Capacity-building measures for capital assessment launched

Mumbai, Aug 30 | Updated: Aug 31 2006, 05:30am hrs
Given the fact that the domestic banks are exploring all avenues for meeting the capital requirements under Basel II, the Reserve Bank of India (RBI) has initiated supervisory capacity-building measures. These measures would identify the gaps and assess as well as quantify the extent of additional capital, which may be required to be maintained by banks said RBI in its annual report on Wednesday.

Further RBI stated that, among the developing countries the extent of rating penetration in India has been increasing every year and a large number of capital issues of companies have been rated.

The RBI also mentioned that in the current scenario, banks are constantly pushing the frontiers of risk management. Compulsions arising out of increasing competition, as well as agency problems between management, owners and other stakeholders are inducing banks to look at newer avenues to augment revenues, while trimming costs.

Consolidation, competition and risk management are no doubt critical to the future of banking but governance and financial inclusion are also likely to emerge as the key issues for a country like India, at this stage of socio-economic development said RBI.

Meanwhile, with increasing liberalisation in the financial sector and the emergence of financial conglomerates, the sectors stability has emerged as a key objective for the regulator.