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Few thoughts open for discussion in this forum:

1. Many of the Indian banks with considerable amounts of AUM (Assets Under Management) have still not fully subscribed to Basel II, Isnt it that if the big global counterparts start subscribing to Basel III, how would our banks strike a balance in cross border deals.

2. Couple this with the upcoming IFRS subscription, And the amount of IT scalability or refinement would be needed

I am sure a lot of change is round the corner and is something we will be looking forward to.

Basel III will be attacking the books of acocunts of banks in multiple ways, some of the important ones are:

1. Increase of Capital Adequacy Ratio upto 7% from 2015 onwards thus constraining the usage of Tier 1 capital

2. Stringent counterparty credit risk limitations which will have profound impact on global trade finance

3. Putting in place a long term structural liquidity baseline and maintaining the minimum 30 day stress fund as a measure of global minimum liquidity

All these measures to counter any cyclicality of risks of any type, are effectively impacting the growth and recovery engines. While the banks subscribing to Basel III have to be large enough to sustain the costs of subscription, they're the only few handful which are assisting in global recovery by churning money among them.

Restraining the big banks will slow down the recovery, hence stretching the cyclicality rather than curing it.

In agreement to what has been briefed by Colin, I would also add a perspective on New Age banking in emerging markets like India. Banks while are still runing on high operational costs, the most trusted banks or the REAL mass market banks have the least IT penetration but perhaps higher CSAT and hence preference among individuals.

Most of the less operational cost - driven banks and financial institutions are least 'connected' with an individual.

So while we're looking at all the above mentioned points, we're blatantly ignoring the realities.

I am in total agreement to what you've wriitten i.e. The KYC (Know Your Customer) is really evolving into K^2YC (Know and Keep Your Customer). However, the Indian banks are still not over KYC, looking at the fact that the demographic base is so huge as compared to a place down under or other geos worldwide, we're still not serving them in as much "specificity" as required and thats what is becoming the stabilizer for multi-continent banks to place a stable foot in India.

I had a look at the operational overhead figures of Indian banks and realized that they're on a higher-side as compared to these foreign banks with strong IT systems. I believe the need of the hour for our banks to compete in "all" aspects is to address the two key issues:

1. How to achieve low operational costs while maintaing the profitability and customer base?

2. Instead of running behind "NPA", if we can monitor the real "VaR (Value at Risk)", I think we would definitely shift our orbit from KYC to K^2YC.