IMF team to visit IBA today to check out Basle compliance

A five member International Monetary Fund (IMF) team will be visiting the Indian Banks' Association (IBA) tomorrow to carry out an assessment of the domestic banking sector with regard to financial performance, management of sticky assets, implementation of anti-money laundering measures and its preparedness for the new Basle Capital Accord.

The IBA brass headed by chief executive officer H N Sinor and chief economist N Nagarajan will brief the Fund team as to the progress made by the banking sector in the last six months.

This meeting is part of the Article IV consultation by the executive board of the IMF with India. The last consultation was concluded on July 18, 2003.

Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members.

A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies.

On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities.

At the last consultation the IMF Directors commended the steady progress made by the country in moving ahead with financial sector reforms.

The IMF welcomed the introduction of risk-based supervision and implementation of a prompt corrective action framework for commercial banks.

It encouraged the introduction of time limits on remedial actions in the latter, so as to increase the framework's effectiveness.

The IMF directors also saw a need to broaden the scope of the market for interest rate derivatives and to tighten the regulatory treatment of state-government guaranteed loans.