INDIAN BANK MAY NEED RS. 700 CR. IN 2010-11 FOR OPERATIONAL RISKS

Indian Bank would need to raise about Rs 700 crore to meet its operational risk under the Basel II norms and for credit expansion in 2010-11. Basel II norms require banks with guidelines to measure the credit, market and operational risks, and the capital required to cover these risks. Basel II norms would require the bank to set aside 15 per cent of its net income for the purpose of operational risk.


Operational risk, as defined by the Basel Committee, is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The capital of adequacy ratio of the bank is at 13.8 per cent fulfilling the Basel II norms.


The board recently approved a proposal to double the bank's authorised capital to Rs 3,000 crore which will enable it to raise capital in the coming years.


Source: http://www.thehindubusinessline.com/2010/02/19/stories/2010021951530600.htm