The Reserve Bank of Zimbabwe (RBZ) says it will begin implementing the revised framework of Basel II in January 2012 after successfully finalising the action plan.
Central bank governor Gideon Gono said with effect from January 1 2013 all banks will be required to comply with Basel II and no bank would be using Basel I.
Basel II is the commonly used term for the new framework for capital requirements for banks issued by Basel committee on banking supervision.
It seeks to create an international standard that banking regulators can use when creating regulations about how much capital banks need to put aside to guard against the types of financial and operational risks banks face.
The rules mean that the greater risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability.
“The period between now and January 2013 should be utilised for planning, obtaining approvals and addressing procedural requirements for Basel II implementation.
“As part of their technical and operational preparations banks are encouraged to prioritise capacity building of concerned implementing officials in their internal roadmaps,” Gono said.
He said RBZ completed the Basell II implementation action plan in which banks shall, at a minimum, adopt the Modified Standardised Approach (MSA) for credit risk and Alternative Standardised Approach for operational risk.
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“Adoption of the advance approaches is subject to satisfactory supervisory validation by the Reserve Bank.
With respect to MSA, Banking institutions are required to develop their internal rating systems, if necessary to ensure reliable and accurate mapping to the Supervisory Rating Systems ,” Gono said.
Gono said RBZ has embraced enhancements to Basel II framework and it would incorporate changes with respect to capital adequacy ratios, liquidity coverage ratio and net stable funding ratio through a revision of the Basel II implementation technical guidance.
The central bank governor said sound macroeconomic policies must be the foundation for a stable financial system.
