Resources for Basel II Capital Accord (Basel II)

Basel II – report on impact on Indian Banks

www.chasecooper.com

In a research report issued last week, Fitch Ratings said that Basel II has brought about a welcome focus on risk management in India. However Fitch expressed concern that the reduction in capital in areas such as consumer loans could increase risks.

Indian banks implemented the standardised approach on credit risk and the basic indicator approach for operational risk on 31 March 2008, a year later than originally planned. In the report entitled "Indian Banks: Impact of Basel II Implementation", Fitch discusses the business impact of the new Basel II guidelines on the capital ratios of the Indian banking system, including local changes made by the Indian regulator such as a zero risk weight for direct exposures to Indian central and state governments, and higher risk weights on residential mortgage loans.

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