A great deal of quantitative work needs to be done for the purpose and banks need to attract talent which is skilled in economics, statistics, financial econometrics and risk metrics for the purpose. The key of the Risk Management is to ensure that banks have adequate capital and have a framework for risk based pricing of products and services.
While Basel guidelines will bring out the challenges of capital planning, banks have to strive hard to meet the challenges of capital requirement. More importantly, the challenge for Indian Banks going forward is going to be in the area of risk based pricing. Banks have not been able to establish an informationbased operational framework for pricing risk.