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In a nut-shell, we would like to conclude that keeping in view the cost of compliance for both banks and supervisors, the regulatory challenge would be to migrate to Basel II in a non-disruptive manner. We would like to continue the process of interaction with other
countries to learn from their experiences through various international fora. India is one of the early countries which subjected itself voluntarily to the FSAP of the IMF, and our system was assessed to be in high compliance with the relevant principles. With the gradual and purposeful implementation of the banking sector reforms over the past decade, the Indian banking system has shown significant improvement on various parameters, has become robust and displayed ample resilience to shocks in the economy. There is, therefore, ample evidence of the capacity of the Indian banking system to migrate smoothly to Basel II.

Concluded.

* Contributed by: -
Jagannath Mishra & Pankaj Kumar Kalawatia,
Students of PGDBM Program, Class of 2008-10,
Institute of Public Enterprises, Hyderabad.
Article posted on September 27, 2008.