Three Pillars of Basel III
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The Basel III Guidelines are based upon 3 very important aspects which are called 3

pillars of the Basel II. These 3 pillars are as follows:
1. Minimum Capital Requirement
2. Supervisory review Process
3. Market Discipline

First Pillar: Minimum Capital Requirement
The first pillar Minimum Capital Requirement has been discussed above. This mainly
for total risk including the credit risk, market risk as well as Operational Risk .
Second Pillar: Supervisory Review Process
The second pillar i.e. Supervisory Review Process is basically intended to ensure that
the banks have adequate capital to support all the risks associated in their businesses.
In India , the RBI has issued the guidelines to the banks that they should have an
internal supervisory process which is called ICAAP or Internal Capital Adequacy
Assessment Process. With this tool the banks can assess the capital adequacy in
relation to their risk profiles as well as adopt strategies for maintaining the capital
levels.