Basel
Accord II Risk Management directives (in short Basel
II) have been implemented by a few Indian banks (those
having international presence) w.e.f. March 31, 2008,
while other banks will do so from 2009 as per RBI's
announcement. This will surely herald a new dimension
in the culture, complexion and sophistication of the
banking business in tune with international mandate.
The prescriptions in Basel II are intended to ensure
strength, stability and robustness of banking operations
the world over. Indian banks should, therefore, welcome
and utilize the directives as opportunities for development
of their business. Of course, the basic requirement
is that they must have appropriate, cohesive and enterprise-wide
risk management architecture across all the segments
of their operations.
We
are in an era of Business Process Outsourcing (BPO).
Even the most advanced countries like the US, the
UK have embraced the concept of outsourcing for the
sake of convenience as a management cost and in the
overall interest of the business and economy. Thus,
`outsourcing' has become a fairly common and respectable
practice. It is obvious that a business unit will
always aim at profit maximization within the prevailing
political and socio-economic contours. In the process
of retaining its core area of competence, a business
unit may like to avail itself of external services
to achieve its overall objectives. It certainly makes
economic sense. Banking business cannot be compared
to any manufacturing/trading business for obvious
reasons. The veil of secrecy surrounds banking operations
to a large extent in all the countries generally.
Hence, it is very difficult to seperate `core' activity
and non-core activity and view outsourcing as a bliss
in banking. Outsourcing of any banking activity demands
serious thought and evaluation. |
