Implementation of Basel II in Microfinance Sector of Pakistan

Rai Imtiaz Hussain, Zeeshan Fareed, Iffat Saleem, Shahbaz Hussain, Sohail Adnan

Abstract


The Basel, the new accord on banking regulation and supervision covers the risk of capital and credit risk. Basel II covers the additional risk of market which completes the first and second pillars. It includes the disclosure of basic information to its market participants. This information is a sum of risks that institution has to face, capital risk exposure, risk assessment process, capital adequacy of the bank, the techniques to account fall the risks. The aim of the study was to implement Basel II in microfinance sector of Pakistan. The study is unique because it is never analyzed before in microfinance sector of Pakistan. The discussion method was used for results and results of the study shows that new accord will definitely help the managers and practitioners to evaluate the performance of this sector.

Keywords: Basel 1, Basel II, Capital Accord, Microfinance, CAR, Operational Risk, Market Risk.


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