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Anna Peter

Mumbai , Aug. 8

INDIAN banks are showing much interest in Basel II compliance, which means banks will set their capital adequacy levels independent of the regulator, but in compliance with certain rules.

At present, banks could be hindered in leveraging extra capital because of existing capital adequacy norms. But with the help of specific software and practices, risk could be understood and the optimisation of capital adequacy would ensure better profits.

According to Mr Murray Sargant, Director Sales, Financial Management Solutions, Japan and Asia Pacific, PeopleSoft, its product lines — PeopleSoft Risk-Weighted Capital, EPM and the Enterprise Network — offer customers a framework to build the right credit models. And a number of Indian banks had shown keen interest in implementing the company's Basel II system, especially joint venture and private banks. A key requirement of the Basel II would be the maintenance of a database of 2-5 years of risk information, customer database and product information and the way these are used, he said.

Indian banks were making significant investments in technology and infrastructure to support it and this was likely to intensify over the next 2-3 years.

As for the state of readiness of Indian banks for the Basel II regime, he said that conceptually and academically Indian banks were ready, but "physically" there was a long way to go. Further, timeline was short and banks had realised that there was a lot of work to be done, considering that the 2006 goal was "aggressive" for most banks.

PeopleSoft has worked closely with such banks as Danske Bank, Copenhagen, and Development Bank of Singapore to build an engine around their understanding of the Basel II and was now selling the concept to the Indian market. The company is helping 110 member banks of the European Union to become Basel II compliant by 2005-06.

In India its primary implementation partner for the EPM are TCS and IBM (PeopleSoft's partner worldwide). It has also begun work on a centre in Bangalore, that will employ 300 people by the end of the year, and 700 next year.PeopleSoft added 100 new customers in the second quarter, 2003, compared with 72 in the same quarter last year, many of whom, Mr Sargant said were Oracle's. 30 per cent of the total license revenue, up from 25 per cent in the second quarter 2002.

PeopleSoft's acquisition of JD Edwards, which has about 6,500 customers worldwide and revenues of $2 billion annually, makes it the second largest enterprise applications software company in the world, the largest being SAP, according to Mr Sargant.

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