-BLP program has enabled poor women to have improved access to credit facilities as SHG helps in internal lending among members. The study notices that educated rural women have shown an acute interest in participating in SHGs to save money for future use, increase their income level, and uplift their economic status in the society. The program has enabled higher psychological and social empowerment along with economic empowerment. Besides, the participation of rural women in the SHG-BLP program has brought confidence, leadership and skill development in rural areas, particularly among women.

- Vighneswara Swamy
Consulting Editor

Article   Price (₹) Buy
The Impact of Basel III Norms on Indian Public Sector Banks: A Review of mpirical Studies
An Empirical Analysis of Key Governance Indicators of Scheduled Urban ooperative Banks in India
The Economic Impact of SHG-BLP on the Empowerment of Rural Women in India
Contents : (Aug' 20)

The Impact of Basel III Norms on Indian Public Sector Banks: A Review of Empirical Studies
Krishan K Boora and Savita

A strong and stable banking sector is vital for the development of an economy. An extraordinary development has been noticed in the banking system of India in the last few years. The scenario of the Indian banking sector has changed due to liberalization, globalization, and various financial sector reforms. After several financial crises in the banking sector across the globe, the financial stability and soundness of the banking sector became a critical issue, and it created the need for uniform banking regulations all over the world. For this purpose, Bank for International Settlements (BIS) formed the Basel Committee on Banking Supervision. This committee framed the Basel Capital Accords of Basel I in 1988, Basel II in 2004 and Basel III in 2010. The objective of this paper is to review the available literature on the Basel III norms and their impact on Indian public sector banks. The empirical studies of the last seven years (2013-2020) have been reviewed in this paper. This paper reveals that the new capital regulation will benefit the banking sector in several ways like a strong and stable financial system and increase the shock-absorbing capacity of banks. Indian banks will have to face various difficulties in its implementation such as a decline in profitability, a higher level of NPAs, and heavy cost of borrowed funds.

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An Empirical Analysis of Key Governance Indicators of Scheduled Urban Cooperative Banks in India
Ashish Srivastava and Nitu Saxena

A challenge to the analysis of corporate governance lies in a large number of variables that define and shape it, and hence, identification of the key parameters improves the effectiveness of overall governance. This paper aims at the identification of key governance parameters of scheduled Urban Cooperative Banks (UCBs) in India through an empirical analysis. The quest for key governance parameters in this paper culminates in eight parameters, encompassing three core features, namely, members' participation, technically qualified and trained directors, and a system of accountability. Identification of these core governance features is the main finding of this paper. These core features, through their subtle influence, take care of the remaining aspects of the governance structure of scheduled UCBs and are useful not only for timely red-flagging in the supervisory processes but also for strengthening the governance of cooperative banks in India.

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The Economic Impact of SHG-BLP on the Empowerment of Rural Women in India
Vanishri R Hundekar and M M Munshi

The present study seeks to examine the application of Self-Help Group (SHG)-bank linkage schemes and their impact on the empowerment of women in the study area and also attempts to evaluate if SHGs can be change agents in influencing women empowerment. The data has been collected from a total of 120 selected members and 25 SHGs which were organized under the Stree Shakti Scheme of Belagavi district of Karnataka. Both structural and behavioral approaches have been used for the study through a questionnaire. The data was analyzed through different statistical tests like reliability test, multiple regression analysis and paired t-test. The study reveals that microfinance-related loan and its productive utilization cause a significant difference in women empowerment level. As per the study, the main reason behind the progress of SHG is credit linkage with poor and vulnerable people and its ability to help members of SHG build financial status, enable members to become self-reliant, build confidence among poor and rural women and eventually help them earn a better livelihood. Besides the above findings, the study also revealed some of the constraints faced by rural women in the journey of their empowerment. SHG program could well be the catalyst to achieve inclusive growth across the country.

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