RBI Plans Basel III Norms to Boost Indian Bank Resilience

The Reserve Bank of India has directed large banks to prepare for the adoption of an expected credit loss provisioning framework and revised Basel III capital norms starting April 2027, with a glide path through 2031 to mitigate the impact of higher provisioning. Inflation data in Australia has caused banks to revise expectations, delaying anticipated interest rate cuts due to stickier inflation pressures, complicating the Reserve Bank of Australia's outlook amid rising unemployment risks. In the U.S., Bank of America’s Q2 2025 results highlight the banking sector's vulnerability to persistent inflation, uncertain interest rates, and macroeconomic headwinds, despite solid earnings. The Federal Reserve's liquidity support during the 2023 bank run, particularly through the Bank Term Funding Program, significantly reduced investor risk perceptions, whereas traditional discount window borrowings did not. An IMF working paper reveals that rising interest rates affect banks differently depending on their loan portfolios, funding structures, and macroprudential policies, with prudent borrower-based measures mitigating default spikes and uneven impacts on net interest margins. Together, these developments underscore global banking sectors grappling with evolving regulatory frameworks, inflation dynamics, monetary tightening, and liquidity support mechanisms to maintain resilience and competitiveness.