Resources for Basel II Capital Accord (Basel II)

'Banks not yet ready for Basel II norms'

economictimes.indiatimes.com

Bankers have asked some more time from the Reserve Bank of India (RBI) to completely adhere to the Basel II norms which come into effect from fiscal year 2007-08. This was taken up by bankers in the pre-credit policy meeting with RBI held in Mumbai on Tuesday.

RBI, which is slated to announce credit policy on April 29 met the CEOs of large commercial banks — PSU, private and foreign — to take into account their views on the economy before announcing the policy.

Under the Basel II norms, for March 2008, banks have to set aside capital for the loan that is sanctioned, but not availed by the borrower. The risk weightage is 20% for short-term unavailed limits and 50% for long-term unavailed limits. This would affect banks’ capital adequacy ratio (CAR). In this context, banks have asked the banking regulator to give them additional time to adhere to these guidelines.

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