Greater transparency is good for Indian banking

RBI's move to align bank disclosures with international norms is welcome. Making its own bank-inspection reports public might also support the cause of improved market discipline

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The Reserve Bank of India (RBI) has put out a draft amendment to its earlier directions on prudential norms for the capital adequacy of commercial banks.

It deals with Pillar 3 (disclosure requirements) of the Basel III framework, adopted by RBI in 2013. The rationale, according to the central bank, is to ensure greater consistency with that framework, as prescribed by the Bank for International Settlements, the global collective of central banks. Its three pillars cover minimum capital ratios, supervisory review processes and market discipline. The third pillar aims to keep markets informed about the financial status of banks through a regulatory mandate to disclose vital information that has no legitimate claim to secrecy.