Technology is the key to implement Basel II: Prof Narayan

Mumbai, July 27 (UNI) Prof P C Narayan of Indian Institute of Management, Bangalore, has said that technology upgradation was the need of the hour for the banks in the country today for the implementation of Basel II norms.

Addressing a seminar on 'Implementation of Basel II' here this evening, he said, ''As we have already successfully tackled the problem of 'Y2K', hence we must welcome 'Basel II' which has become a must for the bankers today. Basel II is nothing but the revised version of 'Basel I', which was formulated few years back in an endeavour to measure capital based on the risk profile of the assets. The programme was held by the Indian Banks' Association (IBA) in association with IBS Publishing.

Brushing aside various confusions persisting to the implementation of 'Basel II', Prof Narayan who heads the banking chair in the IIM, said that shared pool of loss data was possible for operational risk because the basic indicator will be a ''capital hogger''.

Answering to another query relating to the 'Basel II' norm, he cited the example of the banks in the USA, which have already gone for it.

He added that the US banks' derivatives poosition as in the first quarter of the year 2004 was USD 76.0 trillion and thus registering a growth of 20 per cent over the previous year.

Suggesting the banks about the initiatives to be taken up by them, Prof Narayan urged the banks to to vastly enhance risk management to 'talent pool' in the banks. Also, he emphasised on the robust credit rating framework in the banks.

Finally, Prof Narayan advised the banks to expedite the CBS (Core Banking System) implementation.

UNI KKD SSS VKG2345