The Hindu Business Line : Basel-II norms

The RBI has taken the right step in recently issuing final operational guidelines in connection with implementation of the Basel-II capital adequacy framework. The guidelines cover all relevant areas including capital funds, credit charge for credit risk mitigation, and capital charge for market risk and operational risk.

Basel-II-compliant banking will help improve the country's rating and banks can amass larger volumes of business.

Once Indian banks become stronger, they can vigorously pursue the task of financial inclusion and fully exploit the emerging intermediation opportunities.

Market discipline, the third pillar of the accord, will help the public choose where they would like to park their funds and transact their banking business. However, banks have to increase professionalism and develop expertise in the use of risk methodologies and tools.

Banks must initiate the necessary preparatory steps now and ready themselves to implement the new guidelines from April 2008.

K. K. Ammannaya

Udupi

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