According to a survey conducted by Oracle India, i-flex solutions and Indian Banks’ Association (IBA), a majority of Indian banks plan to build comprehensive risk management systems while progressing on their Basel II compliance initiatives.

Carried out among Indian bankers, the survey sought to understand the challenges confronting Indian banks on the road to Basel II compliance.

A prominent finding of the survey was that all surveyed banks viewed RBI’s postponement of the Basel II compliance deadline from March 31, 2007 to March 31, 2008, as an opportunity to adopt a holistic approach to Basel II compliance, rather than relaxing the pace of adoption.

Indian banks plan to implement Basel II under all the three Pillars of Basel II, while addressing gaps in the implementation of Pillar I, such as the Credit Risk Mitigation process, Portfolio Segmentation process for retail exposures and more.

"Implementation of Basel II will improve the Risk Management System in banks and will result in improved processes," said H. N. Sinor, chief executive, IBA.

94% of the bankers surveyed believed that process standardization, cost control, standardizing and storing data, and acquiring the necessary skill sets, were the primary challenges to Basel II compliance. The survey also discovered that one of the key challenges for Indian banks in adopting the standardized approach was data management.

"The survey findings demonstrate the maturity of the Indian banking sector, in their approach to Basel II compliance. Banks should view the Basel II regulations as a means to strengthen their risk management systems rather than merely as a compliance issue," commented Deepak Ghaisas, CEO-India Operations and CFO, i-flex solutions, on the survey findings.