The Hindu Business Line : `IT tools must for Basel II compliance'

TECHNOLOGY will be the key for banks in their effort to implement the Basel II norms was the consensus at the CTO Summit, a seminar on technology in the banking sector, organised by Banknet India.

Experts from the banking sector and the information technology industry agreed that data collection, networking and risk management will be the key areas where banks will need to implement technology, in their efforts to achieve standardisation.

Mr R.N. Ramanathan, Deputy Managing Director, Information Technology, State Bank of India, said: "Inducting IT is required in a big way for preparing for the Basel II norms. One of the requirements for Basel II is to build up 10 years of data of all our customers. This includes both retail customers and corporate clients. This is a big exercise and it is too early to discuss the costs involved."

Mr Ramanathan also said, "State Bank of India will extend the same IT solutions to all our associate banks as well. But we will have to wait and watch for total automation to extend to all 14,000 branches of the group."

SBI plans to shift about 85 per cent of its total business transactions under core banking solution (CBS) by the end of next fiscal. The bank is taking initiatives to get business under CBS, Mr Ramanathan said. Until March, SBI would rollout core banking platform in 1,000 branches.

Mr R. Gandhi, Chief General Manager, Department of Information Technology, RBI, said, "Basel II norms came into effect because central banks all over the world wanted to bring a co-ordinated and standardised approach. Very soon the distributed processes of banks will have to go for centralisation."

He added, "IT helps banks in data collection in a big way. That is why core banking solutions are essential for strong risk management. This will also include profiling of customers and their transactions."

Asked if the RBI will advise banks to implement IT solutions through application service providers, Mr Gandhi said, "That is left to the banks. The RBI cannot suggest how they must implement the solutions."

Mr Hanuman Tripathi, Managing Director, Infrasoft Technologies, a banking and financial solutions company said, that Basel II norms are a big opportunity for companies like his, as banks will look to implement IT solutions. He said, "Technology is essential for Basel II norms because of needs like data collection, computation of the audit trail and reporting between the various departments and across the ranks within banks."

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