The article examines the pros and cons of the implementation of Basel II in India and contextually, conducts an empirical exercise to examine the impact of capital requirements on the Indian banking system

The article traces the development of banking in India since independence and raises certain issues relevant to the sector at the present juncture

The new Basel accord is slated to come into effect in India around 2007 raising the question of how the revised standards will influence bank behaviour. Using a simple theoretical model, it is shown that the revised accord will result in asymmetric differences in the efficacy of monetary policy...