Karachi, Nov 18: State Bank Deputy Governor Tawfiq A. Husain has stressed the need for capacity building in the banking sector for the successful implementation of Basel-II.

Speaking at the conclusion of a five-day seminar organized by the State Bank in collaboration with the Pakistan Banks’ Association here on Friday, he said the Basel-II was relatively complex and its implementation was a challenge, particularly due to the scarcity of expertise in risk management. He said the seminar was a build-up on the earlier initiatives taken by the State Bank to prepare the banking industry for the Basel-II regime. Mr Husain said the State Bank would continue to hold such training initiatives in future for the capacity building of banks, according to a press release issued by the SBP.

He said the implementation of Basel-II was not just a regulatory compliance exercise as it required a robust risk management framework and a capital allocation process based on the risk profile of individual institutions. It should, therefore, be viewed as a business proposition, he added.

The SBP deputy governor observed that for the successful implementation of Basel-II, banks need to have a comprehensive database, qualified risk managers, with knowledge of latest risk management techniques, and commitment of senior managers/board of directors.

He said the implementation of Basel-II would also impact the borrowers as the risk based pricing would compel the corporate borrowers to improve their financial standing and creditworthiness.

Mr Husain thanked trainers, Neil McGhee and Ash Narula from PriceWaterHouseCoopers, Australia, for successfully conducting the seminar on a highly technical subject.