The Asian Banker reports: It is a disappointed to learn that the Reserve Bank of India (RBI) is postponing the Basel II deadline for the country’s banks to 2009, as credit grows unabated and borrowing costs increase – RBI raised the repo rate by 25bps to 7.25 percent last week. Foreign banks and banks with an overseas presence have to comply by 2008, while most of the domestic banks will have to be ready by 2009. Source: The Asian Banker November 06, 2006
BIIA comment: It is a well known fact that Indian Banks are not very well prepared for Basel II. Computerization of India’s main banks began relatively late in the 90’s. Penetration of information technology in banking has been successful in the urban areas, unlike in the rural areas where it is insignificant. Banks do not have a data collection culture. Most of the historical data is still on paper and would have to be back-loaded to conform to Basel II (seven years of history). Indian bankers consider this a daunting task. However this leaves outsiders puzzled because the whole western banking world seem to have their data maintained in India. Why can’t Indian banks mobilize the Indian outsourcing industry for this important task?