The Basel Committee on Banking Supervision's efforts to update the capital adequacy standards for internationally active banks led to the creation of Basel II. This framework is based on three pillars: minimum capital requirements, regulatory supervision, and market discipline. The revised guidelines for capital ratios published by the RBI include a 5% common equity requirement along with a capital conservation buffer of 2.5% and a potential additional buffer of 0-2.5%. Under Basel II, banks must maintain a minimum capital requirement of 8% of risk-weighted assets, with risk weights determined by ratings. The framework also includes Pillar 2, which focuses on banks' internal processes for assessing and managing risk. The final rule outlines the criteria for banks to operate under this new framework and the associated risk-based capital requirements. The three pillars of the new framework are Pillar 1: capital adequacy requirements, Pillar 2: supervisory review, and Pillar 3: market discipline. Known as Basel II, this advanced framework aims to align regulatory capital requirements with actual risks.