19th XBRL International Conference - Presentation by RBI
Transcript of 19th XBRL International Conference - Presentation by RBI
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Banking Supervision Track
XBRL-based Basel II Reporting System:Experience of Reserve Bank of India
A S Ramasastri & P R Ravimohan
June 24, 2009
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` First Three Steps
` The Basel II Path
` Fast Track XBRL
` Future Roadmap
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` About 20 departments of Reserve Bank of Indiareceive data at about 20 locations from about 200commercial banks with about 70000 branches
` Templates for reporting, called returns, which are
around 250 as on date` Varying degrees of technology levels across banks
` Attempts to rationalize the returns and to streamlinemultiple modes of data submission resulted in the
origin of Online Return Filing System (ORFS)
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` An important fortnightly return called Form A has
been brought under ORFS
` It has been designed and developed using XML
tags to be in readiness for adopting XBRL` Based on the experience, the system has been
extended to another 50 returns
` To standardize the data elements across returns
and to be in line with international practices,XBRL was considered
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` The Governor formed a High Level Steering
Committee with the Deputy Governor as
Chairperson to implement XBRL-based data
reporting by banks` After a pilot study and feasibility analysis, the
Committee mandated implementation of the
newly introduced Basel II reporting system
under XBRL` Basel II implementation is a simultaneous
journey, going parallel
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` India has been adopting international best
practices in the area ofbanking regulation in a
well calibrated manner which is suitable to
requirements of the financial system` Reserve Bank of India has emphasized on
strengthening of regulation on capital adequacy
as a key parameter in promoting financial stability
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` India adopted Basel I in a phased manner from 1992onwards
` India stipulated the capital to risk weighted asset ratio of9.0 % as against international norms of 8% and a Tier Icapital ratio of 6%.
` Capital charge for market risk in line with market riskamendment of 1996 to the Basel I accord was adoptedin 2005.
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` India adopted Basel I in a phased manner from 1992onwards
` India stipulated the capital to risk weighted asset ratio of9.0 % as against international norms of 8% and a Tier Icapital ratio of 6%.
` Capital charge for market risk in line with market riskamendment of 1996 to the Basel I accord was adoptedin 2005.
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` Implementation of Basel II in India has been in a phasedand calibrated manner
` All commercial banks in India have migrated to Basel II
as on March 31, 2009
` To begin with, India has adopted the basic / standardisedapproaches of Basel II.
` RBI has also been preparing simultaneously forintroducing advanced approaches for those banks whichhave sophisticated risk management structure
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Pillar 1Pillar 1
Minimum CapitalMinimum CapitalRequirementRequirement
Capital for CreditCapital for CreditRiskRisk
((SASA; FIRB; AIRB); FIRB; AIRB)
BaselBasel IIII
Capital forCapital forMarket RiskMarket Risk
(SMA;(SMA; SDASDA; IMA); IMA)
Pillar 2Pillar 2
Supervisory ReviewSupervisory ReviewPillar 3Pillar 3
Market DisciplineMarket Discipline
Capital forCapital forOperational RiskOperational Risk((BIABIA; SA; AMA); SA; AMA)
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` The current global financial turmoil has brought to
sharp focus the role of capital regulations in
promoting financial stability and mitigating
procyclicality` Capital should serve as an effective buffer to absorb
losses over the cycle, so as to protect both the
solvency of financial institutions in the event of
losses, and their ability to lend.
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` The recent London Summit by G 20 has
articulated certain action points on capital
regulation
` G20 Leaders should support the progressiveadoption of the Basel II capital framework, which
will continue to be improved on an ongoing basis,
across the G20.
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` In this context, the BCBS should develop standardsto promote the build-up of capital buffers in goodtimes that can be drawn down in periods of stress.The BCBS should also complement risk-basedcapital measures with simpler indicators to monitorthe build-up of leverage.
` The international standard for the minimum level of
capital should remain unchanged until the financialsystem has recovered.
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` Underestimation of risk and the consequential
underpricing of risk are attributed as major factors
for the present crisis.
` Since Basel II attempts to build a more risksensitive framework for capital regulation it is
essential that the information flow is designed to
be timely and accurate
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` The implementation of Basel II has thrown up several challenges
due to its requirement of timely receipt of information from banks in
a standardised and transparent format and at the disaggregated
level.
` One of the challenges is upgradation of bank-wide information
system through better branch connectivity within banks and then
integrating this with the regulatory reporting
` Under Pillar II of Basel II, RBI has to ensure that banks assess
accurately all the risks they are exposed to and accurately
determine the capital they need to have in commensurate with their
risk profile
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` Under Pillar III (Market Discipline) of Basel II suitable
disclosures have to be made by the banks so as to
enable the market participants to take informed
decisions
` RBI has been monitoring banks exposure to certain
sensitive sectors with a view to ensuring prescription of
appropriate risk weight
` RBI has been in a calibrated manner revising risk
weights and provisioning relating to sensitive sectors
with the objective of ensuring asset growth with
minimum volatility.
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` Basel II implementation thus requires quicker,
quantitative and qualitative analysis of financial
information by the regulator so that banks can be
monitored closely vis-a-vis Basel II guidelines and
certain corrective policy measures be taken
` These requirements of efficient, standardised and
transparent reporting system which facilitates accurateand reliable extraction of data led RBI to introduce XBRL
reporting system for Basel II reports from banks
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` The Basel II framework also offers multiple options of increasing
sophistication for computing capital requirements for the three
major categories of risks.
` While for the present, banks are required to adopt the relatively
simpler approaches available under the framework, RBI may
permit few banks to migrate to advanced approaches
` A draft time frame for the purpose has been drawn up
` Implementation of advanced approaches would require
tremendous data processing at the bank level and RBI
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` The requirement of maintaining long time series data,processing it and modelling several variables would
throw up several issues of reporting within the banks
`
The requirement of assessing the data quality of thebanks and validating the models of the banks will be
dependent on real time and seamless information flow
between banks and RBI.
` The XBRL project would be critical in this regard.
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` High Level Steering Committee
` Involvement ofbanks
` Interaction with international institutions Europe,
Japan, Australia` Learning from best practices in other central
banks Bank of Spain
` Working closely with external consultants
` Moving the other stakeholders in India
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As directed by the High Level Steering Committee, the Capital
Adequacy Return (RCA 2), based on the Basel II norms has been
taken up first
A2- stage approachAn Excel Based Report preparation Tool
A web portal for
Submission of Returns by the Banks
Viewing Bank Returns and MIS Reports by RBI
A Dimensional XBRL Taxonomy sits on top ofboth these applications
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` Taxonomy tailored to Basel II Reporting Requirements
` XBRL 2.1 and Dimensional Specification Compliant
` Taxonomy Architecture along COREP lines
` Multi dimensional in nature and template basedinformation capture
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Modules Templates
Capital requirements 2
Credit risk exposure 9
Market risk exposure 4
Operational risk exposure 1
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Total 425
Primary Elements 128
Dimensions 29
Domain Members 253
Hypercube 15
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` At RBIs end, following facilities/advantages :
generating standard and ad-hoc reports as required
maximum possible automation of processes
more analysis facilitated since less of data related issues expected
ease of incorporating data for various analytical studies and periodicreports
Quicker access to bank analysts and inspection officials
Provision for automated signalling of red flags in submitted data
which would need further analysis
Access of the centralized data repository by other departments like
banking policy department, monetary policy department, financial
markets department etc. as required
Use of business intelligence tool for advanced analytics and drill-
down/roll up facility
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` Phased Approach
` In Phase I, Basel II reporting implemented
` International Seminar coinciding with launch
` Sec 42 Return under ORFS being brought toXBRL standards
` Taxonomies forAnnual Accounts being developed
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` Institute of Chartered Accountants of India (ICAI)
has been working towards Formation of XBRL-India jurisdiction
Development of Taxonomies` Taxonomies for C&I already developed yet to be
implemented
` Banking taxonomies getting developed
` RBI and ICAI are working closely
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` Industry-based classification Commercial and Industrial companies
Banking companies
Non-Banking Financial companies
` Core Schema Exhaustive list of all element declarations
Common elements defined once
` Distinct extended links for each industry
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` Designing general banking taxonomy in
accordance with the C&I taxonomy Based on IFRS 2006
No dimensions
` RBI can use the banking taxonomy and extend it
to include dimensional structure FINREP structure
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IFRS 2006 IFRS 2008
Release date 15th August 2006 24th June 2008
Modularity The files (Schema and
linkbases) are located in one
folder.
The files are organized based
on the IAS and IFRS. There is a
core schema containing all the
elements defined, and linkages
to the different folders for every
IAS and IFRS.
Structure There was a common entry
point, wherein the users had to
select and browse the
taxonomy.
The entry point is entity specific
and hence has to be created by
the user of the taxonomy.
Elements i) 4100 (approx) i) 2700 (approx)
ii) Elements outside the IAS and
IFRS (common practices andindustry specific) are included in
the taxonomy
ii) Elements only from the IAS
and IFRS are part of taxonomy
Dimension Vs. Tuples Tuples are used in the
taxonomy
Dimensions have been included
in the taxonomy
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Notes to accounts information is largely tabular and
therefore is
` Multi-dimensional data
` Data points having similar attributes
IFRS 2006 Does not use dimension
IFRS 2008 Includes dimensions
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1. Repo transactions2. Composition of Non-SLR investments3. Exchange traded Interest Rate derivatives4. Risk exposure on Derivatives5. Maturity pattern of certain items of assets and
liabilities6. Risk category wise country exposure7. Loan Assets subject to restructuring
8. Segment reporting9. Related party disclosures
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Maturity Deposits Advances Investments BorrowingsForeign Currency
assets
Foreign Currency
liabilities
1 to 14 days
15 to 28 days
29 days to 3 months
Over 3 months & up to 6 months
Over 6 months & up to 1 year
Over 1 year & up to 3 years
Over 3 years & up to 5 years
Over 5 years
Total
PRIMARY
ELEMENTS
D
IM
E
N
S
I
ON
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Based on IFRS 2006
Banking specific tags have been defined additionally in the
core schema
Separate extended links for the bank reporting appended toexisting taxonomy
Basic structure of financial statements and their details, both
included in the same extended link (unlike C&I)
No dimensions have been defined, instead extended links
have been used
Implement the system for March 2010 reporting
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Your
Commentsand
Suggestions
Please
. . .
prravimohan@rb
i.org.in