Escolar Documentos
Profissional Documentos
Cultura Documentos
OF INDIA
BY
KALSANG LHAMO
IV SEMESTER M.COM
Reg. no. MCM150309
ST.PHILOMENAS COLLEGE
MYSORE-570015
TABLE OF CONTENTS
Chapters Particulars Page
number Number
INTRODUCTION
1. Need of study
Statement of problem
Objective of study
Methodology
Scope of study
CHAPTER-1
INTRODUCTION
INTRODUCTION:
Banks are very important in every economy because they provide special
functions or services which if disturbed or interfered with, can lead to
adverse effects on the rest of the economy. They make available financial
resources necessary for economic growth from lenders to borrowers. They
take deposit from those who have to save (lenders) and then lend the
money deposited to those who is in deficit (borrowers) as loans. There
traditional activity of deposit taking and loans making enlarged with
activities like remittance, foreign exchange dealings, trustee services,
securities brokerages, investment advisory dealings, bill paying, leasing
factoring, etc.
Despite all the problems that banks might face, the major one
which is very delicate and can have very negative consequences stem
largely from loans that are not paid even after their due date. This is
termed credit risk. Credit risk is seen as very big problem because it
results to increase debts since the bank will have to borrow more in order
to meet up with its demands especially from its customers who may come
for cash withdrawals. This leads to higher interest payments, reduced
borrowing capacity, reduced profits since less customers will borrow,
increased equity, reduced shareholders value, reduced future capital
investments, limiting the banks long term business performance, or an
increase in the length of trade credit taken from suppliers.
INTERNATIONAL PERSPECTIVE
Crouhy, Gala, Marick have summarized the core principles of
enterprise wide risk management. As per the authors risk management
culture should percolate from the board level to the lower level employee.
Firms will be required to make significant investment necessary to comply
with the latest best practices in the new generation of risk regulation and
management. Corporate governance regulation with the advent of
Sarbanes-Oxley Act in US and several other legislations in various
countries also provide the framework for sound Risk management
structures. Hitherto, enterprise wide risk management existed only for
name sake. Generally firms did not institute a truly integrated set of risk
measures, methodologies or risk management tools encompassing all the
activities of a corporation. The integrated risk management infrastructure
would cover areas like corporate compliance, corporate governance,
capital management etc. areas like business risk, reputation risk and
strategic risk also will be incorporated in the overall risk architecture more
formally. As always it will be the banks and the financial services firms
which will lead the way in this evolutionary process, the compliance
requirements of Basel II and III accords will also oblige banks and financial
institutions to put in place robust risk management methodologies.
The authors felt that risk management concerns largely with activities
within the firm, however, during the next decade government in different
countries would desire to have innovatively drawn risk management
system for the whole country. The authors draw reference to the
suggestions of Nobel laureate Robert Merton who suggested that a
country with exposure to a few concentrated industries should be obliged
to diversify its excessive exposures by arranging appropriates swaps with
other countries with similar problems. Risk management offers many
other potential Marco applications to improve the management of their
social security measures etc. they draw references to the spread of risk
management education worldwide.
Daniele Nouy (29) elaborates the Basel core principles for effectives
banking supervision, its innovativeness, content and the challenges of
quality implementation. Core principles are a set of supervisory guidelines
aimed at providing a general framework for effectives banking supervision
in all countries. They are innovative in the way comprehensive in
coverage, providing a checklist of the principal features of a well-designed
supervisory system.
8. Structural organization.
Scheduled
Banks
Scheduled
Scheduled co-
commercial bank
operative banks
Limitation of study:
The study extensively uses the data provided in the financial reports. If
there is any window dressing the finding could be misleading.
This being academic study it suffers from the time and cost
constraints.
Some of information is of confidential in nature that could not be
divulged for the study.