Basic intent of Basel II is to develop a safe and sound financial system by emphasizing on banks own internal control system, risk management processes, market discipline etc. Implementation of Basel II is a challenge for banks because it requires well developed information system, technology for risk modeling, effective integration of information system etc. Banks require huge investment in technology for implementing Basel II norms effectively. Many software companies have started to develop products which fulfill the Basel II requirements.

The New Basel Accord introduced a revised framework for determining bank capital requirements. The Basel Committee on Banking Supervision (BCBS) released the Third Consultative Paper (`CP3') on the New Accord on April 29, 2003. This indicates the commitment of the BCBS to the process. Its implementation can be expected by late 2006.

As the Basel II Capital Accord continues to evolve, the Basel Committee on Banking Supervision moves closer to its goal of aligning banking risks and their management with capital requirements. By redefining how banks worldwide calculate regulatory capital and report compliance to regulators and the public, Basel II is intended to improve safety and soundness in the financial system by placing increased emphasis on banks' own internal control and risk management processes and models, the supervisory review process, and market discipline.