As a result, high risk assets could flow towards banks on Standardised Approach which need to maintain lower capital on these assets than the banks on IRB Approach.Similarly, low risk assets would tend to get concentrated with IRB banks which need to maintain lower capital on these assets than the Standardised Approach banks.
–  Hence, system as a whole may maintain lower capital than warranted. –  Due to concentration of higher risks, Standardised Approach banks can become vulnerable at times of economic downturns. These issues would need to be addressed satisfactorily.