The objective of a supervisory college is to help its members develop a better understanding of the risk profile

The Reserve Bank of India (RBI) has set up a supervisory college for State Bank of India (SBI) and ICICI Bank. The move is aimed to deal with supervisory issues revolving around these banks, and establish a co-operation mechanism for cross-border supervision. “Supervisory colleges have evolved the world over as an important component of effective supervisory oversight of an international banking group. This mechanism was developed with the aim of reducing supervisory overlap, and filling in supervisory gaps for better supervisory co-operation enunciated in Basel II framework,” said the RBI on Tuesday.

The concept was enunciated in the Basel Committee for Banking Supervision (BCBS) October 2010 document, “Good practice principles on supervisory colleges”.

“Though India does not have any systemically important banks (SIBs), with a view to benchmarking India with the best practices across the globe and in its capacity as the home country supervisor, the RBI decided to establish a supervisory college each for SBI and ICICI Bank as both have vast expanse of overseas operations spreading across many supervisory jurisdictions,” said the RBI.

For SBI, there are nine host country supervisors, while ICICI Bank has seven.

At a meeting of all the host country supervisors, held here on December 3 and 4, K. C. Chakrabarty, RBI Deputy Governor, hoped that the college, being a process and not a one-time forum, would become a key tool of consolidated supervision, particularly considering the ever-expanding footprint of Indian banks abroad. He was inaugurating the first meeting of supervisory colleges.

The overarching objective of a supervisory college is to help its members develop a better understanding of the risk profile of the banking group.

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