New RBI Norms Soon for Banks’ Risk Mea­sure­ment

The Economic Times - - Sports & Economy - Our Bu­reau

Mum­bai: The Re­serve Bank of In­dia has pro­posed a new set of risk mea­sure­ment norms for banks in a draft pa­per which could prob­a­bly raise the cap­i­tal needs of the lenders, re­ports our bu­reau. In a draft pro­posal, the cen­tral bank has said that banks should com­pute the po­ten­tial risk of value ero­sion on over­all bank­ing op­er­a­tions.

“In­ter­est Rate Risk In Bank­ing Book (IRRBB) is a ma­te­rial source of risk to the banks in the long run, it is con­sid­ered de­sir­able to en­hance the re­quire­ments ap­pli­ca­ble to IRRBB,’’ the cen­tral bank said in a draft pro­posal put on its web­site. The im­pact of it could be on the trad­ing books, loans port­fo­lio, de­posits and their other as­sets. Now, In­dian banks com­pute Eq­uity Value Ero­sion and im­pact of in­ter­est rate move­ment on their Net In­ter­est In­come, for the en­tire bal­ance sheet and not just for the bank­ing book po­si­tions. How­ever, in or­der to move to­wards global stan­dards, banks have to split the risk from rate move­ments into loans, de­posits and trad­ing book in one.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.