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Abstract
Credit Risk can be regarded as an inherent component
of the banking business. The introduction of customized
banking products and services has made the task of judging
the risk impact of credit decisions all the more challenging
and time consuming. Also the increasing inter-linkages
amongst the various financial institutions since the
late eighties have ensured that any risk event experienced
by one financial institution has the potential to impact
others also. In order to improve credit risk monitoring
& measurement so that capital requirements of banks
are more in line with the nature of risks they are being
exposed to the BASEL Committee on Banking Supervision
proposed the New BASEL II Accord in 1999 which will
replace the exiting Accord of 1988.
This white paper tries to analyze the various requirements
and issues confronting banks while implementing a Credit
Risk BASELII Solution. It also offers a solution framework
for banks based on a series of highly flexible and inter-connected
modules that capture and monitor every aspect of all
possible credit risk variables in a bank. Every module
is highly parameter driven to take care of changing
credit risk requirements and local regulations. Capital
Charges and Risk Weights for all the three approaches
of Credit Risk BASELL II can be obtained from a single
platform.
Author
Abhijit Ghosh
To know more about Wipro in finance, go to www.wipro.com/finance
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