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by Gamini Warushamana

Senior Director, Capital Markets and Regulatory Compliance in Industries, Asia Pacific region, Dr. Chris Marshall of Oracle was in Colombo last week to promote its BASEL II among the banking and financial service industry.

He elaborated on managing operational risk based on BASEL II guidelines to help Sri Lankan banks to be compliant with global regulatory requirements and other globally accepted processes.

BASEL II compliance by 2007 is a mandatory requirement for banks and financial institutions in some countries. Although Sri Lankan banks are not yet mandated some banks have already implemented it due to the strong business advantage resulting from it.

BASEL II is more risk sensitive and represents modern banks' risks and risk management practices. It includes measures for operational risk and more sensitive risk weights against credit risk and major revision of the international standard on bank capital inadequacy. It aligns the capital measurement framework with sound contemporary practices in banking, promotes improvement in risk management and is intended to enhance financial stability.

BASEL II also reflects improvements in firms' risk management practices and enables an international ratings based approach that allows firms to rely to a certain extent on their own estimates of credit risk.

BASEL II implements a data management and reporting system required to optimise capital holdings, releases resources to maximise return on capital as well as supports a wide range of other proactive business activities.

The overall insight is that implementing the degree of data reconciliation, management, and reporting required by BASEL II, particularly in the area of operational risks, supports and benefits everything from maintaining the general ledger to enhancing financial, operational, administrative and marketing activities.

Oracle is assisting Sri Lankan banks and financial service institutions to transit to the BASEL II regime. Dr. Marshall said that Oracle's technology and applications are helping Sri Lankan industries in the financial service sector to derive better business returns. Oracle has experience working with 8,500 of the world's largest banks.

In Sri Lanka Sampath Bank, NDB Bank, Nations Trust Bank, DFCC and most of the largest insurance companies are Oracle customers, the company said. Data is the main focus in BASEL II and Oracle has done much to ensure that the data infrastructure is capable of meeting the new BASEL II requirements.

Oracle has IT solutions for four sectors such as Financial Service Industries (FSI), Manufacturing, Retail and Distribution, Communication, Media and Utility and Government, Education and Health sectors and there are a large number of users in Sri Lanka. Oracle's solutions categorised under Oracle Financial Service Application (OFSA) in risk management, fund transfer, pricing, profitability, budgeting and planning have been in the market for over a decade.

The OFSA is used by Hatton National Bank in Sri Lanka and 80% of leading Indian banks use Oracle technology to run their critical applications.

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