BIS and the Basel Committee (BCBS): notes for bank exams

At a glance

The Bank for International Settlements (BIS) is often called the "central bank of central banks". It is owned by central banks and works to support monetary and financial stability through international cooperation. It also hosts the Basel Committee on Banking Supervision (BCBS), which sets the global standards for bank capital and liquidity known as the Basel Accords.

Key facts

BIS set up: 1930, under the Hague Agreements of January 1930; it opened in Basel on 17 May 1930
BIS headquarters: Basel, Switzerland
BIS representative offices: one for Asia and the Pacific and one for the Americas
BIS owners: 63 member central banks, covering about 95% of world GDP
RBI and the BIS: invited to become a shareholder in September 1996, one of nine new central banks
BCBS set up: end-1974 by the G10 central bank governors, after the collapse of Germany's Bankhaus Herstatt
BCBS members: 45 institutions from 28 jurisdictions
RBI and the BCBS: India invited to join in March 2009
Basel I: 1988; Basel II: 2004; Basel III: 2010, with the post-crisis reforms finalised in 2017
FSB: set up in April 2009 to succeed the Financial Stability Forum; its office is at the BIS in Basel

How it works

The BIS has three main roles:

Banker to central banks: it accepts deposits from central banks and manages part of their foreign reserves.
Forum for cooperation: central bank governors meet in Basel regularly.
Host of standard setters: it houses the secretariats of committees such as the BCBS and provides support to the Financial Stability Board.

The BCBS has no legal power of its own. Its standards apply only once national regulators adopt them. In India, the RBI does this through its directions to banks.

Accord	Year	Main idea
Basel I	1988	Minimum capital of 8% of risk-weighted assets, focused on credit risk
Basel II	2004	Three pillars: minimum capital, supervisory review, market discipline
Basel III	2010 (finalised 2017)	Better-quality capital, buffers, leverage ratio, LCR and NSFR

CVA in one line: Credit Valuation Adjustment risk is the risk of losses on derivatives when the counterparty's credit quality worsens, even if it does not default. SA-CCR is the standardised Basel method for measuring the exposure to such a counterparty.

Timeline

1930: BIS set up in Basel to handle German reparation payments
1974: BCBS formed by the G10 central banks
1988: Basel I capital accord
1996: RBI invited to become a BIS shareholder
2004: Basel II framework published
2009: India joins the BCBS; FSB replaces the Financial Stability Forum
2010: Basel III announced after the global financial crisis

Recent developments

7 Oct 2026: The RBI issued the Credit Valuation Adjustment Framework Directions, 2026, which revise the capital charge for CVA risk and let eligible banks use a simpler approach. On the same day it amended the SA-CCR rules, covering multiple margin agreements and banks acting as clearing members on SEBI-recognised exchanges. Both take effect from 1 April 2027.

Exam traps

BIS is in Basel, not Geneva or Zurich. It is not a UN agency, and it is not the same as the IMF.
The BCBS sets standards but cannot enforce them. Each country's regulator does that.
The BCBS was formed in 1974, but Basel I came in 1988. Don't mix up the two years.
The FSB (2009) is a different body from the BCBS, even though its office is also at the BIS.
CVA risk is the risk of a counterparty's credit worsening. Default risk is a separate charge.

Quick check

Q: Where is the BIS headquartered? A: Basel, Switzerland.
Q: In which year was India invited to join the BCBS? A: 2009.
Q: From when do the RBI's 2026 CVA directions apply? A: 1 April 2027.

BIS and the Basel Committee (BCBS)