For banks to adapt to the impending BASEL III guidelines and manage both investor and regulatory expectations, re-visiting certain fundamental policies is critical. Banks will be required to re-assess their dividend policies with a view to conserve capital. Additionally, evaluation of impact on credit risk capital under advanced approaches is essential to provide for a balanced credit policy going forward. BASEL III guidelines will invariably shift the focus of the Indian banking sector from balance sheet size to profitability management. The role of bank as an originator and evaluator of credit is likely to take precedence over its role as a holder and long term investor in credit assets. The ability to implement a risk based pricing mechanism in place of the existing base rate linked pricing will be critical to managing return on equity.