Post Basel II, Reserve Bank of India (RBI), for the purpose of operational risk management has mapped the activities of a bank into eight business lines identified in the New Capital Adequacy Framework.The various products launched by the banks also to be mapped to the relevant business line and must be subject to independent review, said RBI in its guidelines on monitoring of banks operational risks.Banks must develop specific policies for mapping a product or an activity to a business line and have the same documented to indicate the criteria, said the guideline.The eight recommended business lines are corporate finance, trading and sales, retail banking, commercial banking, payment and settlement, agency services, asset management and retail brokerage.Recommending that senior management is responsible for the mapping policy, RBI has said that all activities must be mapped into the eight level in a mutually exclusive and jointly exhaustive manner.‘‘Any banking or non-banking activity which cannot be readily mapped into the business line framework, but which represents an ancillary function must be allocated to the business line it supports. If more than one business line is supported through the ancillary activity, an objective mapping criteria must be used, explains the guideline by the central bank.
