The final calibration of liquidity ratios and leverage ratio will be made after further quantitative impact study and observation. Macroeconomic impact of Basel III Assuming that banks may be able to raise the increased capital requirement under Basel III from the market, questions have been raised as to its impact on economic growth and profitability of banks.
In general, the increase in equity capital requirement is likely to increase the weighted average cost of capital. Banks would partly pass on the increase cost of capital to the borrowers as higher lending rates. Thus, the equilibrium lending rates are likely to be marginally higher and as a consequence, credit growth could be a little lower than in the last few years.