IMPLEMENTATION OF BASEL II STANDARDS IN BANKING SECTOR IN SERBIA

Business environment in which banks in our country perform their activity is rather dynamic. Financial sector has, as in the most transitional countries, firstly started with the process of radical changes and continuous access to European business standards. In that sense, constant changes of legal regulations and bylaws that regulate this field set before the banks increasingly higher and more strict requirements in the aspect of clear definition of all business processes, constant control activities, increase of reliability level of information systems and the like. Requirements that are set before the banking sector by Basel II standards, and which primarily refer to the security of banks’ business, stability of financial system, sufficient level of capital and consistency of supervision function will rapidly be implemented in our banking system, for two reasons. Firstly, in the local market there is a great number of banks with the majority foreign capital that are obliged by the legislation of their home countries to apply these standards since the beginning of 2007, and secondly, it is a fact that National Bank of Serbia has already adopted some of these standards, by its regulations and within reform activities on domestic banking system, as well as that it was obliged to continue its implementation due to the inclusion into the international financial flows and cooperations with international financial institutions.