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'75 pc banks do not have Basel II funds'

Seventy five per cent of Indian banks are yet to set up Basel II guidelines, but confident of meeting the RBI guidelines.

india Updated: Nov 22, 2006 18:03 IST

Majority of banks in the country are yet to set up specific budgets for Basel II guidelines, although the industry is confident of meeting the RBI guidelines in this regard, a new study reveals.

According to a new study by the global consultancy firm KPMG released on Wednesday. Indian banks are confident in their ability to implement the Basel II norms and meet the RBI guidelines for achieving a standard approach for credit risk and the basic approach in respect of the operational risk.

However, approximately 75 per cent of the banks surveyed have not specifically budgeted funds for their Basel II programme, KPMG said.

Basel II is a round of deliberation by central bankers from across the globe, under the auspices of the Basel Committee on Banking Supervision (BCBS). It is aimed at producing uniformity in the way banks and banking regulators approach risk management across national borders.

Given the impending timelines for implementation of the Basel II norms, banks lagging behind need to devote considerable resources in this area so that they can address the necessary requirements of the RBI, it said in a report titled "India: Ready for Basel II?".

About 89 per cent of the banks surveyed indicated that they have a 'dedicated team' responsible for Basel II implementation. However, very few banks have established the position of Chief Risk Officer with a reporting line to the CEO/Board and whose role has been defined with clarity.

Although the regulator is yet to issue more specific guidelines, only 16 per cent of the banks surveyed have commenced the process of planning for the more advanced approaches of Basel II.

First Published: Nov 22, 2006 18:03 IST