CHAPTER I

INTRODUCTION
Page 1
RESEARCH PROJECT
ON
An Exploratory Study on
Risk Mana!"!nt in #ankin S!$tor%
RAYAT INSTITUTE OF MANAGEMENT
Afliated To
PUNJAB TECHNICAL UNIVERSITY
I t!e "a#tial $%l&ll'et o$ #e(%i#e'et $o# t!e a)a#d o$
*eg#ee o$ Ma+te#+ o$ B%+ie++ Ad'ii+t#atio ,MBA-

Su&"itt!d To'
Su&"itt!d B y'
Le.t/ M#+/Rita S!a#'a *ee"i0a
Rai
Roll/No/ 1123445
AC(NO)*ED+EMENT
Beig a +t%det o$ Ma+te# o$ B%+ie++ Ad'ii+t#atio Co%#+e Re+ea#.!
P#o6e.t+ a#e e++etial e7e#.i+e 8 e9e#: +t%det o$ "#o$e++ioal +t%die+ i+
.o'"%l+o#: to go t!#o%g! t!e+e t:"e o$ "#o6e.t to &d o%t t!e e7"o+%#e o$
.o#"o#ate )o#ld 8 it+ da:;to;da: d:a'i. .!a#a.te#i+ti.+/ It )a+ "#i9ilege $o#
'e to %de#ta0e ': #e+ea#.! "#o6e.t %de# g%ida.e o$ Assist,Pro-,Rita
S.ar"a< o$ 'aage'et de"a#t'et/ I )o%ld li0e to e7"#e++ ': dee" +e+e
o$ g#atit%de to Assist,Pro-,Rita S.ar"a $o# !e# 9al%a=le g%ida.e
i+"i#atio ad e.o%#age'et/ I #e.ei9ed $#o' t!e' all #e+ea#.! "e#iod ad
)it!o%t t!ei# .ot#i=%tio t!e .o'"letio o$ "#o6e.t 'ig!t ot =e "o++i=le/
I )i+! to a.0o)ledge ': g#atit%de to all #e+"odet )!o+e +i.e#e
#e+"o+e !el"ed 'e to a..o'"li+! t!e "#o6e.t/
Page 1
DECLARATION
I *ee"i0a Rai Roll No/1123445 Cla++ M/B/A/ IV +e'/ o$ t!e Ra:at I+tit%te o$
Maage'et !e#e=: de.la#e t!at t!e P#o6e.t Re"o#t etitled >A e7"lo#ato#:
+t%d: o
Ri+0 Maage'et i Ba0ig Se.to#? i+ a o#igial )o#0 ad t!e +a'e !a+
ot =ee +%='itted to a: ot!e# I+tit%te $o# t!e a)a#d o$ a: ot!e# deg#ee/
A +e'ia# "#e+etatio o$ t!e P#o6e.t Re"o#t )a+ 'ade o >A e7"lo#ato#:
+t%d: o
Ri+0 Maage'et i Ba0ig Se.to#? ad t!e +%gge+tio+ a+ a""#o9ed =:
t!e $a.%lt: )e#e d%l: i.o#"o#ated/
Sigat%#e o$ $a.%lt: Sigat%#e o$
Re+ea#.!e#
Page @
CONTENTS
Cotet+ Page No/
A.0o)ledge'et 1
*e.la#atio @
C!a"te# 1/ INTRO*UCTION OF TOPIC A;4
C!a"te# 1/ Re9ie) o$ Lite#at%#e B;1B
C!a"te# @/ Re+ea#.! Met!odolog:
@/1 INTRO*UCTION
@/1 STU*Y PROBLEM
@/@ OBJECTIVES
@/@/1 *ATA COLLECTION
@/3 STU*Y COVERAGE AN* SAMPLE
@/A SCOPE OF THE SURVEY
@5;@1
C!a"te# 3/ *ATA ANALYSIS 8 INTERPETATION @@;A4
C!a"te# AFIN*INGS AN* SUGGESTIONS OF THE STU*Y AB;C1
C!a"te# C/ CONCLUSION C1;C@
APPEN*ID C3;2A
BIBLIOGRAPHY 2C
Page 3
CHAPTER/0
INTRODUCTION
Page A
0,0 THEME O1 THE STUD2
Ri+0 'aage'et %de#+.o#e+ t!e $a.t t!at t!e +%#9i9al o$ a o#gaiEatio
de"ed+ !ea9il: o it+ .a"a=ilitie+ to ati.i"ate ad "#e"a#e $o# t!e .!age
#at!e# t!a 6%+t )aitig $o# t!e .!age ad #ea.t to it/ T!e o=6e.ti9e o$ #i+0
'aage'et i+ ot to "#o!i=it o# "#e9et #i+0 ta0ig a.ti9it:< =%t to e+%#e
t!at t!e #i+0+ a#e .o+.io%+l: ta0e )it! $%ll 0o)ledge< "%#"o+e ad .lea#
%de#+tadig +o t!at it .a =e 'ea+%#ed ad 'itigated/ It al+o "#e9et+ a
i+tit%tio $#o' +%Fe#ig %a..e"ta=le lo++ .a%+ig a i+tit%tio to +%Fe# o#
'ate#iall: da'age it+ .o'"etiti9e "o+itio/ F%.tio+ o$ #i+0 'aage'et
+!o%ld a.t%all: =e =a0 +"e.i&. di.tated =: t!e +iEe ad (%alit: o$ =ala.e
+!eet< .o'"le7it: o$ $%.tio+< te.!i.alG "#o$e++ioal 'a"o)e# ad t!e
+tat%+ o$ MIS i "la.e i t!at =a0/
0,3 INTRODUCTION
Risk' t!e 'eaig o$ HRi+0I a+ "e# Je=+te#I+ .o'"#e!e+i9e di.tioa#: i+ >a
.!a.e o$ e.o%te#ig !a#' o# lo++< !aEa#d< dage#? o# >to e7"o+e to a
.!a.e o$ i6%#: o# lo++?/ T!%+< +o'et!ig t!at !a+ "otetial to .a%+e !a#'
o# lo++ to oe o# 'o#e "laed o=6e.ti9e+ i+ .alled Ri+0/
T!e )o#d #i+0 i+ de#i9ed $#o' a Italia )o#d >Ri+i.a#e? )!i.! 'ea+ >To
*a#e?/ It i+ a e7"#e++io o$ dage# o$ a ad9e#+e de9iatio i t!e a.t%al
#e+%lt $#o' a: e7"e.ted #e+%lt/
Ba0+ $o# Ite#atioal Settle'et ,BIS- !a+ de&ed it a+; >Ri+0 i+ t!e t!#eat
t!at a e9et o# a.tio )ill ad9e#+el: aFe.t a o#gaiEatioI+ a=ilit: to
a.!ie9e it+ o=6e.ti9e+ ad +%..e++$%ll: e7e.%te it+ +t#ategie+/?
Risk Mana!"!nt' Ri+0 Maage'et i+ a "laed 'et!od o$ dealig )it!
t!e "otetial lo++ o# da'age/ It i+ a ogoig "#o.e++ o$ #i+0 a""#ai+al
t!#o%g! 9a#io%+ 'et!od+ ad tool+ )!i.! .oti%o%+l:
A++e++ )!at .o%ld go )#og
*ete#'ie )!i.! #i+0+ a#e i'"o#tat to deal )it!
I'"le'et +t#ategie+ to deal )it! t!o+e #i+0+
Page C
0,4 STUD2 PRO#*EM
Ba+el II o#'+ .a'e a+ a atte'"t to #ed%.e t!e ga" i "oit o$ 9ie)+
=et)ee .oKi.t "#a.ti.e+/ T!e#e$o#e< t!e i'"le'etatio o$ t!o+e
#e+ol%tio+ e'e#ged =: t!e =a0+/ Rega#dig t!i+ i++%e t!e +%#9e: !a+ =ee
'ade/
St%d: "#o=le' .a =e +tated a+ $ollo)+L
To 5.at !xt!nt &anks .a6! i"pl!"!nt!d #as!l II nor"s r!lat!d to
!n.an$in int!rnal $ontrol in t.! &anks7
0,8 O#JECTI9ES
Co9e#ig diFe#et a+"e.t+ o$ #i+0 a++e++'et
Ideti$:ig 0e:+ $o# eFe.ti9e #i+0 'aage'et
To %de#+tad t!e .!allege+ ad i'"a.t o$ I'"le'etig Ba+el II
To aal:Ee t!e .%##et "#og#e++ o$ Ba+el II i P%6a=
Page 2
CHAPTER II
*ITRETURE RE9IE)
Page 4
3,0 INTRODUCTION
#as!l I A$$ord' T!e Ba+el Co''ittee o Ba0ig S%"e#9i+io< )!i.! .a'e
ito e7i+te.e i 1B23< 9ol%tee#ed to de9elo" a $#a'e)o#0 $o# +o%d
=a0ig "#a.ti.e+ ite#atioall:/ I 1B44 t!e $%ll +et o$ #e.o''edatio+
)a+ do.%'eted ad gi9e to t!e Cet#al =a0+ o$ t!e .o%t#ie+ $o#
i'"le'etatio to +%it t!ei# atioal +:+te'+/ T!i+ i+ .alled t!e Ba+el Ca"ital
A..o#d o# Ba+el I A..o#d/ It "#o9ided le9el "la:ig &eld =: +ti"%latig t!e
a'o%t o$ .a"ital t!at eed+ to =e 'aitaied =: ite#atioall: a.ti9e
=a0+/
#as!l II A$$ord' Ba0ig !a+ .!aged d#a'ati.all: +i.e t!e Ba+el I
do.%'et o$ 1B44/ Ad9a.e+ i #i+0 'aage'et ad t!e i.#ea+ig
.o'"le7it: o$ &a.ial a.ti9itie+ G i+t#%'et+ ,li0e o"tio+< !:=#id +e.%#itie+
et./- "#o'"ted ite#atioal +%"e#9i+o#+ to #e9ie) t!e a""#o"#iatee++ o$
#eg%lato#: .a"ital +tada#d+ %de# Ba+el I/ To 'eet t!i+ #e(%i#e'et< t!e
Ba+el I a..o#d )a+ a'eded ad #e&ed< )!i.! .a'e o%t a+ t!e Ba+el II
a..o#d/
T!e e) "#o"o+al i+ =a+ed o t!#ee '%t%all: #ei$o#.ig "illa#+ t!at allo)
=a0+ ad +%"e#9i+o#+ to e9al%ate "#o"e#l: t!e 9a#io%+ #i+0+ t!at =a0+ !a9e
to $a.e ad #ealig #eg%lato#: .a"ital 'o#e .lo+el: )it! %de#l:ig #i+0+/
Ea.! o$ t!e+e t!#ee "illa#+ !a+ #i+0 'itigatio a+ it+ .et#al =oa#d/ T!e e)
#i+0 +e+iti9e a""#oa.! +ee0+ to +t#egt!e t!e +a$et: ad +o%de++ o$ t!e
id%+t#: =: $o.%+ig oL
M Ri+0 =a+ed .a"ital ,Pilla# 1-
M Ri+0 =a+ed +%"e#9i+io ,Pilla# 1-
M Ri+0 di+.lo+%#e to e$o#.e 'a#0et di+.i"lie ,Pilla# @-
Page B
3,3 #ASE* II 1RAME)OR(
T.! n!5 proposal is &as!d on t.r!! "utually r!in-or$in pillars t.at
allo5 &anks and sup!r6isors to !6aluat! prop!rly t.! 6arious risks
t.at &anks -a$! and r!alin r!ulatory $apital "or! $los!ly 5it.
und!rlyin risks,
#as!l II
1ra"!5ork
Pillar I Pillar II Pillar III
Mini"u" Capital Sup!r6isory
Mark!t
R!:uir!"!nts R!6i!5 Pro$!ss Dis$iplin!
3,3,0 THE 1IRST PI**AR ; MINIMUM CAPITA*
RE<UIREMENTS
T!e &#+t "illa# +et+ o%t 'ii'%' .a"ital #e(%i#e'et $o# t!e =a0/ T!e e)
$#a'e)o#0 'aitai+ 'ii'%' .a"ital #e(%i#e'et o$ 4N o$ #i+0 a++et+/
Ba+el II $o.%+e+ o i'"#o9e'et i 'ea+%#e'et o$ #i+0+/ T!e #e9i+ed .#edit
#i+0 'ea+%#e'et 'et!od+ a#e 'o#e ela=o#ate t!a t!e .%##et a..o#d/ It
"#o"o+e+ $o# t!e &#+t ti'e< a 'ea+%#e $o# o"e#atioal #i+0< )!ile t!e 'a#0et
#i+0 'ea+%#e #e'ai+ %.!aged/
Page 15
3,3,3 THE SECOND PI**AR / SUPER9ISOR2 RE9IE)
PROCESS
S%"e#9i+o#: #e9ie) "#o.e++ !a+ =ee it#od%.ed to e+%#e ot ol: t!at =a0
!a9e ade(%ate .a"ital to +%""o#t all t!e #i+0+< =%t al+o to e.o%#age t!e' to
de9elo" ad %+e =ette# #i+0 'aage'et te.!i(%e+ i 'oito#ig ad
'aagig t!ei# #i+0+/ T!e "#o.e++ !a+ $o%# 0e: "#i.i"le+;
a- Ba0+ +!o%ld !a9e a "#o.e++ $o# a++e++ig t!ei# o9e#all .a"ital ade(%a.:
i #elatio to t!ei# #i+0 "#o&le ad a +t#ateg: $o# 'oito#ig t!ei# .a"ital
le9el+/
=- S%"e#9i+o#+ +!o%ld #e9ie) ad e9al%ate =a0I+ ite#al .a"ital ade(%a.:
a++e++'et ad +t#ategie+< a+ )ell a+ t!ei# a=ilit: to 'oito# ad e+%#e
t!ei# .o'"lia.e )it! #eg%lato#: .a"ital #atio+/
.- S%"e#9i+o#+ +!o%ld e7"e.t =a0+ to o"e#ate a=o9e t!e 'ii'%'
#eg%lato#: .a"ital #atio+ ad +!o%ld !a9e t!e a=ilit: to #e(%i#e =a0+ to !old
.a"ital i e7.e++ o$ t!e 'ii'%'/
d- S%"e#9i+o#+ +!o%ld +ee0 to ite#9ee at a ea#l: +tage to "#e9et .a"ital
$#o' de.#ea+ig =elo) 'ii'%' le9el ad +!o%ld #e(%i#e #a"id #e'edial
a.tio i$ .a"ital i+ ot 'etioed o# #e+to#ed/
3,3,4 THE THIRD PI**AR ; MAR(ET DISCIP*INE
Ma#0et di+.i"lie i'"o+e+ +t#og i.eti9e+ to =a0+ to .od%.t t!ei#
=%+ie++ i a +a$e< +o%d ad eFe.ti9e 'ae#/ It i+ "#o"o+ed to =e eFe.ted
t!#o%g! a +e#ie+ o$ di+.lo+%#e #e(%i#e'et+ o .a"ital< #i+0 e7"o+%#e et./ +o
t!at 'a#0et "a#ti.i"at+ .a a++e++ a =a0I+ .a"ital ade(%a.:/ T!e+e
di+.lo+%#e+ +!o%ld =e 'ade at lea+t +e'i;a%all: ad 'o#e $#e(%etl: i$
a""#o"#iate/ O%alitati9e di+.lo+%#e+ +%.! a+ #i+0 'aage'et o=6e.ti9e+ ad
"oli.ie+< de&itio+ et./ 'a: =e "%=li+!ed a%all:/
Page 11
3,4 T2PES O1 RIS(S
J!e )e %+e t!e te#' >Ri+0?< )e all 'ea &a.ial #i+0 o# %e7"e.ted
&a.ial lo++/ I$ )e .o+ide# #i+0 i te#'+ o$ "#o=a=ilit: o# o..%# $#e(%etl:<
)e 'ea+%#e #i+0 o a +.ale< )it! .e#tait: o$ o..%##e.e at oe ed ad
.e#tait: o$ o;o..%##e.e at t!e ot!e# ed/ Ri+0 i+ t!e g#eate+t "!eo'ea
)!e#e t!e "#o=a=ilit: o$ o..%##e.e o# o;o..%##e.e i+ e(%al/ A+ "e# t!e
Re+e#9e Ba0 o$ Idia g%idelie+ i++%ed i O.t/ 1BBB< t!e#e a#e t!#ee 'a6o#
t:"e+ o$ #i+0+ e.o%te#ed =: t!e =a0+ ad t!e+e a#e C#edit Ri+0< Ma#0et
Ri+0 8 O"e#atioal Ri+0/ F%#t!e# a$te# eli.itig 9ie)+ o$ =a0+ o t!e d#a$t
g%idelie+ o C#edit Ri+0 Maage'et ad 'a#0et #i+0 'aage'et< t!e RBI
!a+ i++%ed t!e &al g%idelie+ ad ad9i+ed +o'e o$ t!e la#ge PSU =a0+ to
i'"le'et +o a+ to ga%ge t!e i'"a.t/ Ri+0 i+ t!e "otetialit: t!at =ot! t!e
e7"e.ted ad %e7"e.ted e9et+ 'a: !a9e a ad9e#+e i'"a.t o t!e =a0I+
.a"ital o# it+ ea#ig+/ T!e e7"e.ted lo++ i+ to =e =o#e =: t!e =o##o)e# ad
!e.e i+ ta0e .a#e o$ =: ade(%atel: "#i.ig t!e "#od%.t+ t!#o%g! #i+0
"#e'i%' ad #e+e#9e+ .#eated o%t o$ t!e ea#ig+/ It i+ t!e a'o%t e7"e.ted
to =e lo+t d%e to .!age+ i .#edit (%alit: #e+%ltig i de$a%lt/ J!e#e a+< t!e
%e7"e.ted lo++ o a..o%t o$ t!e idi9id%al e7"o+%#e ad t!e )!ole
"o#t$olio i+ eti#el: =o#e =: t!e =a0 it+el$ ad !e.e .a#e +!o%ld =e ta0e/
T!%+< t!e e7"e.ted lo++e+ a#e .o9e#ed =: #e+e#9e+G"#o9i+io+ ad t!e
%e7"e.ted lo++e+ #e(%i#e .a"ital allo.atio/
3,4,0 CREDIT RIS(
I t!e .ote7t o$ Ba+el II< t!e #i+0 t!at t!e o=ligo# ,=o##o)e# o# .o%te#"a#t:-
i #e+"e.t o$ a "a#ti.%la# a++et )ill de$a%lt i $%ll o# i "a#t o t!e o=ligatio
to t!e =a0 i #elatio to t!e a++et i+ te#'ed a+ C#edit Ri+0/
C#edit Ri+0 i+ de&ed a+;>T!e #i+0 o$ lo++ a#i+ig $#o' o%t#ig!t de$a%lt d%e to
ia=ilit: o# %)illige++ o$ t!e .%+to'e# o# .o%te# "a#t: to 'eet
.o''it'et+ i #elatio to ledig< t#adig< !edgig< +ettle'et ad ot!e#
&a.ial t#a+a.tio o$ t!e .%+to'e# o# .o%te# "a#t: to 'eet
.o''it'et+?/
C#edit Ri+0 i+ al+o de&ed< >a+ t!e "otetial t!at a =o##o)e# o# .o%te# "a#t:
)ill $ail to 'eet+ it+ o=ligatio+ i a..o#da.e i ag#eed te#'+?/
3,4,3 MAR(ET RIS(
Page 11
It i+ de&ed a+ >t!e "o++i=ilit: o$ lo++ .a%+ed =: .!age+ i t!e 'a#0et
9a#ia=le+ +%.! a+ ite#e+t #ate< $o#eig e7.!age #ate< e(%it: "#i.e ad
.o''odit: "#i.e?/ It i+ t!e #i+0 o$ lo++e+ i< 9a#io%+ =ala.e +!eet "o+itio+
a#i+ig $#o' 'o9e'et+ i 'a#0et "#i.e+/
RBI !a+ de&ed 'a#0et #i+0 a+ t!e "o++i=ilit: o$ lo++ to a =a0 .a%+ed =:
.!age+ i t!e 'a#0et #ate+G "#i.e+/ RBI G%ida.e Note $o.%+ o t!e
'aage'et o$ li(%idit: Ri+0 ad Ma#0et Ri+0< $%#t!e# .atego#iEed ito
ite#e+t #ate #i+0< $o#eig e7.!age #i+0< .o''odit: "#i.e #i+0 ad e(%it:
"#i.e #i+0/
Ma#0et #i+0 i.l%de+ t!e #i+0 o$ t!e deg#ee o$ 9olatilit: o$ 'a#0et "#i.e+ o$
=od+< +e.%#itie+< e(%itie+< .o''oditie+< $o#eig e7.!age #ate et./< )!i.!
)ill .!age dail: "#o&t ad lo++ o9e# ti'eP itI+ t!e #i+0 o$ %e7"e.ted
.!age+ i "#i.e+ o# #ate+/ It al+o add#e++e+ t!e i++%e+ o$ Ba0+ a=ilit: to
'eet+ it+ o=ligatio a+ ad )!e d%e< i ot!e# )o#d+< li(%idit: #i+0/
3,4,4 OPERATIONA* RIS(
O"e#atioal #i+0 i+ t!e #i+0 a++o.iated )it! t!e o"e#atio+ o$ a o#gaiEatio/
It i+ de&ed a+ >#i+0 o$ lo++ #e+%ltig $#o' iade(%ate o# $ailed ite#al
"#o.e++< "eo"le ad +:+te'+ o# $#o' e7te#al e9et+/?
It i.l%de+ legal #i+0/ It e7.l%de+ +t#ategi. ad #e"%tatioal #i+0+< a+ t!e +a'e
a#e ot (%ati&a=le/
O"e#atioal #i+0 i.l%de+ t!e #i+0 o$ lo++ a#i+ig $#o' $#a%d< +:+te' $ail%#e+<
t#adig e##o# ad 'a: ot!e# ite#al o#gaiEatioal #i+0+ a+ )ell a+ #i+0 d%e
to e7te#al e9et+ +%.! a+ &#e< Kood et./ t!e lo++e+ d%e to o"e#atio #i+0 .a
=e di#e.t a+ )ell a+ idi#e.t/ *i#e.t lo++ 'ea+ t!e &a.ial lo++e+ #e+%ltig
di#e.tl: $#o' a i.idet o# a e9et/ E/g/ $o#ge#:< $#a%d et./ idi#e.t lo++
'ea+ t!e lo++ i.%##ed d%e to t!e i'"a.t o$ a i.idet/
Page 1@
3,4,8 RE+U*ATOR2 RIS(
T!e o)ed $%d+ aloe a#e 'aaged =: a etit:< it i+ at%#al t!at 9e#: $e)
#eg%lato#+ o"e#ate ad +%"e#9i+e t!e'/ Ho)e9e#< a+ =a0+ a..e"t de"o+it
$#o' "%=li. o=9io%+l: =ette# go9e#a.e i+ e7"e.ted $#o' t!e'/ T!i+ etail+
'%lti"li.it: o$ #eg%lato#: .ot#ol+/ Ma: Ba0+< !a9ig al#ead: goe $o#
"%=li. i++%e< !a9e a g#eate# #e+"o+i=ilit: ad a..o%ta=ilit: i t!i+ #ega#d/
A+ =a0+ deal )it! "%=li. $%d+ ad 'oe:< t!e: a#e +%=6e.t to 9a#io%+
#eg%latio+/ T!e 9a#io%+ #eg%lato#+ i.l%de Re+e#9e Ba0 o$ Idia ,RBI-<
Se.%#itie+ E7.!age Boa#d o$ Idia ,SEBI-< *e"a#t'et o$ Co'"a: AFai#+
,*CA-< et./ Mo#e o9e#< =a0+ +!o%ld e+%#e .o'"lia.e o$ t!e a""li.a=le
"#o9i+io+ o$ T!e Ba0ig Reg%latio A.t< T!e Co'"aie+ A.t< et./ T!%+ all
t!e =a0+ #% t!e #i+0 o$ '%lti"le #eg%lato#:;#i+0+ )!i.! i!i=it+ $#ee g#o)t!
o$ =%+ie++ a+ $o.%+ o .o'"lia.e o$ too 'a: #eg%latio+ lea9e little
ee#g: +.o"e ad ti'e $o# de9elo"ig e) =%+ie++/ Ba0+ +!o%ld lea# t!e
a#t o$ "la:ig t!ei# =%+ie++ a.ti9itie+ )it!i t!e #eg%lato#: .ot#ol+/
3,4,= EN9IRONMENTA* RIS(
A+ t!e :ea#+ #oll t!e te.!ologi.al ad9a.e'et ta0e+ "la.e< e7"e.tatio o$
t!e .%+to'e#+ .!age ad ela#ge+/ Jit! t!e e.oo'i. li=e#aliEatio ad
glo=aliEatio< 'o#e atioal ad ite#atioal "la:e#+ a#e o"e#atig t!e
&a.ial 'a#0et+< "a#ti.%la#l: i t!e =a0ig &eld/ T!i+ "#o9ide+ t!e "lat$o#'
$o# e9i#o'etal .!age ad e7"o+%#e o$ t!e =a0 to t!e e9i#o'etal
#i+0/ T!%+< %le++ t!e =a0+ i'"#o9e t!ei# deli9e#: .!ael+< #ea.!
.%+to'e#+< io9ate t!ei# "#od%.t+ t!at a#e +e#9i.e o#ietedP t!e: a#e
e7"o+ed to t!e e9i#o'etal #i+0/
Page 13
3,8 #ASE*>S NE) CAPITA* ACCORD
Ba0e#+I $o# Ite#atioal Settle'et ,BIS- 'eet at Ba+el +it%ated at
S)itEe#lad to add#e++ t!e .o''o i++%e+ .o.e#ig =a0e#+ all o9e# t!e
)o#ld/ T!e Ba+el Co''ittee o Ba0ig S%"e#9i+io ,BCBS- i+ a .o''ittee
o$ =a0ig +%"e#9i+o#: a%t!o#itie+ o$ G;15 .o%t#ie+ ad !a+ =ee
de9elo"ig +tada#d+ ad e+ta=li+!'et o$ a $#a'e)o#0 $o# =a0 +%"e#9i+io
to)a#d+ +t#egt!eig &a.ial +ta=ilit: t!#o%g! o%t t!e )o#ld/ I
.o+%ltatio )it! t!e +%"e#9i+o#: a%t!o#itie+ o$ a $e) o;G;15 .o%t#ie+
i.l%dig Idia< .o#e "#i.i"le+ $o# eFe.ti9e =a0ig +%"e#9i+io i t!e $o#'
o$ 'ii'%' #e(%i#e'et+ to +t#egt!e .%##et +%"e#9i+o#: #egi'e< )e#e
'ooted/ T!e 1B44 Ca"ital A..o#d e++etiall: "#o9ided ol: oe o"tio $o#
'ea+%#ig t!e a""#o"#iate .a"ital i #elatio to t!e #i+0 )eig!ted a++et+ o$
t!e &a.ial i+tit%tio/ It $o.%+ed o t!e total a'o%t o$ =a0 .a"ital +o a+
to #ed%.e t!e #i+0 o$ =a0 +ol9e.: at t!e "otetial .o+t o$ =a0I+ $ail%#e $o#
t!e de"o+ito#+/ A+ a i'"#o9e'et o t!e a=o9e< t!e Ne) Ca"ital A..o#d
)a+ "%=li+!ed i 1551 =: Ba+el Co''ittee o$ Ba0ig S%"e#9i+io/ It
"#o9ide+ +"e.t#%' o$ a""#oa.!e+ $o# t!e 'ea+%#e'et o$ .#edit< 'a#0et ad
o"e#atioal #i+0+ to dete#'ie t!e .a"ital #e(%i#ed/ T!e +"#ead ad at%#e o$
t!e o)e#+!i" +t#%.t%#e i+ i'"o#tat a+ it i'"ige+ o t!e "#o"e+it: to
id%.t additioal .a"ital/ J!ile gettig +%""o#t $#o' a la#ge =od: o$
+!a#e!olde#+ i+ a dif.%lt "#o"o+itio )!e t!e =a0I+ "e#$o#'a.e i+
ad9e#+e< a +'alle# +!a#e!olde# =a+e .o+t#ai+ t!e a=ilit: o$ t!e =a0 to
ga#e# $%d+/ Tie# I .a"ital i+ ot o)ed to a:oe ad i+ a9aila=le to .o9e#
"o++i=le %e7"e.ted lo++e+/ It !a+ o 'at%#it: o# #e"a:'et #e(%i#e'et<
ad i+ e7"e.ted to #e'ai a "e#'aet .o'"oet o$ t!e .o#e .a"ital o$ t!e
.o%te# "a#t:/ J!ile Ba+el +tada#d+ .%##etl: #e(%i#e =a0+ to !a9e a
.a"ital ade(%a.: #atio o$ 4N )it! Tie# I ot le++ t!a 3N< RBI !a+ 'adated
t!e =a0+ to 'aitai CAR o$ BN/ T!e 'aitea.e o$ .a"ital ade(%a.: #atio
i+ li0e ai'ig at a 'o9ig ta#get a+ t!e .o'"o+itio o$ #i+0;)eig!ted a++et+
get+ .!aged e9e#: o) ad t!e o a..o%t o$ K%.t%atio+ i t!e #i+0
"#o&le o$ a =a0/ Tie# I .a"ital i+ 0o) a+ t!e .o#e .a"ital "#o9idig
"e#'aet ad #eadil: a9aila=le +%""o#t to t!e =a0 to 'eet t!e %e7"e.ted
Page 1A
lo++e+/ I t!e #e.et "a+t< o)e#+ o$ PSU =a0+< t!e go9e#'et "#o9ided
ade(%ate .a"ital to )ea0e# =a0+ to ea+e t!e =%#de/ I doig +o< t!e
go9e#'et )a+ ot a.tig a+ a "#%det i9e+to# a+ #et%# o +%.! .a"ital
)a+ e9e# a .o+ide#atio/ F%#t!e#< .a"ital i$%+io did ot #e+%lt i a: .a+!
Ko) to t!e #e.ei9e#< a+ all t!e .a"ital )a+ #e(%i#ed to =e #ei9e+ted i
go9e#'et +e.%#itie+ :ieldig lo) #et%#+/ Re.ei"t o$ .a"ital )a+ 6%+t a =oo0
et#: )it! t!e ol: ad9atage o$ i.o'e $#o' t!e +e.%#itie+/
3,= CAPITA* ADE<UAC2
S%=+e(%et to atioaliEatio o$ =a0+< .a"italiEatio i =a0+ )a+ ot gi9e
d%e i'"o#ta.e a+ it )a+ $elt e.e++a#: $o# t!e #ea+o t!at t!e o)e#+!i" o$
t!e =a0+ #e+ted )it! t!e go9e#'et< .#eatig t!e #e(%i#ed .o&de.e i
t!e 'id o$ t!e "%=li./ Co'=ied $o#.e+ o$ glo=aliEatio ad li=e#aliEatio
.o'"elled t!e "%=li. +e.to# =a0+< !it!e#to +!ielded $#o' t!e 9aga#ie+ o$
'a#0et $o#.e+< .o'e =: t!e .oditio o$ te#'+ 'a#0et #ealitie+< )!e#e .e#tai
'ii'%' .a"ital ade(%a.: !a+ to =e 'aitaied i t!e $a.e o$ +tiF o#'+ i
#e+"e.t o$ i.o'e #e.ogitio< a++et .la++i&.atio ad "#o9i+ioig/ It i+ .lea#
t!at '%lti "#oged a""#oa.! )o%ld =e #e(%i#ed to 'eet t!e .!allege+ o$
'aitaiig .a"ital at ade(%ate le9el+ i t!e $a.e o$ 'o%tig #i+0+ i t!e
=a0ig +e.to#/ I =a0+< a++et .#eatio i+ a e9et !a""eig +%=+e(%et to
t!e .a"ital $o#'atio ad de"o+it 'o=iliEatio/
3,? RIS( A++RE+ATION @ CAPITA* A**OCATION
Ca"ital Ade(%a.: i #elatio to e.oo'i. #i+0 i+ a e.e++a#: .oditio $o# t!e
log;te#' +o%de++ o$ =a0+/ Agg#egate #i+0 e7"o+%#e i+ e+ti'ated t!#o%g!
Ri+0 Ad6%+ted Ret%# o Ca"ital ,RAROC- ad Ea#ig+ at Ri+0 ,EaR- 'et!od/
Fo#'e# i+ %+ed =: =a0 )it! ite#atioal "#e+e.e ad t!e RAROC "#o.e++
e+ti'ate+ t!e .o+t o$ E.oo'i. Ca"ital 8 e7"e.ted lo++e+ t!at 'a: "#e9ail i
t!e )o#+t;.a+e +.ea#io ad t!e e(%ate+ t!e .a"ital .%+!io to =e "#o9ided
$o# t!e "otetial lo++/ RAROC i+ t!e &#+t +te" to)a#d+ e7a'iig t!e
i+tit%tioI+ eti#e =ala.e +!eet o a 'a#0 to 'a#0et =a+i+< i$ ol: to
%de#+tad t!e #i+0 #et%# t#ade oF t!at !a9e =ee 'ade/ A+ =a0+ .a##: o
t!e =%+ie++ o a )ide a#ea et)o#0 =a+i+< it i+ .#iti.al t!at t!e: a#e a=le to
.oti%o%+l: 'oito# t!e e7"o+%#e+ a.#o++ t!e eti#e o#gaiEatio ad
Page 1C
agg#egate t!e #i+0+ +o t!at a iteg#ated 9ie) .a =e ta0e/ T!e E.oo'i.
Ca"ital i+ t!e a'o%t o$ t!e .a"ital ,=e+ide+ t!e Reg%lato#: Ca"ital- t!at t!e
&#' !a+ to "%t at #i+0 +o a+ to .o9e# t!e "otetial lo++ %de# t!e e7t#e'e
'a#0et .oditio+/ I ot!e# )o#d+< it i+ t!e diFe#e.e i 'a#0;to;'a#0et
9al%e o$ a++et+ o9e# lia=ilitie+ t!at t!e =a0 +!o%ld ai' at o# ta#get/ A+
agai+t t!i+< t!e #eg%lato#: .a"ital i+ t!e a.t%al Ca"ital F%d+ !eld =: t!e
=a0 agai+t t!e Ri+0 Jeig!ted A++et+/ A$te# 'ea+%#ig t!e e.oo'i. .a"ital
$o# t!e =a0 a+ a )!ole< =a0I+ a.t%al .a"ital !a+ to =e allo.ated to
idi9id%al =%+ie++ %it+ o t!e =a+i+ o$ 9a#io%+ t:"e+ o$ #i+0+/ T!i+ "#o.e++
.a =e .oti%ed till .a"ital i+ allo.ated at t#a+a.tioG.%+to'e# le9el/
3,A RIS( #ASED SUPER9ISION BR#SC
T!e Re+e#9e Ba0 o$ Idia "#e+etl: !a+ it+ +%"e#9i+o#: 'e.!ai+' =: )a:
o$ o;+ite i+"e.tio ad oF;+ite 'oito#ig o t!e =a+i+ o$ t!e a%dited
=ala.e +!eet o$ a =a0/ I o#de# to e!a.e t!e +%"e#9i+o#: 'e.!ai+'< t!e
RBI !a+ de.ided to "%t i "la.e< a +:+te' o$ Ri+0 Ba+ed S%"e#9i+io/ Ude#
#i+0 =a+ed +%"e#9i+io< +%"e#9i+o#+ a#e e7"e.ted to .o.et#ate t!ei# eFo#t+
o e+%#ig t!at &a.ial i+tit%tio+ %+e t!e "#o.e++ e.e++a#il: to ideti$:
'ea+%#e ad .ot#ol #i+0 e7"o+%#e/ T!e RBS i+ e7"e.ted to $o.%+ +%"e#9i+o#:
attetio i a..o#da.e )it! t!e #i+0 "#o&le o$ t!e =a0/ T!e RBI !a+ al#ead:
+t#%.t%#ed t!e #i+0 "#o&le te'"late+ to ea=le t!e =a0 to 'a0e a +el$;
a++e++'et o$ t!ei# #i+0 "#o&le/ It i+ de+iged to e+%#e .oti%o%+
'oito#ig ad e9al%atio o$ #i+0 "#o&le o$ t!e i+tit%tio t!#o%g! #i+0 'at#i7/
T!i+ 'a: o"ti'iEe t!e %tiliEatio o$ t!e +%"e#9i+o#: #e+o%#.e+ o$ t!e RBI +o
a+ to 'ii'iEe t!e i'"a.t o$ a .#i+e+ +it%atio i t!e &a.ial +:+te'/ T!e
t#a+a.tio =a+ed a%dit ad +%"e#9i+io i+ gettig +!i$ted to #i+0 $o.%+ed
a%dit/ Ri+0 =a+ed +%"e#9i+io a""#oa.! i+ a atte'"t to o9e#.o'e t!e
de&.ie.ie+ i t!e t#aditioal "oit;i;ti'e< t#a+a.tio; 9alidatio ad 9al%e
=a+ed +%"e#9i+o#: +:+te'/ It i+ $o#)a#d loo0ig ea=lig t!e +%"e#9i+o#+ to
diFe#etiate =et)ee =a0+ to $o.%+ attetio o t!o+e !a9ig !ig!;#i+0
"#o&le/ T!e i'"le'etatio o$ #i+0 =a+ed a%ditig )o%ld i'"l: t!at g#eate#
e'"!a+i+ i+ "la.ed o t!e ite#al a%dito#I+ #ole $o# 'itigatig #i+0+/ B:
$o.%+ig o eFe.ti9e #i+0 'aage'et< t!e ite#al a%dito# )o%ld ot ol:
Page 12
oFe# #e'edial 'ea+%#e+ $o# .%##et t#o%=le;"#oe a#ea+< =%t al+o ati.i"ate
"#o=le'+ to "la: a a.ti9e #ole i "#ote.tig t!e =a0 $#o' #i+0 !aEa#d+/
Page 14
3,D RIS( MANA+EMENT'
(E2S 1OR E11ECTI9E RIS( MANA+EMENT'
To di#e.t #i+0 =e!a9io%# 8 iK%e.e t!e +!a"e o$ a &#'I+ #i+0 "#o&le<
'aage'et +!o%ld %+e all a9aila=le o"tio+/ U+ig &a.ial
i.eti9e+ ad "ealtie+ to iK%e.e #i+0 ta0ig =e!a9io%# i+ eFe.ti9e
'aage'et tool/
S!a#ig o$ i$o#'atio =: 0ee"ig .o&detialit: ita.t i+ al+o !el"$%l
to &d o%t diFe#et )a:+ $o# .ot#ollig t!e #i+0 a+ 9al%a=le i"%t+ 'a:
=e #e.ei9ed t!#o%g! t!i+ +!a#ig/ E9e i$o#'atio o .#edit)o#t!ie++
o$ .o%te#"a#tie+ t!at a#e 0o) to ta0e +%=+tatial #i+0 .a al+o !el"/
*i9e#+i&.atio i+ e7t#e'el: i'"o#tat/ A+ it lo)e#+ t!e 9a#ia.e i
i9e+to# "o#t$olio+< i'"#o9e+ .o#"o#ate a=ilit: to #ai+e de=t< #ed%.e+
e'"lo:'et #i+0+< 8 !eig!te+ o"e#atig ef.ie.:/
Go9e#a.e +!o%ld e9e# =e igo#ed/ Ca#e$%l +t#%.t%#ig o$ t!e allia.e
i ad9a.e o$ t!e deal ad .oti%al ad6%+t'et t!e#ea$te# !el" to
=%ild a .o+t#%.ti9e #elatio+!i"/
Oe +!o%ld ot t#%+t )!ile i =%+ie++/ Pe#+oal .!e'i+t#: i+ good =%t
i+ o +%=+tit%te $o# 'oito#ig 'e.!ai+'< .o;o"e#atio i.eti9e+< 8
o#gaiEatioal alig'et/
Jit!o%t +%""o#t +:+te' )it!i t!e o#gaiEatio it+el$< e7te#al
allia.e+ a#e doo'ed to $ail/
Page 1B
3,D,0 MAR(ET RIS( MANA+EMENT'
Je 'a: =elie9e t!at t!e#e a#e li'ited tool+ a9aila=le to 'itigate t!i+ #i+0< =%t
t!i+ i+ ot +o/ F%t%#e< o"tio< de#i9ati9e+ t#adig ad it+ 'a: +%= t:"e+ a#e
+o'e o$ t!e tool+ )!i.! !el" to i9e+to#+ to "#ote.t t!e i9e+t'et o#
'ii'iEe t!e#e e7"o+%#e to)a#d 'a#0et #i+0/ I .a+e o$ de#i9ati9e+ a+ i
=#oade# +e+e de#i9ati9e+ a#e .o+ide#ed to =e %+ed to !edge agai+t 'a#0et
#i+0< =%t t!e: .a =e %+ed to 'itigate 9a#io%+ ot!e# t:"e+ o$ #i+0+< li0e .#edit
#i+0< o"e#atioal #i+0/
T!e i'"o#ta.e o$ 'aagig 'a#0et #i+0 !a+ o) =ee )ell %de#+tood =:
&a.ial i+tit%tio+ ad .o#"o#ate a.#o++ t!e )o#ld/ Ma#0et #i+0 !a+ 'ade
t!e glo=al &a.ial .oditio+ %.e#tai ad %+ettled ad +till #e.o9e#: o$
"#o=le' i+ ot 9i+i=le i t!e ea# ti'e/
3,D,3 CREDIT RIS( MANA+EMENT
Tool+ o$ C#edit Ri+0 Maage'etL T!e i+t#%'et+ ad tool+< t!#o%g! )!i.!
.#edit #i+0 i+ 'aaged a#eL E7"o+%#e Ceilig+< Re9ie)GRee)al< Ri+0 Ratig
Model< Ri+0 =a+ed +.ieti&. "#i.ig< Po#t$olio Maage'et< Loa Re9ie)
Me.!ai+'
3,D,4 OPERATIONA* RIS( MANA+EMENT'
T!i+ #i+0 .a =e #ed%.ed to g#eat e7tet =: eFe.ti9el: .ot#ollig
o#gaiEatio a+ a )!ole =: ta0ig .e#tai +te"+< li0e a++%#ig t!at de+iged
"#o.e++e+ i+ .a##ied o%t .a#e$%ll: 8 )it! t!e !el" o$ e7"e#t+< ad a#e $ollo)ed
i de+i#ed )a:/
Page 15
3,E COMPUTATION O1 CAPITA* RE<UIREMENT
3,E,0 CREDIT RIS( APPROACHES
Cr!dit Risk
StandardiF!d approa$. Ad6an$!d Approa$.

1oundation IR#
Ad6an$!d IR#
StandardiF!d approa$.L t!e Ba+el .o''ittee a+ )ell a+ RBI "#o9ide+ a
+i'"le 'et!odolog: $o# #i+0 a++e++'et ad .al.%latig .a"ital #e(%i#e'et+
$o# .#edit #i+0 .alled Stada#diEed a""#oa.!/ T!i+ a""#oa.! i+ di9ided ito t!e
$ollo)ig =#oad to"i.+ $o# +i'"le# ad ea+ie# %de#+tadig
1/ A++ig'et o$ Ri+0 Jeig!t+L all t!e e7"o+%#e+ a#e &#+t .la++i&ed ito
9a#io%+ .%+to'e# t:"e+ de&ed =: Ba+el .o''ittee o# RBI/ T!e#ea$te#<
a++ig'et o$ +tada#d #i+0 )eig!t+ i+ doe< eit!e# o t!e =a+i+ o$ .%+to'e#
t:"e o# o =a+i+ o$ t!e a++et (%alit: a+ dete#'ied =: #atig o$ t!e a++et< $o#
.al.%latig #i+0 )eig!ted a++et+/
1/ E7te#al C#edit A++e++'et+L t!e #eg%lato# o# RBI #e.ogiEe+ .e#tai #i+0
#atig age.ie+ ad e7te#al .#edit a++e++'et i+tit%tio+ ,ECAI+- ad
#atig a++iged =: t!e+e ECAI+< to t!e =o##o)e#+ 'a: =e ta0e a+ a =a+i+ $o#
a++igig #i+0 )eig!t+ to t!e =o##o)e#+/ Bette# #atig 'ea+ =ette# (%alit: o$
a++et+ ad le++e# #i+0 )eig!t+ ad !e.e le++e# #e(%i#e'et o$ .a"ital
allo.atio/
@/ C#edit Ri+0 MitigatioL Ba+el #e.ogiEed Collate#al+ ad Ba+el #e.ogiEed
G%a#atee+ a#e t)o +e.%#itie+ t!at =a0+ o=tai $o# loa+ G ad9a.e+ to .o9e#
.#edit #i+0< )!i.! a#e te#'ed a+ >C#edit Ri+0 Mitigat+?
Ad6an$!d Approa$.' Ba+el II $#a'e)o#0 al+o "#o9ide+ $o# ad9a.ed
a""#oa.!e+ to .al.%late .a"ital #e(%i#e'et $o# .#edit #i+0/ T!e+e a""#oa.!e+
#el: !ea9il: o a =a0+ ite#al a++e++'et o$ it+ =o##o)e#+ ad e7"o+%#e+/
T!e+e ad9a.ed a""#oa.!ed a#e =a+ed o t!e ite#al #atig+ o$ t!e =a0
Page 11
ad a#e "o"%la#l: 0o) a+ Ite#al Ratig Ba+ed ,IRB- a""#oa.!e+/ Ude#
Ad9a.ed A""#oa.!e+< t!e =a0+ )ill !a9e 1 o"tio+ a+ %de#
a- Fo%datio Ite#al Ratig Ba+ed ,FIRB- A""#oa.!e+/
=- Ad9a.ed Ite#al Ratig Ba+ed ,AIRB- A""#oa.!e+/
T!e diFe#e.e+ =et)ee $o%datio IRB ad ad9a.ed IRB !a9e =ee
.a"t%#ed i t!e $ollo)ig ta=leL Ta=le 1/B/1/1L T!e diFe#e.e+ =et)ee
$o%datio IRB ad ad9a.ed IRB
Page 11
Data Input 1oundation IR# Ad6an$!d IR#
P#o=a=ilit: o$ *e$a%lt P#o9ided =: =a0
=a+ed o o)
e+ti'ate+
P#o9ided =: =a0 =a+ed
o o) e+ti'ate+
Lo++ Gi9e *e$a%lt S%"e#9i+o#: 9al%e+ +et
=: t!e Co''ittee
P#o9ided =: =a0 =a+ed
o o) e+ti'ate+
E7"o+%#e at *e$a%lt S%"e#9i+o#: 9al%e+ +et
=: t!e Co''ittee
P#o9ided =: =a0 =a+ed
o o) e+ti'ate+
EFe.ti9e Mat%#it: S%"e#9i+o#: 9al%e+ +et
=: t!e Co''ittee
P#o9ided =: =a0 =a+ed
o o) e+ti'ate+ O# At
t!e atioal di+.#etio<
"#o9ided =: =a0 =a+ed
o o) e+ti'ate+
Page 1@
3,E,3 MAR(ET RIS( APPROACHES
Mark!t Risk
StandardiF!d Int!rnal
Mod!l
Approa$. #as!d
approa$.
Maturity Duration
#as!d #as!d
RBI !a+ i++%ed detailed g%idelie+ $o# .o'"%tatio o$ .a"ital .!a#ge o
Ma#0et Ri+0 / T!e g%idelie+ +ee0 to add#e++ t!e i++%e+ i9ol9ed i
.o'"%tig .a"ital .!a#ge $o# ite#e+t #ate #elated i+t#%'et+ i t!e t#adig
=oo0< e(%itie+ i t!e t#adig =oo0 ad $o#eig e7.!age #i+0 ,i.l%dig gold
ad "#e.io%+ 'etal+- i =ot! t#adig ad =a0ig =oo0/ T#adig =oo0 )ill
i.l%deL
Se.%#itie+ i.l%ded %de# t!e Held $o# t#adig .atego#:
Se.%#itie+ i.l%ded %de# t!e A9aila=le $o# Sale .atego#:
O"e gold "o+itio li'it+
O"e $o#eig e7.!age "o+itio li'it+
T#adig "o+itio i de#i9ati9e+ ad de#i9ati9e+ ete#ed ito $o# !edgig
t#adig =oo0 e7"o+%#e+/
Page 13
3,E,4 OPERATIONA* RIS( APPROACHES
Op!rational
Risk
#asi$ Indi$ator StandardiF!d
Ad6an$!d
Approa$. Approa$.
M!asur!"!nt
Approa$.
Ba+i. Idi.ato# A""#oa.!L Ude# t!e =a+i. idi.ato# a""#oa.!< Ba0+ a#e
#e(%i#ed to !old .a"ital $o# o"e#atioal #i+0 e(%al to t!e a9e#age o9e# t!e
"#e9io%+ t!#ee :ea#+ o$ a &7ed "e#.etage ,1AN ; deoted a+ al"!a- o$
a%al g#o++ i.o'e/ G#o++ i.o'e i+ de&ed a+ et ite#e+t i.o'e "l%+ et
o;ite#e+t i.o'e< e7.l%dig #ealiEed "#o&tGlo++e+ $#o' t!e +ale o$
+e.%#itie+ i t!e =a0ig =oo0 ad e7t#ao#dia#: ad i##eg%la# ite'+/
Stada#diEed A""#oa.!L Ude# t!e +tada#diEed a""#oa.!< =a0+ a.ti9itie+
a#e di9ided ito eig!t =%+ie++ lie+/ Jit!i ea.! =%+ie++ lie< g#o++ i.o'e
i+ .o+ide#ed a+ a =#oad idi.ato# $o# t!e li0el: +.ale o$ o"e#atioal #i+0/
Ca"ital .!a#ge $o# ea.! =%+ie++ lie i+ .al.%lated =: '%lti"l:ig g#o++
i.o'e =: a $a.to# ,deoted =eta- a++iged to t!at =%+ie++ lie/ Total
.a"ital .!a#ge i+ .al.%lated a+ t!e t!#ee;:ea# a9e#age o$ t!e +i'"le
+%''atio+ o$ t!e #eg%lato#: .a"ital a.#o++ ea.! o$ t!e =%+ie++ lie i ea.!
:ea#/
Ad9a.ed Mea+%#e'et A""#oa.!L Ude# ad9a.ed 'ea+%#e'et a""#oa.!<
t!e #eg%lato#: .a"ital )ill =e e(%al to t!e #i+0 'ea+%#e+ gee#ated =: t!e
=a0I+ ite#al #i+0 'ea+%#e'et +:+te' %+ig t!e "#e+.#i=ed (%atitati9e
ad (%alitati9e .#ite#ia/
3,0G #ENE1ITS O1 #ASE* II
0, #!tt!r allo$ation o- $apital and r!du$!d i"pa$t o- "oral .aFard
t.rou. r!du$tion in t.! s$op! -or r!ulatory ar&itra!' B: a++e++ig
t!e a'o%t o$ .a"ital #e(%i#ed $o# ea.! e7"o+%#e o# "ool o$ e7"o+%#e+< t!e
Page 1A
ad9a.ed a""#oa.! doe+ a)a: )it! t!e +i'"li+ti. #i+0 =%.0et+ o$ .%##et
.a"ital #%le+/
3, I"pro6!d sinal :uality o- $apital as an indi$ator o- sol6!n$y' t!e
"#o"o+ed #%le i+ de+iged to 'o#e a..%#atel: alig #eg%lato#: .a"ital )it!
#i+0< )!i.! )ill i'"#o9e t!e (%alit: o$ .a"ital a+ a idi.ato# o$ +ol9e.:/
4, En$oura!s &ankin oraniFations to i"pro6! $r!dit risk
"ana!"!nt' Oe o$ t!e "#i.i"al o=6e.ti9e+ o$ t!e "#o"o+ed #%le i+ to
'o#e .lo+el: alig .a"ital .!a#ge+ ad #i+0/ Fo# a: t:"e o$ .#edit< #i+0
i.#ea+e+ a+ eit!e# t!e "#o=a=ilit: o$ de$a%lt o# t!e lo++ gi9e de$a%lt
i.#ea+e+/
8, Mor! !H$i!nt us! o- r!:uir!d &ank $apital' I.#ea+ed #i+0 +e+iti9it:
ad i'"#o9e'et+ i #i+0 'ea+%#e'et )ill allo) "#%detial o=6e.ti9e+ to =e
a.!ie9ed 'o#e ef.ietl:/
=, In$orporat!s and !n$oura!s ad6an$!s in risk "!asur!"!nt and
risk "ana!"!ntL T!e "#o"o+ed #%le +ee0+ to i'"#o9e %"o e7i+tig
.a"ital #eg%latio+ =: i.o#"o#atig ad9a.e+ i #i+0 'ea+%#e'et ad #i+0
'aage'et 'ade o9e# t!e "a+t 1A :ea#+/
?, R!$oniF!s n!5 d!6!lop"!nts and a$$o""odat!s $ontinuin
inno6ation in Inan$ial produ$ts &y -o$usin on risk' T!e "#o"o+ed #%le
al+o !a+ t!e =ee&t o$ $a.ilitatig #e.ogitio o$ e) de9elo"'et+ i
&a.ial "#od%.t+ =: $o.%+ig o t!e $%da'etal+ =e!id #i+0 #at!e# t!a
o +tati. "#od%.t .atego#ie+/
A, #!tt!r alin"!nt o- $apital and op!rational risk and !n$oura!s
&ankin oraniFations to "itiat! op!rational risk' It#od%.ig a
e7"li.it .a"ital .al.%latio $o# o"e#atioal #i+0 eli'iate+ t!e i'"li.it ad
i'"#e.i+e >=%Fe#? t!at .o9e#+ o"e#atioal #i+0 %de# .%##et .a"ital #%le+/
D, En.an$!d sup!r6isory -!!d&a$k' all t!#ee "illa#+ o$ t!e "#o"o+ed #%le
ai' to e!a.e +%"e#9i+o#: $eed=a.0 $#o' $ede#al =a0ig age.ie+ to
Page 1C
'aage#+ o$ =a0+ ad t!#i$t+/ E!a.ed $eed=a.0 .o%ld $%#t!e# +t#egt!e
t!e +a$et: ad +o%de++ o$ t!e =a0ig +:+te'/
E, En.an$!d dis$losur! pro"ot!s "ark!t dis$iplin!' T!e "#o"o+ed #%le
+ee0+ to aid 'a#0et di+.i"lie t!#o%g! t!e #eg%lato#: $#a'e)o#0 =: #e(%i#ig
+"e.i&. di+.lo+%#e+ #elatig to #i+0 'ea+%#e'et ad #i+0 'aage'et/
0G, Pr!s!r6!s t.! &!n!Its o- int!rnational $onsist!n$y and
$oordination a$.i!6!d 5it. t.! 0EDD #as!l A$$ord' A i'"o#tat
o=6e.ti9e o$ t!e 1B44 A..o#d )a+ .o'"etiti9e .o+i+te.: o$ .a"ital
#e(%i#e'et+ $o# =a0ig o#gaiEatio+ .o'"etig i glo=al 'a#0et+/ Ba+el II
.oti%e+ to "%#+%e t!i+ o=6e.ti9e/
3,00 *IMITATIONS O1 #ASE* II'
0, *a$k o- suH$i!nt pu&li$ kno5l!d!L 0o)ledge a=o%t =a0+I
"o#t$olio+ ad t!ei# $%t%#e #i+0;)eig!t< +i.e t!i+ )ill al+o de"ed o )!et!e#
=a0+ )ill %+e t!e +tada#diEed o# IRB a""#oa.!e+/
3, *a$k o- pr!$is! kno5l!d!' a+ to !o) o"e#atioal #i+0 .o+t+ )ill =e
.!a#ged/ T!e =a0+ a#e e7"e.ted to =ee&t $#o' +!a#"eig %" +o'e
a+"e.t+ o$ t!ei# #i+0 'aage'et "#a.ti.e+ "#e"a#atio ad $o# t!e
it#od%.tio o$ t!e o"e#atioal #i+0 .!a#ge/
4, *a$k o- $onsist!n$y' at lea+t at t!i+ +tage< a+ to !o) i+%#a.e a.ti9itie+
)ill =e a..o%ted $o#/ Oe t#eat'et o%tlied i t!e Ca"ital A..o#d i+ t!at
=a0+ ded%.t e(%it: ad ot!e# #eg%lato#: .a"ital i9e+t'et+ i i+%#a.e
+%=+idia#ie+ ad +igi&.at 'io#it: i9e+t'et+ i i+%#a.e etitie+/ A
alte#ati9e to t!i+ t#eat'et i+ to a""l: a #i+0 )eig!t age to i+%#a.e
i9e+t'et+/
Page 12
3,03 CHA**EN+ES 1OR INDIAN #AN(IN+ S2STEM UNDER
#ASE* II
Costly Data&as! Cr!ation and Maint!nan$! Pro$!ss' T!e 'o+t
o=9io%+ i'"a.t o$ BASEL II i+ t!e eed $o# i'"#o9ed #i+0 'aage'et ad
'ea+%#e'et/ It ai'+ to gi9e i'"et%+ to t!e %+e o$ ite#al #atig +:+te'
=: t!e ite#atioal =a0+/
Additional Capital R!:uir!"!nt' He#e i+ a )o##:ig a+"e.t t!at +o'e
o$ t!e =a0+ )ill ot =e a=le to "%t %" t!e additioal .a"ital to .o'"l:
)it! t!e e) #eg%latio ad t!e: 'a: =e i+olated $#o' t!e glo=al =a0ig
+:+te'/
*ar! Proportion o- NPAJs' A la#ge %'=e# o$ Idia =a0+ !a9e
+igi&.at "#o"o#tio o$ NPAQ+ i t!ei# a++et+/ Alog )it! t!at a la#ge
"#o"o#tio o$ loa+ o$ =a0+ a#e o$ "oo# (%alit:/ T!e#e i+ a dage# t!at a
la#ge %'=e# o$ =a0+ )ill ot =e a=le to #e+t#%.t%#e ad +%#9i9e i t!e
e) e9i#o'et/ T!i+ 'a: lead to $o#.ed 'e#ge#+ o$ 'a: de$%.t
=a0+ )it! t!e e7i+tig oe+ ad a lo++ o$ .a"ital to t!e =a0ig +:+te'
a+ a )!ole/
In$r!as!d Pro/Cy$li$ality' T!e i.#ea+ed i'"o#ta.e to .#edit #atig+
%de# Ba+el II .o%ld a.t%all: i'"l: t!at t!e 'ii'%' #e(%i#e'et+ .o%ld
=e.o'e "#o;.:.li.al a+ =a0+ a#e #e(%i#ed to #ai+e .a"ital le9el+ $o# loa+
i ti'e+ o$ e.oo'i. .#i+e+/
*o5 D!r!! o- Corporat! Ratin P!n!tration' Idia !a+ a+ $e) a+
t!#ee e+ta=li+!ed #atig age.ie+ ad t!e le9el o$ #atig "eet#atio i+ ot
9e#: +igi&.at a+< +o $a#< #atig+ a#e #e+t#i.ted to i++%e+ ad ot i++%e#+/
J!ile Ba+el II gi9e+ +o'e +.o"e to e7ted t!e #atig o$ i++%e+ to i++%e#+<
t!i+ )o%ld ol: =e a a""#o7i'atio ad it )o%ld =e e.e++a#: $o# t!e
+:+te' to 'o9e to #atig+ o$ i++%e#+/ E.o%#agig #atig+ o$ i++%e#+ )o%ld
=e a .!allege/
Page 14
Cross #ord!r Issu!s -or 1or!in #anks' I Idia< $o#eig =a0+ a#e
+tat%to#il: #e(%i#ed to 'aitai lo.al .a"ital ad t!e $ollo)ig i++%e+ a#e
#e(%i#ed to =e #e+ol9edP
1/ Validatio o$ t!e ite#al 'odel+ a""#o9ed =: t!ei# !ead of.e+ ad
!o'e .o%t#: +%"e#9i+o# ado"ted =: t!e Idia =#a.!e+ o$ $o#eig
=a0+/
1/ *ate !i+to#: 'aitaied ad %+ed =: t!e =a0 +!o%ld =e di+ti.t $o# t!e
Idia =#a.!e+ .o'"a#ed to t!e glo=al data %+ed =: t!e !ead of.e
@/ .a"ital $o# o"e#atioal #i+0 +!o%ld =e 'aitaied +e"a#atel: $o# t!e
Idia =#a.!e+ i Idia
3,08 IMPACT O1 #ASE* II IMP*EMENTATION ON THE INDIAN
#AN(IN+ INDUSTR2
0, C.an!s in Capital Risk )!i.t!d Ass!ts Ratio BCRARC' Mo+t o$ t!e
=a0+ a#e al#ead: ad!e#ig to t!e Ba+el II g%idelie+/ Ho)e9e#< t!e
Go9e#'et !a+ idi.ated t!at a .%+!io +!o%ld =e 'aitaied =: t!e "%=li.
+e.to# =a0+ ad t!e#e$o#e t!ei# CRAR +!o%ld =e a=o9e 11N/ Ba+el I $o.%+ed
la#gel: o .#edit #i+0< )!e#ea+ Ba+el II !a+ @ #i+0+ to =e .o+ide#ed< 9iE/<
.#edit #i+0< o"e#atioal #i+0 ad 'a#0et #i+0+/ A+ Ba+el II .o+ide#+ all t!e+e @
#i+0+< t!e#e a#e .!a.e+ o$ a de.lie i t!e Ca"ital Ade(%a.: Ratio/
3, Hi. $osts -or up/radation o- t!$.noloy' F%ll i'"le'etatio o$ t!e
Ba+el II $#a'e)o#0 )o%ld #e(%i#e %";g#adatio o$ t!e =a0;)ide i$o#'atio
+:+te'+ t!#o%g! =ette# =#a.!;.oe.ti9it:< )!i.! )o%ld etail !%ge .o+t+
ad 'a: #ai+e IT;+e.%#it: i++%e+/ T!e i'"le'etatio o$ Ba+el II .a al+o
#ai+e i++%e+ #elatig to de9elo"'et o$ HR +0ill+ ad data=a+e 'aage'et/
S'all ad 'edi%' +iEed =a0+ 'a: !a9e to i.%# eo#'o%+ .o+t+ to a.(%i#e
#e(%i#ed te.!olog:< a+ )ell a+ to t#ai +taF i te#'+ o$ t!e #i+0 'aage'et
a.ti9itie+/ T!e#e )ill =e a eed $o# te.!ologi.al %" g#adatio ad a..e++ to
i$o#'atio li0e !i+to#i.al data et./
4, Ratin risks' P#o=le'+ e'=edded i Ba+el II o#'+ i.l%de #atig o$ #i+0+
=: #atig age.ie+/ J!et!e# t!e .o%t#: !a+ ade(%ate %'=e# o$ #atig
age.ie+ to di+.!a#ge t!e $%.tio+ i a Ba+el II .o'"liat =a0ig +:+te'< i+
Page 1B
a (%e+tio $o# .o+ide#atio/ F%#t!e#< to )!at e7tet t!e #atig age.ie+ .a
=e #elied %"o i+ al+o a 'atte# o$ de=ate/
Et#: o#'+ $o# #e.ogitio o$ #atig age.ie+ +!o%ld =e +t#i.te#/ Ol: &#'+
)it! ite#atioal e7"e#ie.e o# =a.0g#o%d i #atig+ =%+ie++ +!o%ld =e
allo)ed to ete#/ T!i+ i+ e.e++a#il: gi9e t!at t!e Idia #atig id%+t#: i+ i
it+ g#o)t! "!a+e< e+"e.iall: )it! t!e i'"le'etatio o$ e) Ba+el II .a"ital
o#'+ t!at e.o%#age .o'"aie+ to get #ated/
8, I"pro6!d Risk Mana!"!nt @ Capital Ad!:ua$y' Oe a+"e.t t!at
!old =a.0 t!e .#iti.+ o$ Ba+el II i+ t!e $a.t t!at it )ill tig!te t!e #i+0
'aage'et "#o.e++< i'"#o9e .a"ital ade(%a.: ad +t#egt!e t!e =a0ig
+:+te'/
=, Curtail"!nt o- Cr!dit to In-rastru$tur! ProK!$ts' T!e o#'+ #e(%i#e a
!ig!e# )eig!t age $o# "#o6e.t &a.e< .%#tailig .#edit to t!i+ i+ 9e#: .#%.ial
+e.to#/ T!e log;te#' i'"a.t+ $o# t!i+ .o%ld =e di+a+t#o%+/
?, Pr!-!r!n$! -or Morta! Cr!dit to Consu"!r Cr!dit *o5!r Risk
)!i.ts to Morta! $r!dit' P#e$e#e.e $o# Mo#tgage C#edit to Co+%'e#
C#edit Lo)e# Ri+0 Jeig!t+ to Mo#tgage .#edit )o%ld a..et%ate =a0e#+I
"#e$e#e.e to)a#d+ it 9i+;R;9i+ .o+%'e# .#edit/
A, #as!l II' Ad6anta! #i #anks' It )o%ld =e $a# ea+ie# $o# t!e la#ge#
=a0+ to i'"le'et t!e o#'+< #ai+ig t!ei# (%alit: o$ #i+0 'aage'et ad
.a"ital ade(%a.:/ T!i+ .o'=ied )it! t!e !ig!e# .o+t o$ .a"ital $o# +'alle#
"la:e#+ )o%ld (%ee# t!e "it.! i $a9o%# o$ t!e $o#'e#/ T!e la#ge# =a0+ )o%ld
al+o !a9e a di+ti.t ad9atage i #ai+ig .a"ital i e(%it: 'a#0et+/ E'e#gig
Ma#0et Ba0+ .a t%# t!i+ .!allege ito a ad9atage =: a.ti9e
i'"le'etatio ad e7"adig t!ei# !o#iEo+ o%t+ide t!e .o%t#:/
D, IT sp!ndin' Ad6anta! to Indian IT $o"pani!s' O t!e Ki"+ide<
Idia IT .o'"aie+< )!i.! !a9e .o+ide#a=le e7"e#ti+e i t!e BFSI +eg'et<
+tad to gai/ Ma6o# Idia IT .o'"aie+ +%.! a+ I;Ke7 ad I$o+:+ al#ead:
!a9e t!e "#od%.t+< )!i.! .o%ld !el" t!e' de9elo" a edge o9e# t!ei# #i9al+
$#o' t!e de9elo"ed .o%t#ie+/
Page @5
CHAPTER III
RESEARCH METHODO*O+2
Page @1
4,0 INTRODUCTION
T!e #ea+o $o# .od%.tig t!i+ +%#9e: )a+ to e+ta=li+! !o) t!e+e e)
#eg%latio+ )e#e "e#.ei9ed i te#'+ o$ "#io#it:< %#ge.: ad ite#e+t )it!i
t!e =a0+/ I additio< ai' i+ to "#o9ide a 9ie) o +t#ategi. i++%e+ ad to
#e"o#t o 0e: t#ed+ #elated to 'a: a+"e.t+ o$ .o'"lia.e )it!i t!e Ba+el
II #eg%lato#: $#a'e)o#0/ Fiall:< to 'a0e #e.o''edatio+ o t!e
o""o#t%itie+ oFe#ed =: t!e e) #eg%latio+ $o# t!e #i+0 'aage'et
"#o.e++/
4,3 STUD2 PRO#*EM
Ba+el II o#'+ .a'e a+ a atte'"t to #ed%.e t!e ga" i "oit o$ 9ie)+
=et)ee .oKi.t "#a.ti.e+/ T!e#e$o#e< t!e diFe#e.e o$ =a0 i'"le'etatio
o$ t!o+e #e+ol%tio+ e'e#ge+/ St%d: "#o=le' .a =e +tated a+ $ollo)+L
To 5.at !xt!nt &anks .a6! i"pl!"!nt!d #as!l II nor"s r!lat!d to
!n.an$in int!rnal $ontrol in t.! &anks7
4,4 O#JECTI9ES
Co9e#ig diFe#et a+"e.t+ o$ #i+0 a++e++'et
Ideti$:ig 0e:+ $o# eFe.ti9e #i+0 'aage'et
To %de#+tad t!e .!allege+ ad i'"a.t o$ I'"le'etig Ba+el II
To aal:Ee t!e .%##et "#og#e++ o$ Ba+el II
Page @1
4,4,0 DATA CO**ECTION
P#i'a#: i$o#'atioL Pe#+oal ite#9ie)G O%e+tioai#e
Se.oda#: i$o#'atioL T!#o%g! ite#et< Ma%al+< Jo%#al+<
A%ditGA%al #e"o#t+
4,8 STUD2 CO9ERA+E AND SAMP*E
St%d: .o9e#age .o+i+t+ o$ all =a0 e'"lo:ee+ )it!i ite#al .ot#ol<
#i+0 'aage'et< o"e#atio+ de"a#t'et< ad .#edit de"a#t'et/ 15
(%e+tioai#e+ )e#e di+t#i=%ted o9e# 15 =a0+ i .!adig#!< +ele.ted
o #ado' +a'"lig te.!i(%e/
T!e +%#9e: a++e++e+ t!e #eadie++ o$ t!e =a0ig id%+t#: $o# i'"le'etig
t!e Ba+el II #eg%lato#: $#a'e)o#0 ad "#o9ide+ a 9ie) o$ t!e +t#ategi. i++%e+
ad 0e: t#ed+ #elated to t!e 'a: a+"e.t+ o$ .o'"lia.e )it!i t!i+
$#a'e)o#0/
4,= SCOPE O1 THE SUR9E2
T!e Ba0ig Id%+t#: !a+ =ee a++e++ed t!e #eadie++ i +e9e a#ea+L
A)a#ee++ o$ #eg%latio+
O#gaiEatioal +t#%.t%#e
Re"o#tig a=ilit:
Co'"lia.e )it! Ba+el II
Ca"ital allo.atio
Ba+el II a.tio "la
Te.!olog:
Page @@
CHAPTER I9
ANA*2SIS @ INTERPRETATION
Page @3
8,0 A)ARENESS O1 RE+U*ATIONS
Sour$!' All t.! &!lo5 analysis and int!rpr!tation is don! -ro" t.!
sur6!y $ondu$t!d in #anks,
1/ J!at i+ :o%# a++e++'et o$ :o%# #eadie++ $o# t!e e) Ba+el "#o"o+al+
)it! #e+"e.t to .a"ital #e(%i#e'et+S
Ta=le 3/1/1L Readie++ $o# t!e e) Ba+el "#o"o+al
CRE*T RIST MARTET RIST OPERATIONAL RIST
FULLY PREPARE* 4 B B
PARTIALLY PREPARE* 1 1 1
NOT YET PREPARE*
Fig%#e 3/1/1 Readie++ $o# t!e e) Ba+el "#o"o+al
1/ Ha9e :o% doe a ga" aal:+i+ =et)ee .%##et #i+0 'aage'et "#a.ti.e
ad e) .a"ital #e(%i#e'et+S
Ta=le 3/1/1L Ga" aal:+i+
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES B A B
NO 1 A 1
Page @A
Fig%#e 3/1/1 Ga" aal:+i+
@/ J!at deg#ee o$ "#io#it: do :o% add#e++ to t!e e) Ba+el #eg%lato#:
$#a'e)o#0S
Ta=le 3/1/@L P#io#it: to e) Ba+el #eg%lato#: $#a'e)o#0
CRE*T
RIST
MARTET RIST OPERATIONAL RIST
VERY IMPORTANT B B 15
IMPORTANT 1 1
NOT IMPORTANT
Fig%#e 3/1/@ P#io#it: to e) Ba+el #eg%lato#: $#a'e)o#0
3/ Ho) do :o% 9ie) Ba+el II #eg%latioL a+ a o""o#t%it: to e!a.e t!e #i+0
'aage'et "#o.e++< o# a+ a #eg%lato#: .o+t#aitS
Ta=le 3/1/3L Vie) o$ Ba+el II #eg%latio
Page @C
CRE*T
RIST
MARTET RIST OPERATIONAL RIST
OPPORTUNITY 15 4 15
CONSTRAINT 1
Fig%#e 3/1/3L Vie) o$ Ba+el II #eg%latio
O#SER9ATIONS
T!e 'a6o#it: o$ =a0+ .o+ide# t!e'+el9e+ to =e $%ll: "#e"a#ed/
A 'a6o#it: o$ =a0+ !a9e "e#$o#'ed a ga" aal:+i+ =et)ee t!ei#
.%##et #i+0 'aage'et "#a.ti.e ad t!e e) .a"ital #e(%i#e'et+/
Ol: oe =a0 doe+ ot 9ie) Ba+el II i'"le'etatio a+ a !ig! "#io#it:
"#o6e.t/
T!e =a0+ la#gel: =elie9e t!at Ba+el II )ill "#o9ide t!e' a o""o#t%it:
to e!a.e #i+0 'aage'et/
Page @2
INTERPRETATION
Alt!o%g! t!e Ba+el II #eg%latio+ a#e .o+ide#ed i'"o#tat to 9e#:
i'"o#tat =: a +t#og 'a6o#it: o$ =a0+< +o'e a#e ol: "a#tl: "#e"a#ed
$o# i'"le'etatio/
T!e =a0+ ai' to loo0 =e:od t!e #eg%lato#: a+"e.t+ ad ai' to =ee&t
$#o' t!e e) #eg%latio+ a+ a 'ea+ to e!a.ed #i+0 'aage'et/
8,3 OR+ANISTIONA* STRUCTURE
1/ *o :o% !a9e a a++iged C#edit #i+0< Ma#0et #i+0 ad O"e#atioal #i+0
'aage# i :o%# =a0S
Ta=le 3/1/1L A++ig'et o$ #i+0 'aage#
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 15 B B
NO 1 1
Fig%#e 3/1/1L A++ig'et o$ #i+0 'aage#
Page @4
1/ To )!o' doe+ t!e Ri+0 'aage# #e"o#tS
Ta=le 3/1/1L J!o' doe+ #i+0 'aage# #e"o#t
CRE*T
RIST
MARTET
RIST
OPERATIONAL
RIST
CHIEF EDECUTIVE OFFICER 3 C C
CHIEF FINANCIAL OFFICER
ASSETS AN* LIABLITY
MANAGER
1 1 1
CRE*IT RIST OFFICER 3 1 1
OTHER SPECIFY
Fig%#e 3/1/1L J!o' doe+ #i+0 'aage# #e"o#tS
@/ J!at i+ t!e a++iged 'aage#I+ ti'e dedi.ated to t!i+ a.ti9it:S
Ta=le 3/1/@L Ti'e dedi.atio
CRE*T RIST MARTET RIST OPERATIONAL RIST
5;15N 1 3 1
15;A5N 1 1 1
UA5N C A C
Page @B
Fig%#e 3/1/@L Ti'e dedi.atio
3/ Ho) 'a: "eo"le )o#0 i t!e+e de"a#t'et+S
Ta=le 3/1/3L N%'=e# o$ "eo"le )o#0
CRE*T RIST MARTET RIST OPERATIONAL RIST
1 ; @ 1 3 1
@ ; A C 3 A
A; 15 1 1 1
U 15 1 1 @
Fig%#e 3/1/3L N%'=e# o$ "eo"le )o#0
A/ *o :o% !a9e a Ri+0 Co''itteeS
Ta=le 3/1/AL Ri+0 Co''ittee
CRE*T RIST MARTET RIST OPERATIONAL RIST
Page 35
YES C A C
NO 3 A 3
Fig%#e 3/1/AL Ri+0 Co''ittee
O#SER9ATIONS
Al'o+t all o$ t!e "a#ti.i"atig =a0+ !a9e a #i+0 'aage'et
de"a#te't/
Mo+t o$ t!e id%+t#:I+ #i+0 'aage#+I #e"o#t to t!e C!ie$ E7e.%ti9e
Of.e#< A++et ad lia=ilit: 'aage# ad C!ie$ Ri+0 Of.e# a..o%tig
$o# t!e =ala.e i e(%al "#o"o#tio+/
Slig!tl: 'o#e attetio i+ "aid to .#edit ad o"e#atioal #i+0 t!a to
Ma#0et #i+0< a+ 35 N o$ t!e =a0+ o"e#atig do ot !a9e #i+0
.o''ittee/
INTERPRETATION
*e+"ite t!e #elati9el: +'all +iEe o$ =a0+< t!e: a#e gee#all: )ell a)a#e
o$ t!e #i+0 'aage'et $%.tio< ad $o# t!i+ "%#"o+e< #i+0 'aage#+
+"ed o9e# !al$ t!ei# ti'e "e#$o#'ig t!e+e $%.tio+/
8,4 REPORTIN+ A#I*IT2
1/ A#e :o% "#od%.ig #e"o#tig $o#
Ta=le 3/@/1L Re"o#t+ "#od%.ed $o#
CRE*T
RIST
MARTET RIST OPERATIONAL RIST
REGULATORY PURPOSE @ 3 3
Page 31
MONITORING 2 4 4
*ECISION MATING
PURPOSE
2 3 3
Fig%#e 3/@/1L Re"o#t+ "#od%.ed $o#
1/ *oe+ e7te#al #e"o#tig d#i9e :o%# ite#al #e"o#tigS
Ta=le 3/@/1L E7te#al #e"o#tig d#i9e ite#al #e"o#tig
CRE*T RIST MARTET RIST OPERATIONAL
RIST
VERY SIGNIFICANTLY 3 A 3
SIGNIFICANTLY A 3 A
NOT AT ALL SIGNIFICANTLY 1 1 1
Fig%#e 3/@/1L E7te#al #e"o#tig d#i9e ite#al #e"o#tig
@/ *oe+ e7te#al #e"o#tig aFe.t :o%# de.i+io 'a0ig "#o.e++S
Page 31
Ta=le 3/@/@L E7te#al #e"o#tig aFe.t de.i+io 'a0ig "#o.e++
CRE*T RIST MARTET RIST OPERATIONAL RIST
VERY SIGNIFICANTLY @ @ @
SIGNIFICANTLY C A C
NOT AT ALL
SIGNIFICANTLY
1 1 1
Fig%#e 3/@/@L E7te#al #e"o#tig aFe.t de.i+io 'a0ig "#o.e++
Page 3@
3/ Ho) $#e(%et i+ :o%# ite#al #e"o#tigS
Ta=le 3/@/3L F#e(%e.: o$ ite#al #e"o#tig
CRE*T RIST MARTET RIST OPERATIONAL RIST
*ail: 1 1
Jee0l: 1 1
Mot!l: 4 4 2
A%all: 1 1 1
Fig%#e 3/@/3L F#e(%e.: o$ ite#al #e"o#tig
A/ Jill :o% "#od%.e +"e.i&. ite#al #e"o#tig $o# C#edit< Ma#0et ad
O"e#atioal Ri+0S
Ta=le 3/@/AL P#od%.tio o$ +"e.i&. ite#al #e"o#tig
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 15 15 15
NO
Page 33
Fig%#e 3/@/AL P#od%.tio o$ +"e.i&. ite#al #e"o#tig
O#SER9ATIONS
All #i+0 #e"o#tig i+ .o'"iled la#gel: $o# 'oito#ig ad *e.i+io 'a0ig
"%#"o+e+ t!a Reg%lato#: "%#"o+e/
All t!e Ba0+ "#od%.e ite#al #e"o#t/
Mo+t o$ t!e Ba0+ "#od%.e Ite#al Re"o#t 'ot!l:/
Mo+t o$ t!e =a0+ +aid E7te#al #e"o#tig aFe.t t!ei# de.i+io 'a0ig
"#o.e++/
INTERPRETATION
Re"o#tig $o# all #i+0 +till eed+ to =e de9elo"ed/
Page 3A
8,8 COMP*IACE )ITH #ASE* II
1/ J!i.! a""#oa.! )ill =e+t +%it :o%# o#gaiEatioS
Ta=le 3/3/1L A""#oa.! t!at =e+t +%it o#gaiEatio
CRE*T
RIST
MARTET RIST OPERATIONAL RIST
STAN*AR* 4 B 2
FOUN*ATION
A*VANCE* 1 1 @
*ONIT TNOJ
Fig%#e 3/3/1L A""#oa.! t!at =e+t +%it o#gaiEatio
1/ Ha9e :o% "e#$o#'ed a Co+tGBee&t aal:+i+ $o# ea.! a""#oa.! "#o"o+ed
=: Ba+el IIS
Ta=le 3/3/1L Co+tGBee&t aal:+i+
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 15 4 B
NO 1 1
Page 3C
Fig%#e 3/3/1L Co+tGBee&t aal:+i+
@/ I :o%# +it%atio< .o%ld #eg%lato#: .a"ital .o+%'"tio =e 'oti9atio $o#L
Ta=le 3/3/@L Reg%lato#: .a"ital .o+%'"tio =e 'oti9atio
CRE*T
RIST
MARTET RIST OPERATIONAL RIST
STOPPING
ACTIVITIES
1 1 1
*EVEOPLING
ACTIVITIES
A 2 C
ACOUIRING
ACTIVITIES
1
NONE 1 1 1
Page 32
Fig%#e 3/3/@L Reg%lato#: .a"ital .o+%'"tio =e 'oti9atio
O#SER9ATIONS
Mo+t o$ t!e =a0+ =elie9e t!at t!e +tada#d a""#oa.! i+ 'o+t
a""#o"#iate $o# t!ei# "%#"o+e+/
O t!e )!ole< a .o+tG=ee&t aal:+i+ !a+ =ee doe $o# ea.! a""#oa.!/
It a""ea#+ t!at t!e =a0+ !a9e .o'"leted t!ei# .o+tG=ee&t aal:+i+
ol: $o# t!ei# ele.ted a""#oa.!/
Reg%lato#: .a"ital .o+%'"tio i+ 'oti9ated $o# de9elo"ig a.ti9itie+/
INTERPRETATION
Mo+t o$ t!e =a0+ )o%ld "#e$e# to ado"t t!e +tada#d a""#oa.!< =%t
ol: $e) o$ t!o+e )!o )o%ld li0e to i'"le'et t!e ad9a.ed a""#oa.!
ad t!e: )ill i'"le'et/
T!e =a0+ t!at )o%ld "#e$e# to ado"t t!e +tada#d a""#oa.! +!o%ld t#:
to ado"t ad9a.ed a""#oa.!/
Page 34
8,= CAPITA* A**OCATION
1/ Ha9e :o% e+ti'ated t!e #eg%lato#: .a"ital .o+%'"tio $o# ea.! o$ :o%#
idi9id%al =%+ie++e+S
Ta=le 3/A/1L E+ti'atio o$ t!e #eg%lato#: .a"ital .o+%'"tio
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 15 B 15
NO 1
Fig%#e 3/A/1L E+ti'atio o$ t!e #eg%lato#: .a"ital .o+%'"tio
1/ Jill :o% o%t+o%#.e a.ti9itie+ )it! !ig! .a"ital .o+%'"tioS
Ta=le 3/A/1L O%t+o%#.e a.ti9itie+ $o# !ig! .a"ital .o+%'"tio
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 3 @ A
NO C 2 2
Page 3B
Fig%#e 3/A/1L O%t+o%#.e a.ti9itie+ $o# !ig! .a"ital .o+%'"tio
@/ Jill :o% i+%#e +ele.ted Ri+0S
Ta=le 3/A/@L I+%#e Ri+0
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 2 A C
NO @ A 3
Fig%#e 3/A/@L I+%#e Ri+0
3/ *o :o% ited allo.atig e.oo'i. .a"ital =: B%+ie++ lie+S
Ta=le 3/A/3L Allo.atio o$ e.oo'i. .a"ital
CRE*T RIST MARTET RIST OPERATIONAL
RIST
Page A5
YES 4 2 4
NO 1 1 1
Fig%#e 3/A/3L Allo.atio o$ e.oo'i. .a"ital
A/ Jill :o% 'a0e %+e o$ Ba+el II #e(%i#e'et+ to i'"le'et a e.oo'i.
.a"ital allo.atio t!#o%g!o%t :o%# =%+ie++ lie+S
Ta=le 3/A/AL U+e o$ Ba+el II #e(%i#e'et+
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES B 4 4
NO 1 1
Page A1
Fig%#e 3/A/AL U+e o$ Ba+el II #e(%i#e'et+
O#SER9ATIONS
Mo+t o$ t!e =a0+ do ot o%t+o%#.e a.ti9itie+ )it! !ig! .a"ital
.o+%'"tio/
Hal$ o$ t!e =a0+ i+%#e +ele.ted Ri+0/
Ba0+ )it! le++ +o"!i+ti.ated a""#oa.!e+ a#e li0el: to %+e #eg%lato#:
.a"ital a+ t!e =a+i+ $o# ite#al .a"ital allo.atio/
INTERPRETATION
Ve#: $e) =a0+ "la to o%t+o%#.e a.ti9itie+ )it! !ig! .a"ital
.o+%'"tio< =%t t!e 'a6o#it: )ill i+%#e t!ei# .#edit #i+0+< )!ile ea#l:
!al$ )ill "la to i+%#e t!ei# 'a#0et ad o"e#atioal #i+0+/
A +t#og 'a6o#it: o$ lo.al =a0+ )ill allo.ate e.oo'i. .a"ital a..o#dig
to =%+ie++ lie+< )!ile a +t#oge# 'a6o#it: )ill %+e t!e Ba+el II
#e(%i#e'et+ to i'"le'et t!at .a"ital allo.atio "#o.e++/
Page A1
8,? #ASE* II ACTION P*AN
1/ Ha9e :o% e+ta=li+!ed a a.tio "la to a.!ie9e t!e Ba+el II #e(%i#e'et+S
Ta=le 3/C/1L E+ta=li+!'et o$ a.tio "la
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 15 15 15
NO
Fig%#e 3/C/1L E+ta=li+!'et o$ a.tio "la
1/ Ho) )ill :o% e7e.%te t!i+ a.tio "laS
Ta=le 3/C/1L E7e.%tio o$ a.tio "la
CRE*T
RIST
MARTET RIST OPERATIONAL RIST
INTERNAL
RESOURCES
2 A 4
EDTERNAL
RESOURCES
1 3 1
BOTH 3 @ @
Page A@
Fig%#e 3/C/1L E7e.%tio o$ a.tio "la
@/ J!at )ill t!e la#ge+t +"edig a#ea =eS
Ta=le 3/C/@L La#ge+t +"edig a#ea
CRE*T
RIST
MARTET
RIST
OPERATIONAL RIST
TECHNOLOGY 4 2 4
COMMUNICATION 1 3 1
OTHER ,SPECIFY-
*ONIT TNOJ
Fig%#e 3/C/@L La#ge+t +"edig a#ea
3/ Ho) $a# a#e :o% i t!e i'"le'etatio o$ :o%# a.tio "laS
Ta=le 3/C/3L C%##et "#og#e++
Page A3
CRE*T RIST MARTET RIST OPERATIONAL RIST
NOT REALLISE*
PARTIALLY
REALLISE*
A 2 A
FULLY REALLISE* A @ A
Fig%#e 3/C/3L C%##et "#og#e++
O#SER9ATIONS
All t!e =a0+ e+ta=li+!ed =: a a.tio "la to a.!ie9e t!e Ba+el II
#e(%i#e'et+/
Mo+t o$ t!e =a0+ e7e.%te t!e a.tio "la )it! ite#al #e+o%#.e+ t!a
e7te#al #e+o%#.e+/
La#ge+t +"edig a#ea i+ te.!olog:/
Hal$ o$ t!e =a0I+ i'"le'etatio o$ a.tio "la i+ "a#tiall: #ealiEed
ad !al$ $%ll: #ealiEed/
Page AA
INTERPRETATION
T!e =a0+ !a9e gee#all: dete#'ied a a.tio "la to !el" t!e' to
'eet Ba+el II #e(%i#e'et+/ T!e: !a9e "a#tiall: .o'"leted t!e a.tio+
#e(%i#ed< ad )ill .oti%e )it! t!e+e a.tio "la+/
T!o+e =a0+ t!at !a9e ot :et =eg% i'"le'etatio ted to =e t!e
+'alle# =a0+< )it! +i'"le# =%+ie++ 'odel+< )!i.! #e(%i#e le++ ti'e
ad #e+o%#.e+ to 'eet t!e Ba+el II #e(%i#e'et+/
8,A TECHNO*O+2
1/ *oe+ :o%# .%##et IT i$#a+t#%.t%#e allo) :o% to 'eet t!e Ba+el II
#e(%i#e'et+S
Ta=le 3/2/1L IT i$#a+t#%.t%#e
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 15 4 B
NO 1 1
Fig%#e 3/2/1L IT i$#a+t#%.t%#e
Page AC
1/ Jill :o% de9elo" a IT +ol%tio $o# Ri+0 'aage'etS
Ta=le 3/2/1L IT +ol%tio $o# Ri+0 'aage'et
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES 2 2 2
NO @ @ @
Fig%#e 3/2/1L IT +ol%tio $o# Ri+0 'aage'et
@/ Ha9e :o% .o'"leted a #e9ie) o$ "otetial IT +ol%tio+ a9aila=leS
Ta=le 3/2/@L Re9ie) o$ "otetial IT +ol%tio+ a9aila=le
CRE*T RIST MARTET RIST OPERATIONAL RIST
TECHNOLOGY A @ 3
CONSULTING 3 C A
Fig%#e 3/2/@L Re9ie) o$ "otetial IT +ol%tio+ a9aila=le
Page A2
3/ J!at dif.%ltie+ do :o% $o#e+eeS
Ta=le 3/2/3L *if.%ltie+ t!at :o% $o#e+ee
CRE*T
RIST
MARTET RIST OPERATIONAL RIST
INTEGRATION
CAPABILITIES
@ 1 1
*ATABASE *ESIGN 1 1
MO*ELS 1 1
BU*GET 1
*ATA GATHERING 3 C 3
HUMAN RESOURCE @ @ @
OTHER ,SPECIFY-
Fig%#e 3/2/3L *if.%ltie+ t!at :o% $o#e+ee
O#SER9ATIONS
Mo#e t!a !al$ o$ t!e Ba0ig id%+t#: )ill %+e t!ei# IT i$#a+t#%.t%#e i
it+ .%##et $o#'at/
*if.%ltie+ t!at =a0+ $o#e+ee a#e 'o#e o *ata Gat!e#ig ad H%'a
Re+o%#.e/
INTERPRETATION
Page A4
T!e =a0+ +!o%ld t#ai t!ei# e'"lo:ee+< i o#de# to o9e#.o'e t!e
dif.%ltie+ i i'"le'etig t!e Ba+el II o#'+/
T!e =a0+ +!o%ld de9elo" +%f.iet i$#a+t#%.t%#e to gat!e# t!e
#e(%i#ed data/
CHAPTER 9
1INDIN+S AND SU++ESTIONS
Page AB
=,0 1INDIN+S
C#edit #i+0 i+ gee#all: )ell .otaied< =%t t!e#e a#e +till "#o=le'+
a++o.iated )it! loa .la++i&.atio< loa lo++ "#o9i+ioig< ad t!e
a=+e.e o$ .o+olidated a..o%t+/
Ma#0et #i+0 ad O"e#atioal #i+0 a#e .lea# .!allege< a+ t!e: a#e
#elati9el: e) to t!e a#ea+ t!at )e#e ot )ell de9elo"ed %de# t!e
o#igial Ba+el Ca"ital A..o#d/
T!e e) #eg%latio+ )ill allo) =a0+ to it#od%.e +%=+tatial
i'"#o9e'et+ i t!ei# o9e#all #i+0 'aage'et .a"a=ilitie+< i'"#o9ig
#i+0 =a+ed "e#$o#'a.e 'ea+%#e'et< .a"ital allo.atio a+ "o#t$olio
'aage'et te.!i(%e+/
F%t%#e .o'"le7it: i+ e7"e.ted =e.a%+e =a0+ di9e#+i$: t!ei#
o"e#atio+/ It i+ e7"e.ted t!at =a0+ )ill di9e#+i$: t!ei# o"e#atio+ to
gee#ate additioal i.o'e +o%#.e+< "a#ti.%la#l: $ee;=a+ed i.o'e i/e/
o ite#e+t i.o'e< to i'"#o9e #et%#+/
Ba+el II lead+ to i.#ea+e i *ata .olle.tio ad 'aitea.e o$ "#i9a.:
ad +e.%#it: i 9a#io%+ i++%e+/
T!e =a0+ t!at )o%ld "#e$e# to ado"t t!e Stada#d A""#oa.! +!o%ld t#:
to ado"t Ad9a.ed A""#oa.!/
Page C5
=,3 SU++ESTIONS
T!e Ba0+ +!o%ld #e9ie) Ba+el II .o'"oet+ ad de9elo" a 9i+io<
+t#ateg: ad a.tio "la $o# )!at i+ e7"e.ted to =e a +%ita=le
$#a'e)o#0 =a+ed o !o) t!e =a0ig +:+te' e9ol9e+ o9e# ti'e/
T!e Ba0+ eed #eg%la# egage'et $o# +%+taied +%""o#t/ A (%ali&ed
log;te#' ad9i+o# )o%ld =e "#e$e#a=le/
A )o#0+!o" +!o%ld =e "laed to "#od%.e a #oad 'a" to Ba+el II
Co'"lia.e/
T#aiig ad additioal a++i+ta.e to 'a0e it ea+ie# $o# t!e =a0ig
+:+te' to .o'"l: )it! e) g%idelie+ o 'a#0et ad o"e#atioal #i+0/
*ata P#i9a.: ad +e.%#it: eed+ 'o#e attetio
Page C1
CHAPTER 9I
CONC*USION
Page C1
?,0 CONC*USION
I'"le'etatio o$ Ba+el II !a+ =ee de+.#i=ed a+ a log 6o%#e: #at!e# t!a
a de+tiatio =: it+el$/ Udo%=tedl:< it )o%ld #e(%i#e .o''it'et o$
+%=+tatial .a"ital ad !%'a #e+o%#.e+ o t!e "a#t o$ =ot! =a0+ ad t!e
+%"e#9i+o#+/ RBI !a+ de.ided to $ollo) a .o+%ltati9e "#o.e++ )!ile
i'"le'etig Ba+el II o#'+ ad 'o9e i a g#ad%al< +e(%etial ad .o;
o#diate 'ae#/ Fo# t!i+ "%#"o+e< dialog%e !a+ al#ead: =ee iitiated )it!
t!e +ta0e!olde#+/ A+ e9i+aged =: t!e Ba+el Co''ittee< t!e a..o%tig
"#o$e++io too< )ill 'a0e a "o+iti9e .ot#i=%tio i t!i+ #e+"e.t to 'a0e
Idia =a0ig +:+te' +till +t#oge#/
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CHAPTER 9II
APPENDIL
Page C3
A,0 <UESTIONNAIRE
I a' *EEPITA RANI +t%d:ig 3
t!
+e'e+te# MBA/ I a' )o#0ig o a "#o6e.t
titled >RIS( MANA+EMENT IN #AN(IN+ SECTOR%, I t!i+ #ega#d I
#e(%e+t :o% to +"ed :o%# 9al%a=le ti'e i &llig t!i+ (%e+tioai#e BTi$k
t.! appropriat! &oxC, T!i+ i$o#'atio )ill =e %+ed ol: $o# a.ade'i.
"%#"o+e ad )ill =e 0e"t .o&detial/
INSTITUTIONA* IN1ORMATION
1/ Na'e o$ :o%# =a0L
1/ Plea+e idi.ate t!e a'e o$
t!e .ota.t "e#+o $o# t!i+
(%e+tioai#e ad !i+G!e#
"o+itio i t!e Ba0/
Na'eL
Po+itioL
@/ To )!i.! o$ t!e $ollo)ig t:"e+
o$ =a0+ doe+ :o%# =a0
=elogS
o P%=li. +e.to#
o P#i9ate +e.to#
o Fo#eig Ba0
3/ J!e#e i+ :o%# "a#etG!ead
of.e lo.atedS
Page CA
Ti$k t.! appropriat! &ox
A)ARENESS O1 RE+U*ATIONS
1/ J!at i+ :o%# a++e++'et o$ :o%# #eadie++ $o# t!e e) Ba+el "#o"o+al+
)it! #e+"e.t to .a"ital #e(%i#e'et+S
CRE*T RIST MARTET RIST OPERATIONAL RIST
FULLY PREPARE*
PARTIALLY
PREPARE*
NOT YET
PREPARE*
1/ Ha9e :o% doe a ga" aal:+i+ =et)ee .%##et #i+0 'aage'et "#a.ti.e
ad e) .a"ital #e(%i#e'et+S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
@/ J!at deg#ee o$ "#io#it: do :o% add#e++ to t!e e) Ba+el #eg%lato#:
$#a'e)o#0S
CRE*T RIST MARTET RIST OPERATIONAL RIST
VERY
IMPORTANT
IMPORTANT
NOT IMPORTANT
3/ Ho) do :o% 9ie) Ba+el II #eg%latioL a+ a o""o#t%it: to e!a.e t!e #i+0
'aage'et "#o.e++< o# a+ a #eg%lato#: .o+t#aitS
CRE*T RIST MARTET RIST OPERATIONAL RIST
OPPORTUNITY
CONSTRAINT
OR+ANISTIONA* STRUCTURE
1/ *o :o% !a9e a a++iged C#edit #i+0< Ma#0et #i+0 ad O"e#atioal #i+0
'aage# i :o%# =a0S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
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1/ To )!o' doe+ t!e Ri+0 'aage# #e"o#tS
CRE*T RIST MARTET RIST OPERATIONAL RIST
CHIEF
EDECUTIVE
OFFICER
CHIEF
FINANCIAL
OFFICER
ASSETS AN*
LIABLITY
MANAGER
CRE*IT RIST
OFFICER
OTHER SPECIFY
@/ J!at i+ t!e a++iged 'aage#I+ ti'e dedi.ated to t!i+ a.ti9it:S
CRE*T RIST MARTET RIST OPERATIONAL RIST
5;15N
15;A5N
UA5N
3/ Ho) 'a: "eo"le )o#0 i t!e+e de"a#t'et+S
CRE*T RIST MARTET RIST OPERATIONAL RIST
1 V @
@ V A
A; 15
U 15
A/ *o :o% !a9e a Ri+0 Co''itteeS
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
REPORTIN+ A#I*IT2
1/ A#e :o% "#od%.ig #e"o#tig $o#
CRE*T RIST MARTET RIST OPERATIONAL RIST
REGULATORY
PURPOSE
MONITORING
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*ECISION
MATING
PURPOSE
1/ *oe+ e7te#al #e"o#tig d#i9e :o%# ite#al #e"o#tigS
CRE*T RIST MARTET RIST OPERATIONAL RIST
VERY
SIGNIFICANTLY
SIGNIFICANTLY
NOT AT ALL
SIGNIFICANTLY

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@/ *oe+ e7te#al #e"o#tig aFe.t :o%# de.i+io 'a0ig "#o.e++S
CRE*T RIST MARTET RIST OPERATIONAL RIST
VERY
SIGNIFICANTLY
SIGNIFICANTLY
NOT AT ALL
SIGNIFICANTLY
3/ Ho) $#e(%et i+ :o%# ite#al #e"o#tigS
CRE*T RIST MARTET RIST OPERATIONAL RIST
*ail:
Jee0l:
Mot!l:
A%all:
A/ Jill :o% "#od%.e +"e.i&. ite#al #e"o#tig $o# C#edit< Ma#0et ad
O"e#atioal Ri+0S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
COMP*IACE )ITH #ASE* II
1/ J!i.! a""#oa.! )ill =e+t +%it :o%# o#gaiEatioS
CRE*T RIST MARTET RIST OPERATIONAL RIST
STAN*AR*
FOUN*ATION
A*VANCE*
*ONIT TNOJ
1/ Ha9e :o% "e#$o#'ed a Co+tGBee&t aal:+i+ $o# ea.! a""#oa.! "#o"o+ed
=: Ba+el IIS
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
@/ I :o%# +it%atio< .o%ld #eg%lato#: .a"ital .o+%'"tio =e 'oti9atio $o#L
CRE*T RIST MARTET RIST OPERATIONAL RIST
STOPPING
ACTIVITIES
*EVEOPLING
ACTIVITIES
ACOUIRING
Page CB
ACTIVITIES
NONE
CAPITA* A**OCATION
1/ Ha9e :o% e+ti'ated t!e #eg%lato#: .a"ital .o+%'"tio $o# ea.! o$ :o%#
idi9id%al =%+ie++e+S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
Page 25
1/ Jill :o% o%t+o%#.e a.ti9itie+ )it! !ig! .a"ital .o+%'"tioS
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
@/ Jill :o% i+%#e +ele.ted Ri+0S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
3/ *o :o% ited allo.atig e.oo'i. .a"ital =: B%+ie++ lie+S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
A/ Jill :o% 'a0e %+e o$ Ba+el II #e(%i#e'et+ to i'"le'et a e.oo'i.
.a"ital allo.atio t!#o%g!o%t :o%# =%+ie++ lie+S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
Page 21
#ASE* II ACTION P*AN
1/ Ha9e :o% e+ta=li+!ed a a.tio "la to a.!ie9e t!e Ba+el II #e(%i#e'et+S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
1/ Ho) )ill :o% e7e.%te t!i+ a.tio "laS
CRE*T RIST MARTET RIST OPERATIONAL RIST
INTERNAL
RESOURCES
EDTERNAL
RESOURCES
BOTH
@/ J!at )ill t!e la#ge+t +"edig a#ea =eS
CRE*T RIST MARTET RIST OPERATIONAL
RIST
TECHNOLOGY
COMMUNICATION
OTHER ,SPECIFY-
*ONIT TNOJ
Ot!e# ,+"e.i$:- WWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWWW
Page 21
3/ Ho) $a# a#e :o% i t!e i'"le'etatio o$ :o%# a.tio "laS
CRE*T RIST MARTET RIST OPERATIONAL RIST
NOT REALLISE*
PARTIALLY
REALLISE*
FULLY REALLISE*
TECHNO*O+2
1/ *oe+ :o%# .%##et IT i$#a+t#%.t%#e allo) :o% to 'eet t!e Ba+el II
#e(%i#e'et+S
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
1/ Jill :o% de9elo" a IT +ol%tio $o# Ri+0 'aage'etS
CRE*T RIST MARTET RIST OPERATIONAL RIST
YES
NO
@/ Ha9e :o% .o'"leted a #e9ie) o$ "otetial IT +ol%tio+ a9aila=leS
CRE*T RIST MARTET RIST OPERATIONAL RIST
TECHNOLOGY
CONSULTING
3/ J!at dif.%ltie+ do :o% $o#e+eeS
CRE*T RIST MARTET RIST OPERATIONAL
RIST
INTEGRATION
CAPABILITIES
*ATABASE
*ESIGN
MO*ELS
BU*GET
*ATA GATHERING
HUMAN
RESOURCE
OTHER ,SPECIFY-
Page 2@
PLACEL
*ATEL Sigat%#e/
Page 23
#I#*IO+RAPH2
REPORTS
Re"o#t o I'"le'etig Ba+el IIL I'"a.t o E'e#gig E.oo'ie+ ;;
Ja:dee" T/ T!a0e# NMIMS
Pa"e# o Ri+0 A++e++'et ad Ri+0 Maage'et ;; Sato+! *eo#a'
Jat"ade 8 Sidd!i S!#i0at V:a+ METI+ I+tit%te o$ Maage'et Na+!i0/
ARTICA*S
Ri+0 Maage'et i Ba0+/ ;; R S Rag!a9a C!a#te#ed A..o%tat/
Ba+el No#'+ .!allege+ i Idia VS)a"a Ba0+!i
J!ite Pa"e# T!e Ri""le EFe.tL Ho) Ba+el II )ill i'"a.t i+tit%tio+ o$ all
+iEe+
Ri+0 Maage'et G%idelie+ $o# Co''e#.ial Ba0+ 8 *FI+/
BASEL II V A#e Idia Ba0+ Goig to GaiS ;; Sato+! N/ Ga'=!i#e
Ja'aalal< Ba6a6 I+tit%te o$ Maage'et St%die+ M%'=ai
Ba+el II ad IdiaQ+ =a0ig +t#%.t%#e C/ P/ C!ad#a+e0!a# ad Ja:ati
G!o+!
#OO(S
Had Boo0 o Ri+0 'aage'et 8 Ba+el II o#'+
)E# SITES
)))/=i+/o#g
)))/#=i/o#g
)))/0"'g/.o'
)))/.ogiEat/.o'
)))/:a!oo/.o'
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