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Banks are Showing Concerns Against Upcoming Basel IRB Consultation

The Internal Ratings Based (IRB) approach enables banks to use internal models as inputs for determining their regulatory capital requirements for credit risk, subject to certain constraints. The Basel Committee on Banking Supervision is planning to propose few regulatory changes to the IRB approach. The proposed changes to the IRB will be one of the key elements of the regulatory reform program that the Basel Committee has committed to finalize by end of 2016.

The proposed changes are aimed at reducing the complexity of the regulatory framework and improve comparability. It will also address excessive variability in the capital requirements for credit risk. But banks are showing concerns for upcoming consultation as it will limit the ability to model capital for loan portfolios and product higher capital requirements.

News Characteristics

Date : Mar 24, 2016
Region : North America
Industry : Banks
Function : Regulation and Compliance
Sub-Function : Basel