The Hindu Business Line : Basel-II accord: KPMG to assess banks' preparedness

KPMG has embarked on a survey of the banking system in the country to assess the level of preparedness of banks in meeting with the requirements of the Basel-II Capital Accord.

"The survey would look at the state of preparedness and also see whether there are any issues of concern to banks in the implementation of the Basel-II programme," Mr Amreshwar Seth, Senior Advisor, KPMG, told Business Line.

Mr Seth said that he was in discussions with some banks to help them implement the Basel-II accord in respect of operation risk. "We have put in some proposals for both public sector and private sector banks," he said.

While the 1988 capital accord addressed market and credit risks, Basel II had substantially changed the treatment of credit risk and also required banks to have substantial capital to cover operational risks.

Mr Seth also said that the jury is still out on the view of some people that the capital requirements of banks would go up dramatically because of the Basel-II requirements of operational risk. "I don't agree with the view", he said.

He said that Basel-II is not about implementation of guidelines or compliance with requirements, but it is about getting business benefits. "There are real benefits to be had from implementing Basel-II programme. If you implement a good operational risk programme, it will enable banks to understand the product pricing better and do intelligent product pricing. It would also help in portfolio analysis," Mr Seth said.