Basel 3 in India

Basel 3 is the new regulation of capital requirements of a bank. These new regulations are issued by Basel committee on banking supervision in 2010. These regulations and recommendations are the the amendment of Basel 2 recommendations.Basel 3's recommendations will improve the banking system by increasing the efficiency to cover the shock of financial crisis. Basel 3 will also reduce the financial risk.

Before recommending Basel 3 in 2010, Basel committee studied the reasons of international world crisis in 2008. By adopting recommendations of this Basel 3, risk of happening same financial crisis will decrease.

Regulatory Capital under Basel 3

1. Tier 1 capital

a) Common equity tier 1 and additional tier 1 capital

2. Tier 2 capital

3. Capital conservation buffer ( CCB)

Overall capital as a % to risk weighted assets.

Every commercial bank which is working in India should have capital as per following % of risk weighted assets.

1. Minimum common equity tier 1 ratio for credit risk + market risk + operational risk

India 5.5 and BCBS recommended 4.5

2. Capital conservation buffer

India 2.5 and BCBS recommended 2.5

3. Minimum common equity tier 1 ratio + capital conservation buffer ( 1+2)

India 8 and BCBS recommended 7

4. Additional Tier 1 capital

India 1.5 and BCBS recommended 1.5

5. Minimum Tier 1 capital ratio
(1+4)

India 7 and BCBS recommended 6

6. Tier 2 Capital

India 2 and BCBS recommended 2

7. Minimum total capital ratio ( 5 + 6)

India 9 and BCBS recommended 8

8. Minimum total cpaital ratio + capital conservation buffer ( 7 +2)

India 11.5 and BCBS recommended 10.5

These recommendations will apply on scheduled commercial banks excluding RRBs and LABs.

Now, question is, whether above recommendations will apply in 2012 or in future. Actually, these recommendations are phase-in- programme of RBI. Following is the chart which will show you the period in which 100% of these recommendations will apply.

Related :  Basel Accords

Video Lecture on Income Tax - Part 3

This video is the part of teaching of income tax law 1961. In this part, I will teach you to compute net profit which will be taxable.

Video Lecture on Income Tax - Part 1

In first part, we will learn different expenses which are allowed by Income tax law for calculating net profit.

Video Lecture on Income Tax - Part 2

In second video lecture on income tax, we are covering depreciation rates. I have explained different depreciation rates as per income tax law 1961 for AY - 2011- 2012

Peachtree vs Tally

I know that Peachtree is very famous software in the filed of accounting .There are large no. accounting transactions or problems that are solved by peechtree software. Tally software is also accounting based software.

This tally software is on its growing stage and also used in many countries. Both accounting software have own characteristics to solve the accounting problems. It is depend upon you and your department that which software is suitable according to the cost of installation in your department and cover all accounting transactions which are concerned with your business. But today the demand of tally software is very increasing due to its accuracy and easy use.

There are lots of advance work like multi-currency options, cost centers and inventory management system which are wonderful. Except this, tally has its own existence for statutory and taxation. In India, tally is used in almost all the business organisation. So, my personal preference is of using tally. But, Once again advice you that both software are best in accounting. It is depend upon you that which software you adopt easily.

Written by Guest Writer - Davinder 

MCA Accounting Notes

The Master of Computer Applications (MCA) is a postgraduate degree in computer application streams awarded in India. Full time MCA programmes normally take three academic years. Many universities have added  "ACCOUNTING AND FINANCIAL MANAGEMENT" subject in MCA degree. Because my specialize field is Accounting and Finance. So, I can help you to learn this subject. For providing you accounting notes, I am taking  "JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY KAKINADA"  I YEAR I SEMESTER M.C.A's Accounting syllabus. I hope, all those who are studying MCA, following notes will be helpful for you.

{Important Note : Some of these notes will be published  in future. So, please bookmark this page for your future learning. }

UNIT I:

Accounting: Generally Accepted Accounting Principles(GAAP) and Accounting standards, Characteristics and limitations of single entry system, double entry system of accounting, introduction of basic books of accounts ledgers..

UNIT II:

Preparation of trial balance - Final accounts - company final accounts. Users of Accounting Information, Role of Accountant in modern Organization.

UNIT III:

Financial Management - meaning and scope, role, objectives of time value of money - over capitalization – under capitalization - profit maximization - wealth maximization - EPS maximization.

UNIT IV:

Ratio Analysis - advantages - limitations - Fund flow analysis - meaning, importance, preparation and interpretation of Funds flow and cash flow statements-statement of changes in working capital.

UNIT V:

Costing - nature and importance and basic principles. Elements of cost, Absorption costing vs. marginal costing - Financial accounting vs. cost accounting vs. management accounting.

UNIT VI:

Marginal costing and Break-even Analysis: nature, scope and importance - practical applications of marginal costing, limitations and importance of cost - volume, profit analysis, Short run decisions.

UNIT VII:

Standard costing and budgeting: nature, scope and computation and analysis - materials variance, labor variance and sales variance -cash budget, sales budget - flexible Budgets, master budgets.

UNIT VIII:

Introduction to computerized accounting system: coding logic and codes, master files, transaction files, introduction documents used for data collection, processing of different files and Outputs obtained.

Is to Register with Any Government Authority Necessary for Issuing Certificate

A person started his own computer training institute, upon course completion, he wants to issue certificate to the students. Is he supposed to register with any government authority? If yes, where and how? India.

Karan from India

Dear, there is no need to be register with any govt. authority. If you are perfect in your knowledge. You can issue the certificate to your organisation's certificate. Before giving the certificate, you have to take the test and you should record your student's result in your own database. After this, your given certificate will be valid.