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|November 10, 1998||
RBI proposes seven-point strategy for Y2K complianceThe Reserve Bank of India has proposed a seven-point strategy to help the financial sector overcome the date 2000 bug.
In its report on trend and progress of the banking sector in India for the year ended June 30, 1998, the central bank has come out with the seven-point plan.
Expressing concern over the Y2K bug, the RBI has stated that in India, as in any other country in the world, banks are confronted with the date 2000 problem.
If measures are not taken to address the problem, normal operations of financial institutions would be disrupted, which would lead to disturbances in payment and settlement systems nation-wide, the effects of which may spread to other sectors.
The central bank said that it is being increasingly recognised that the Y2K issue has cross-border implications.
Recognising this dimension, the Basle Committee on Banking Supervision has advised bank supervisors to consider all possible aspects. These are foreign activities of domestic banks, including the readiness of foreign markets and infrastructure, and domestic activities of foreign banks including the quality of head office preparedness and the readiness of the local branch of a subsidiary to conduct business, typically within the domestic market.
To overcome the Y2K problem in India, a high-level working group has been constituted with members drawn from banking, regulatory, supervisory and information technology departments in the RBI, representatives of IBA, commercial banks and NIBM.
The working group would review the progress by banks, their subsidiaries and financial institutions every month.
The RBI report has stated that the banks have to also indicate to the RBI/IBA about the steps taken to ensure that their customers are Y2K compliant. The banks have been advised to step up their efforts to assess, convert and thoroughly validate all systems and applications by September 30, 1998. They have also been advised to validate interfaces/linkages with customers/correspondents.
Commencing on October 1, 1998 the banks have been advised to continuously validate their renovated systems through testing and to identify alternative approaches if need be.
About 44 of 104 targeted commercial banks, and 12 of 41 non-banking subsidiaries of commercial banks are expected to be Y2K compliant by September 30, 1998.
The majority of remaining banks would achieve the norm by December 1998.
About 50 per cent of the financial institutions are expected to be Y2K compliant by the end of 1998, the RBI report says.
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