Containing excessive reliance on foreign borrowings remains a challenge. As mentioned, managing the risks of leveraged fund based and non-fund based overseas exposures to the JV/WoS abroad is also an emerging issue. Adoption of sound risk management practices at home has also not been properly appreciated as domestic firms should focus on their core business rather than see forex transactions as profit centres.
The new Basel III international capital rules increase the loss absorbing capacity of banks because they now have to hold more and better capital than before. But to some, the riskweighted approach of the Basel rules is fundamentally flawed.