Basel Framework

Other Resources

Basel I Accord: Credit Risk Categories

Basel I (aka Basel 1) created a bank asset classification system and focuses on credit risk. This classification system groups banks assets in five risk categories. Banks must maintain Tier 1 and Tier 2 capital equal to a minimum of 8% of risk-weighted assets.

1. Cash, central bank and government debt and any OECD government deb - 0%

2. Public sector debt - 0%, 10%, 20% or 50%

3. Development bank debt, OECD bank debt, OECD securities firm debt, non-OECD bank debt, and non-OECD public sector debt, cash in collection - 20%

4. Residential mortgages - 50%

5. Private sector debt, non-OECD bank debt, real estate, plants and equipment, capital instruments issued at other banks - 100%

Basel I is now viewed as outdated and has been replaced by Basel II