BASEL III ENDGAME: A CRITICAL LEGAL ANALYSIS OF CAPITAL ALLOCATION AND GOVERNANCE IN THE EVOLVING BANKING REGULATORY REGIME

AUTHOR – SHWETA ROUT, LLM, KIIT SCHOOL OF LAW

BEST CITATION – SHWETA ROUT, BASEL III ENDGAME: A CRITICAL LEGAL ANALYSIS OF CAPITAL ALLOCATION AND GOVERNANCE IN THE EVOLVING BANKING REGULATORY REGIME, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (4) OF 2026, PG. 541-558, APIS – 3920 – 0001 & ISSN – 2583-2344.

Abstract

The Basel III Endgame is the final phase in the series of regulatory reform measures initiated in response to the global financial crisis. These measures have been principally designed to enhance the soundness, transparency and resilience of the international banking system, altogether. Developed by the Basel Committee on Banking Supervision, these measures introduce significant changes to the capital adequacy standards mainly through the recalibration of risk-weighted assets (RWAs), the restriction of internal risk models, and the imposition of an output floor to promote harmonization in the computation of capital. This article undertakes a detailed legal study of the Basel III Endgame and its ripple effect on capital allocation and corporate governance in the banking sector. Using a doctrinal and comparative research approach, the research looks at both international regulatory systems as well as domestic versions, such as the Indian regulatory regime under the reserve bank of India. It assesses the reorganization of the legal responsibilities of banks by the Endgame reforms, the role of the supervisory activities and the governance arrangements through the establishment of more stringent compliance, disclosure, and risk management provisions. In this paper, the author asserts that on one hand, the Basel III Endgame enhances prudential regulation, decreases systemic risk, and enhances global comparability of banks, on the other hand, it creates the issue of regulatory overreach, compliance overheads, and possible limitations on credit expansion. The challenges are especially severe in the developing economies whereby the banking systems are considered to be a key factor in the development of the economy. In addition, the research paper indicates the existence of jurisdictional differences in the application in leading economies, which can compromise the goal of global regulatory harmonization. It considers that the Basel III Endgame is relevant and should be implemented based on a fair and proportional balance between the aims of financial stability and the need for economic growth. Also, it should allow national regulatory frameworks some degree of flexibility.

Keywords: Basel III, Financial crises, Banking, RBI, Indian Regulatory, Compliance, Disclosure, and Risk management.