Bank Risk Management and role of Reserve Bank of India – A Study
Abstract
Growing competition and fast changes in the operating environment impacting the business potentials, banks are forced to encounter various kinds of financial and non-financial risks. Risk is associated with uncertainty and reflected by way of charge on the fundamental/ basic i.e. in the case of business it is the Capital, which is the cushion that protects the liability holders of an institution. The various risks that a bank is bound to tackle is divided into two categories i.e. business risks and control risks. Risk management in banking designates the entire set of risk management processes and models allowing banks to implement risk-based policies and practices. They cover all techniques and management tools required for measuring, monitoring and controlling risks. The range of models and processes extends to all risks: credit risk, market risk, interest rate risk, liquidity risk and operational risk, to mention only major areas. From the banks point of view risk based practices are so important,because banks being ‘risk machines’, they take risks, they transform them, and they embed them in banking products and services. For centuries bankers as well as their regulators have assessed and managed risk instinctively, without the benefit of a formal and generally accepted framework or common terms. R.B.I. is the guardian of all banks in Indian therefore its role is more promising and vital in managing the bank risk in country like India.
Copyright (c) 2014 S Ramprakash, J Kannan
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