The challenges ahead Let me now briefly outline some of the salient issues and challenges that might arise for the Indian banking system from the adoption of the Basel II framework. The list here is, however, by no means exhaustive.
First, the new norms might, in some cases, lead to an increase in the overall regulatory capital requirements for the banks, particularly under the simpler approaches adopted in India, if the additional capital required for the operational risk is not offset by the capital relief available for the credit risk.