Banking Supervision Track
XBRL-based Basel II Reporting System:
Experience of Reserve Bank of India
A S Ramasastri & P R Ravimohan
June 24, 2009

First Three Steps

The Basel II Path

Fast Track XBRL

Future Roadmap




About 20 departments of Reserve Bank of India
receive data at about 20 locations from about
200 commercial banks with about 70000
branches
Templates for reporting, called returns, which
are around 250 as on date
Varying degrees of technology levels across
banks
Attempts to rationalize the returns and to
streamline multiple modes of data submission
resulted in the origin of Online Return Filing
System (ORFS)




An important fortnightly return called Form
A has been brought under ORFS
It has been designed and developed using
XML tags – to be in readiness for adopting
XBRL
Based on the experience, the system has
been extended to another 50 returns
To standardize the data elements across
returns and to be in line with international
practices, XBRL was considered



The Governor formed a High Level Steering
Committee with the Deputy Governor as
Chairperson to implement XBRL-based data
reporting by banks
After a pilot study and feasibility analysis,
the Committee mandated implementation
of the newly introduced Basel II reporting
system under XBRL
Basel II implementation is a simultaneous
journey, going parallel


India has been adopting international best
practices in the area of banking regulation in
a well calibrated manner which is suitable to
requirements of the financial system
Reserve Bank of India has emphasized on
strengthening of regulation on capital
adequacy as a key parameter in promoting
financial stability



India adopted Basel I in a phased manner from
1992 onwards
India stipulated the capital to risk weighted asset
ratio of 9.0 % as against international norms of 8%
and a Tier I capital ratio of 6%.
Capital charge for market risk in line with market
risk amendment of 1996 to the Basel I accord was
adopted in 2005.



India adopted Basel I in a phased manner from
1992 onwards
India stipulated the capital to risk weighted asset
ratio of 9.0 % as against international norms of 8%
and a Tier I capital ratio of 6%.
Capital charge for market risk in line with market
risk amendment of 1996 to the Basel I accord was
adopted in 2005.

Implementation of Basel II in India has been in a
phased and calibrated manner

All commercial banks in India have migrated to
Basel II as on March 31, 2009

To begin with, India has adopted the basic /
standardised approaches of Basel II.

RBI has also been preparing simultaneously for
introducing advanced approaches for those banks
which have sophisticated risk management
structure
Basel II
Pillar 1
Minimum Capital
Requirement
Capital for Credit
Risk
(SA; FIRB; AIRB)
Pillar 2
Pillar 3
Supervisory Review
Market Discipline
Capital for
Market Risk
(SMA; SDA; IMA)
Capital for
Operational Risk
(BIA; SA; AMA)


The current global financial turmoil has brought
to sharp focus the role of capital regulations in
promoting financial stability and mitigating
procyclicality
Capital should serve as an effective buffer to
absorb losses over the cycle, so as to protect
both the solvency of financial institutions in the
event of losses, and their ability to lend.


The recent London Summit by G 20 has
articulated certain action points on capital
regulation
G20 Leaders should support the progressive
adoption of the Basel II capital framework,
which will continue to be improved on an
ongoing basis, across the G20.


In this context, the BCBS should develop
standards to promote the build-up of capital
buffers in good times that can be drawn down
in periods of stress. The BCBS should also
complement risk-based capital measures with
simpler indicators to monitor the build-up of
leverage.
The international standard for the minimum
level of capital should remain unchanged until
the financial system has recovered.


Underestimation of risk and the
consequential underpricing of risk are
attributed as major factors for the present
crisis.
Since Basel II attempts to build a more risk
sensitive framework for capital regulation it is
essential that the information flow is
designed to be timely and accurate



The implementation of Basel II has thrown up several
challenges due to its requirement of timely receipt of
information from banks in a standardised and transparent
format and at the disaggregated level.
One of the challenges is upgradation of bank-wide
information system through better branch connectivity within
banks and then integrating this with the regulatory reporting
Under Pillar II of Basel II, RBI has to ensure that banks assess
accurately all the risks they are exposed to and accurately
determine the capital they need to have in commensurate
with their risk profile



Under Pillar III (Market Discipline) of Basel II
suitable disclosures have to be made by the banks
so as to enable the market participants to take
informed decisions
RBI has been monitoring
banks’ exposure to
certain sensitive sectors with a view to ensuring
prescription of appropriate risk weight
RBI has been in a calibrated manner revising risk
weights and provisioning relating to sensitive
sectors with the objective of ensuring asset growth
with minimum volatility.

Basel II implementation thus requires quicker,
quantitative and qualitative analysis of financial
information by the regulator so that banks can be
monitored closely vis-a-vis Basel II guidelines and
certain corrective policy measures be taken

These requirements of efficient, standardised and
transparent reporting system which facilitates
accurate and reliable extraction of data led RBI to
introduce XBRL reporting system for Basel II reports
from banks

The Basel II framework also offers multiple options of
increasing sophistication for computing capital
requirements for the three major categories of risks.

While for the present, banks are required to adopt the
relatively simpler approaches available under the
framework, RBI may permit few banks to migrate to
advanced approaches

A draft time frame for the purpose has been drawn up

Implementation of advanced approaches would require
tremendous data processing at the bank level and RBI



The requirement of maintaining long time series
data, processing it and modelling several variables
would throw up several issues of reporting within
the banks
The requirement of assessing the data quality of
the banks and validating the models of the banks
will be dependent on real time and seamless
information flow between banks and RBI.
The XBRL project would be critical in this regard.






High Level Steering Committee
Involvement of banks
Interaction with international institutions –
Europe, Japan, Australia
Learning from best practices in other central
banks – Bank of Spain
Working closely with external consultants
Moving the other stakeholders in India
As directed by the High Level Steering Committee, the Capital
Adequacy Return (RCA 2), based on the Basel II norms has
been taken up first
A 2- stage approach
An Excel Based Report preparation Tool
A web portal for
Submission of Returns by the Banks
Viewing Bank Returns and MIS Reports by RBI
A Dimensional XBRL Taxonomy sits on top of both these
applications




Taxonomy tailored to Basel II Reporting Requirements
XBRL 2.1 and Dimensional Specification Compliant
Taxonomy Architecture along COREP lines
Multi dimensional in nature and template based
information capture
Modules
Templates
Capital requirements
2
Credit risk exposure
9
Market risk exposure
4
Operational risk exposure
1
Total
425
Primary Elements
128
Dimensions
29
Domain Members
253
Hypercube
15

At RBI’s end, following facilities/advantages :
◦ generating standard and ad-hoc reports as required
◦ maximum possible automation of processes
◦ more analysis facilitated since less of data related issues expected
◦ ease of incorporating data for various analytical studies and periodic
reports
◦ Quicker access to bank analysts and inspection officials
◦ Provision for automated signalling of “red flags” in submitted data
which would need further analysis
◦ Access of the centralized data repository by other departments like
banking policy department, monetary policy department, financial
markets department etc. as required
◦ Use of business intelligence tool for advanced analytics and drilldown/roll up facility
31





Phased Approach
In Phase I, Basel II reporting implemented
International Seminar coinciding with launch
Sec 42 Return under ORFS being brought to
XBRL standards
Taxonomies for Annual Accounts being
developed

Institute of Chartered Accountants of India
(ICAI) has been working towards
◦ Formation of XBRL-India jurisdiction
◦ Development of Taxonomies



Taxonomies for C&I already developed – yet
to be implemented
Banking taxonomies getting developed
RBI and ICAI are working closely

Industry-based classification
◦ Commercial and Industrial companies
◦ Banking companies
◦ Non-Banking Financial companies

Core Schema
◦ Exhaustive list of all element declarations
◦ Common elements defined once

Distinct extended links for each industry

Designing general banking taxonomy in
accordance with the C&I taxonomy
◦ Based on IFRS 2006
◦ No dimensions

RBI can use the banking taxonomy and
extend it to include dimensional structure
◦ FINREP structure
IFRS 2006
IFRS 2008
Release date
15th August 2006
24th June 2008
Modularity
The files (Schema and
linkbases) are located in one
folder.
The files are organized based
on the IAS and IFRS. There is
a core schema containing all
the elements defined, and
linkages to the different
folders for every IAS and
IFRS.
Structure
There was a common entry
point, wherein the users had
to select and browse the
taxonomy.
The entry point is entity
specific and hence has to be
created by the user of the
taxonomy.
Elements
i) 4100 (approx)
i) 2700 (approx)
ii) Elements outside the IAS
and IFRS (common practices
and industry specific) are
included in the taxonomy
ii) Elements only from the IAS
and IFRS are part of
taxonomy
Tuples are used in the
taxonomy
Dimensions have been
included in the taxonomy
Dimension Vs. Tuples
Notes to accounts information is largely tabular
and therefore is
 Multi-dimensional data
 Data points having similar attributes
IFRS 2006 – Does not use dimension
IFRS 2008 – Includes dimensions
1.
2.
3.
4.
5.
6.
7.
8.
9.
Repo transactions
Composition of Non-SLR investments
Exchange traded Interest Rate derivatives
Risk exposure on Derivatives
Maturity pattern of certain items of assets
and liabilities
Risk category wise country exposure
Loan Assets subject to restructuring
Segment reporting
Related party disclosures
Maturity
Deposits
Advances
Investments
Borrowings
Foreign Currency Foreign Currency
assets
liabilities
1 to 14 days
15 to 28 days
29 days to 3 months
Over 3 months & up to 6 months
Over 6 months & up to 1 year
Over 1 year & up to 3 years
Over 3 years & up to 5 years
Over 5 years
Total
D
I
M
E
N
S
I
O
N
PRIMARY
ELEMENTS
• Based on IFRS 2006
–
–
–
–
•
Banking specific tags have been defined additionally in
the core schema
Separate extended links for the bank reporting
appended to existing taxonomy
Basic structure of financial statements and their details,
both included in the same extended link (unlike C&I)
No dimensions have been defined, instead extended
links have been used
Implement the system for March 2010 reporting
Your
Comments
and
Suggestions
Please
...
asramasastri@rbi.org.in
prravimohan@rbi.org.in