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`Small banks can hold their own in Basel II era'

Our Bureau

Ahmedabad , Aug. 25

STOP frightening us — that is the message from risk managers of banks to IT service providers who are keen to sell their products to the banking industry as it prepares for the Basel II norms.

"It is really not a crime to be a bit slow in adopting the latest IT tools as part of our preparation for the Basel II norms. It is often good to learn from others' experience," said Mr Chandrashekhar Sathe, Group Head (Risk Management) at Kotak Mahindra Bank.

Speaking at a seminar on risk management in the banking industry organised by the Nirma Institute of Management here, Mr Sathe said that even with the impending consolidation in the banking industry, there would still be a lot of space for niche players who have a good stronghold in their area.

"Not every financial institution needs to become a universal bank. Even with the emergence of the big fish, there will be enough space for the smaller fish as the larger players always enlarge the market size," Mr Sathe pointed out.

Agreeing, Mr Satish Ranade, Head (Banking and Financial Services Industry), KPIT Cummins Infosystems Ltd, said that in the coming years, personal touch in banks would gain importance. "ATMs, Internet banking and the like are fine, but users in the West are increasingly looking at `touch and feel' banking. It is in this niche that smaller Indian banks can carve out their place," Mr Ranade said.

On the challenge for banks to upgrade their IT systems, Mr C. Krishnan, Head (Risk Management) at Tata Consultancy Services Ltd (TCS), said that enterprise-wide risk management and IT were closely linked and banks would have to choose the right products and vendors. "Banks generate a lot of data and they also have legacy systems. While choosing IT products to get in line with Basel II norms, banks need to be careful to choose products that help them leverage their data best," Mr Krishnan said.

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