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Capital Adequacy
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Capital Adequacy and Risk Evaluation (CARE) Solution

Regulatory frameworks (such as Basel II) compel banks to invest in risk identification and management. This can pose a challenge since banks are not really used to formal risk management practices. Before implementing Basel II, they need to perform a detailed evaluation of their existing risk management principles, regulatory systems and processes, all in a timely, accurate and cost-effective manner. Very often, a fundamental restructuring and expansion of a bank’s risk measurement and management capabilities is needed. And this usually comes at a prohibitive cost.

Deploy CARE for risk management and Basel II compliance

Surya Software Systems' CARE solution suite has been developed to compute capital adequacy requirements as specified by Basel II, by collating data from all modules to arrive at the capital requirement. The solution minimizes cost and is flexible, allowing banks to progressively adopt Basel II regulations as their processes and systems mature.

Banks can use CARE to:

  • Calculate capital adequacy
  • Calculate capital required due to credit risk, using
    • Standardized approach
    • IRB models
    • Estimation of PD and LGD
  • Calculate capital required due to market risk
  • Capital required due to operational risk, using
    • Standardized approach
    • Advanced measurement approach
  • Audit each calculation for verification

CARE employs the Incremental Maturity Model (IMM) framework. The IMM analyzes and measures risk at three levels, with more complex models being implemented at higher levels of maturity.


Key Benefits of CARE

  • Compliance with regulatory standards: CARE helps easily compute the regulatory capital needed as per Basel II norms.
  • Effective risk measurement and control: The solution helps measure, and therefore control, risks effectively.
  • Reduced implementation time and total cost of ownership: CARE’s easy-to-use framework and incremental implementation approach significantly lowers implementation time and total cost of ownership.
  • Improved responsiveness: CARE uses rule engines to ensure that response to change is rapid.
  • Ease of use: CARE facilitates access to data by accumulation through rule engines, and also generates reports that are easy to understand.