Basel II is an international banking accord that provides recommendations on banking regulations regarding capital adequacy requirements. It aims to ensure banks have enough capital reserves to account for credit risk from borrower defaults. Basel II builds upon Basel I by separating operational risk from credit risk and allowing banks to use internal models to calculate capital requirements. It has three pillars: minimum capital requirements, supervisory review, and market discipline through disclosure requirements.
Given the recent financial crisis and the extended impact on global credit market and liquidity, it is imperative that financial institutions strengthen their market risk management capabilities to effectively meet compelling business objectives and challenges which include portfolio pricing and portfolio exposure management
Collateral management has moved to the top of the agenda for many institutions as a tool to help mitigate credit risk and manage liquidity. This approach has mainly been driven by regulatory changes such as Basel III, Solvency II and G20 requirements pertaining to the central clearing of over the counter (OTC) derivatives. Basel III will require banks to hold more capital against their uncollateralised exposures, which will force more banks to increase their collateral requirements with clients. In turn, financial institutions will have to find the most efficient way for managing their collateral to manage liquidity as uncollateralised trades will become more expensive due to the CVA requirements.
The Hedge Fund Academy will explore the impact proposed regulatory changes will have on collateral management and liquidity requirements for the whole South African Market. Implementing a collateral management process can be challenging and implementing an insufficient collateral management system and process may even result in much greater losses.
Given the recent financial crisis and the extended impact on global credit market and liquidity, it is imperative that financial institutions strengthen their market risk management capabilities to effectively meet compelling business objectives and challenges which include portfolio pricing and portfolio exposure management
Collateral management has moved to the top of the agenda for many institutions as a tool to help mitigate credit risk and manage liquidity. This approach has mainly been driven by regulatory changes such as Basel III, Solvency II and G20 requirements pertaining to the central clearing of over the counter (OTC) derivatives. Basel III will require banks to hold more capital against their uncollateralised exposures, which will force more banks to increase their collateral requirements with clients. In turn, financial institutions will have to find the most efficient way for managing their collateral to manage liquidity as uncollateralised trades will become more expensive due to the CVA requirements.
The Hedge Fund Academy will explore the impact proposed regulatory changes will have on collateral management and liquidity requirements for the whole South African Market. Implementing a collateral management process can be challenging and implementing an insufficient collateral management system and process may even result in much greater losses.
Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
1. Basel -II
The basis for credit risk management is the requirements of “Basel II”, the agreement by
the major central banks on how commercial banks should be regulated. Basel II is the
second of the Basel Accords, which are recommendations on banking laws and
regulations issued by the Basel Committee on Banking Supervision. The reason for
regulation is that banks lend long term but their deposits are liquid and short term, and
so they are exposed (as all firms are) to cash flow problems. In order to ensure that
banks don‟t fail, and to ensure confidencee in them by depositors, they must hold
capital reserves to cover from possible default by their borrowers.
The first Basel Accord (1988) focused on credit risk, but it soon became clear that its
approach was too common. In 1996 the Basel committee allowed banks to choose for
their own Valuation Risk models. However there were still issues in the way different
asset classes and borrowers were handled by Basel I and by 2001 a new accord (Basel II)
was being developed.
The purpose of Basel II, which was initially published in June 2004, is to create an
international standard that banking regulators can use when creating regulations about
how much capital banks need to put aside to guard against the types of financial and
operational risks banks face.
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2. Three Pillars
Basel II is based on three pillars:
Minimum capital requirements are the calculation of the minimum level of
regulatory capital that a bank should hold. There are two approaches,
standardized and internal rating based approaches. These approaches will enable
the calculation of the risk weighted assets and a bank is required to hold 8% of its
risk weighted assets as risk capital.
Supervisory review process provides guidelines for supervisors to ensure that
each bank has robust internal processes for risk management and that banks
could have adequate capital to support all the risks in their business
Outline of the New Basel Capital Accord
Pillar I
Minimum Pillar II
Pillar III Market
Supervisory
Capital Review process
Discipline
Requirement
Operational
Credit Risk Market Risk
Risk
Internal Rating Event Risk Business Risk
Standardised Standardised Inernal Models
Based
Approach Approach Approach
Approach
Foundation Advanced
Advanced
Basic Indicator Standardised
Measurement
Approach Approach
Approach
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3. Market disciple to encourage market discipline by developing a set of disclosure
requirements which will allow market participants to assess key pieces of
information on the scope of application, capital, risk exposures, risk assessment
processes, and hence the capital adequacy of the institution.
Objective of Basel-II
The Main objectives of Basel-II are
Ensuring that capital allocation is more risk sensitive;
Separating operational risk from credit risk, and quantifying both;
Attempting to align economic and regulatory capital more closely to reduce the
scope for regulatory arbitrage.
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4. Recent chronological updates
September 2005 update
On September 30, 2005, the four US Federal banking agencies announced their revised
plans for the U.S. implementation of the Basel II accord. This delays implementation of
the accord for US banks by 12 months.
November 2005 update
On November 15, 2005, the committee released a revised version of the Accord,
incorporating changes to the calculations for market risk and the treatment of double
default effects. These changes had been flagged well in advance, as part of a paper
released in July 2005.
July 2006 update
On July 4, 2006, the committee released a comprehensive version of the Accord,
incorporating the June 2004 Basel II Framework, the elements of the 1988 Accord that
were not revised during the Basel II process, the 1996 Amendment to the Capital
Accord to Incorporate Market Risks, and the November 2005 paper on Basel II:
International Convergence of Capital Measurement and Capital Standards: A Revised
Framework. No new elements have been introduced in this compilation. This version is
now the current version.
November 2007 update
On November 1, 2007, the Office of the Comptroller of the Currency (U.S. Department
of the Treasury) approved a final rule implementing the advanced approaches of the
Basel II Capital Accord. This rule establishes regulatory and supervisory expectations
for credit risk, through the Internal Ratings Based Approach (IRB), and operational risk,
through the Advanced Measurement Approach (AMA).
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5. July 16, 2008 update
On July 16, 2008 the federal banking and thrift agencies issued a final guidance
outlining the supervisory review process for the banking institutions that are
implementing the new advanced capital adequacy framework (known as Basel II).
January 16, 2009 update
For public consultation, a series of proposals to enhance the Basel II framework was
announced by the Basel Committee announced. It releases a consultative package that
includes: the revisions to the Basel II market risk framework.
July 8-9, 2009 update
A final package of measures to enhance the three pillars of the Basel II framework and
to strengthen the 1996 rules governing trading book capital was issued by the newly
expanded Basel Committee. These measures include the enhancements to the Basel II
framework, the revisions to the Basel II market-risk framework and the guidelines for
computing capital for incremental risk in the trading book.
Basel-II in Bangladesh
In Bangladesh, Basel II Road Map has already been issued by Bangladesh Bank, the
central bank of the country. Basel II was implemented from January 2009. Basel II is
implemented with the following specific approaches as an initial step with the parallel
calculations was started from January 2009:
Standardized Approach for calculating Risk Weighted Assets (RWA) against
Credit Risk supported by External Credit Assessment Institutions (ECAIs)
Standardized Rule Based Approach against Market Risk and
Basic Indicator Approach for Operational Risk.
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6. Implementation of Basel II in Developed Countries
Implementation of Basel II in developed countries would impact the developing
economies in the following ways:
High Cost Lending and Reduced Lending to Developing Economies
The Basel II accord has provided two approaches towards credit risk management.
Banks in advanced countries and multilateral lending institutions are expected to
implement Basel II and they are the major lenders to the developing economies. On the
other hand, an IRB approach would be even more stringent and applies extraordinarily
heavy risk weights.
The Vicious Circle of Curtailment of Credit to Developing Countries
The lower ratings will reduce the availability of funds in the developing countries. The
reduced market access and high costs of funding will further impact the ratings of these
countries leading to a vicious circle with each aspect feeding the other in a downward
spiral.
Higher Interest Costs and Competitive advantage of corporate borrowers
The Higher Interest costs to the banks will ultimately translate into higher cost of
borrowing for the corporate skewing the playing field in favor of the developed
countries.
Impact on Infrastructure development
The Basel II document impacts the Interest rate determination process and attributes
higher risk to project finance than corporate finance. All the developing economies have
been suffering from the paucity of Infrastructure to sustain development and this has
the potential of severely hampering the Infrastructure development process.
Shorter Term to maturity of lending
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7. Basel II accords have a preference for short-term lending. This is because of the ease in
exiting the investment in case the situation turns adverse. Also the interest rates on
short term will also tend to be lower further incentivizing such borrowings. This shall
impact both banks and ultimate borrowers in developing economies because of the
change in the interest rate term structure and the need for Asset and Liability
Management (ALM).
Impact on capital flows
Short Term lending will further increase the volatility of capital flows within
developing countries. This was a major reason of the Asian financial crises. There
would be a tendency to press the panic button at the smallest change in the situation,
further deteriorating it, leading to crisis. In the highly integrated global economy of
today this will lead to stronger world economic cycles.
Impact on Companies
This would impact output levels in corporate and skew the capital structure in favor of
short term borrowings and working capital finance. The Liquidity position and the
companies‟ ability to globalize would be hampered by this difficulty in raising long-
term capital.
Impacts of Basel II Implementation in Developing Countries
Improved Risk Management and Capital Adequacy
It will tighten the risk management process, improve capital adequacy and strengthen
the banking system.
Curtailment of Credit to Infrastructure Projects
The norms require a higher weight age for project finance, curtailing credit to this very
crucial sector. The long-term impacts for this could be disastrous.
Preference for Mortgage Credit to Consumer Credit
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8. Lower Risk Weights to Mortgage credit would accentuate bankers‟ preference towards
it vis-à-vis consumer credit.
Basel II: Advantage Big Banks
It would be far easier for the larger banks to implement the norms, raising their quality
of risk management and capital adequacy.
Consolidation in the banking Industries
To the greatest extent possible, all banking and other relevant financial activities
conducted within a group containing an internationally active bank has to be captured
through consolidation.
Problems in Implementation of Basel II in Developing Countries
There are some problems in implementation of Basel-II in developing countries like
Bangladesh. Some of those problems are:-
Standardized Approach and External Credit Rating Problems
One of the two approaches prescribed for Credit Risk in Basel II is the standardized
approach, which makes use of external credit ratings for attaching risk weights. One of
the major problems is the availability of credit ratings in developing countries. While
Bangladesh has been fortunate in this respect with two Credit Rating agencies(Credit
Rating Information and Services Limited and Credit Rating Agency of Bangladesh
Ltd.),many developing countries are not so equipped in this field.
Difficulties in Implementation of IRB based Credit Risk Management
Approach
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9. Various models have been proposed for the Internal Rating Based Credit Risk
Assessment. A major problem is data availability. In Bangladesh, State-owned banks are
still in the process of computerization. The extent of historical data required to
formulate and then convincingly test Indigenous IRB models is simply not available.
Costs of Implementation: IT spending and Training Costs
The single largest cost of implementing Basel II is the IT costs. The required capital
expenditure would be far higher than small banks could bear. There is an unavailability
of trained manpower for risk management and audits.
Multiple Supervisory bodies and dearth of skilled professionals
The Basel II definition of a banking company is very broad and includes banking
subsidiaries such as insurance companies. In many developing countries, there is no
single regulator to govern the whole „bank‟ as per Basel II. In Bangladesh, Securities
Exchange Commission, Bangladesh Bank, National Board of Revenue, Dhaka Stock
Exchange and Ministry of Finance would regulate different aspects of Basel II. In
Bangladesh, Regulatory capital norms do not apply to Insurance companies. The
availability of trained risk auditors is another problem.
Ineffective Pillar 3
Aside from the broader issue of the relevance of specific disclosures for market
participants, this Pillar is not a very useful discipline device in countries with small
private markets or few incentives for creditors to monitor banks .In addition, the Pillar 3
might be inapplicable in those countries whose systems are dominated by foreign
banks.
Unavailability of required risk data in easily accessible or
comprehensive format
Historical loss data is required to calculate the main IRB risk parameters; that data are
frequently incomplete/unavailable or prohibitively expensive to collect .Particularly for
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10. the development of rating systems parameters, individual banks may not have a
meaningful loss dataset to enable them to build the required models and back-test their
performance.
Conclusion
Since, there are many problems in implementation of Basel II in developing countries
but Basel II is here to stay and the competitive forces will compel banks to follow this. It
is very important to select carefully “what form of the Basel II standard” should be
applied and “to what extent” to ensure the survival and growth for the developing
countries. Ultimately, the standard are for strengthening the banking systems globally
and this objective should not be lost. Bangladesh Bank is giving highest concentration
and best possible effort for the implementation of Basel II. We think the new accord
would provide a level playing field for banking organizations meeting in international
competition.
References
www.wikipedia.com
International Research Journal Of finance and Economics
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