Calibration of alpha should be based on forward-looking through-the-cycle probability of default of various asset classes/rating classes and should be based on the credit history of individual banks and reflect their own credit risk profile.
However, it is not possible for all banks to have alpha calibrated based on their individual credit histories at this stage as the requisite data is not captured by them. Further, system-level alpha could not be calculated at this stage for all important segments requiring a separate alpha factor owing to the data issue.