Indian IT firms bank on Basel II

05 August 2006

The global IT budget related to risk management applications for the global financial services sector to become Basel II-compliant is expected to grow to $22 billion. Indian IT firms are pitching for a chunk of it. Venkatchari Jagannathan reports.

The Basel II accord and other regulatory compliance measures have thrown up a huge business opportunity for banking software companies around the globe.

Says Aruna Rao, business head, corporate banking, products and services, Polaris Software Lab Limited, "The worldwide credit risk management systems market alone is expected to grow at a compound annual growth rate of 7 per cent to $7.96 billion by 2010."

Citing a Tower group-a research group- report Debashis Chatterjee, vice president, Cognizant Technology Solutions says, "The global IT budget related to Basel II is expected to be $22 billion, which would be spent on software and services in the run up to compliance with the norms." According to him the Basel II risk management application software market is still evolving and many technology providers claim to have partial or all necessary product components.

Given this could it be said that the Basel II norms is for banking software companies what Y2K was for software services companies?

Responds B Suresh Kamath, chairman and managing director, Laser Soft Infosystems Limited, "The Y2K boom was very large and Basel II definitely will not be such a large boom. This is primarily because, Y2K problem was affecting all software users, unlike the Basel II norms, which will only affect banking companies."