Further, India responded to the 1996 amendment to the Basel I framework, which required banks to maintain capital for market risk exposures, by initially prescribing various surrogate capital charges for these risks between 2000 and 2002. These were replaced with the capital charges as required under the Basel I framework in June 2004, which became effective from March 2005.
We have gone a step further than the Basel I requirement and have required the banks in India to maintain capital charge for market risks on their ‘Available for Sale’ portfolio also with effect from March 2006. We continue to see considerable merit in pursuing a policy of gradualism in harmonising our regulations with the global standards.