Page 44 - Banking Finance October 2015
P. 44
ARTICLE
A CURSORY LOOK AT
RISK MANAGEMENT
PRACTICES IN INDIAN
BANKS - A STUDY OF
STATE BANK OF INDIA
&Prof. NARASAIAH, P. V. Dr. RATHNAM, N. V.
Professor
Dept. of Commerce, Post Doctoral Fellow
Dept. of Commerce
S. V. University, Tirupati S. V. University, Tirupati
Abstract reputational, operational, etc. These risks are highly in-
terdependent and events that affect one area of risk can
Banks are the critical organizations for stability and devel- have ramifications for a range of other risk categories.
opment of the economy. The banking scenario in India is Thus, top management of banks should attach consider-
at the cross roads and is continuously developing, but the able importance to improve the ability to identify mea-
progress has been remarkable over the past few decade. sure, monitor and control the overall level of risks under-
With the advent of liberalization the best banking indus- taken.
try had made a head start towards the best banking prac-
tices at each interaction point of the supply chain. Experts The origins of State Bank of India date back to 1806 when
have also projected that India would emerge as the third the bank of Calcutta later called the Bank of Bengal was
largest banking hub in the world by 2040. But in the established. In 1921, the Bank of Bengal and 2 other presi-
present changing business environment, the term 'risk' is dency banks (Bank of Madras and Bank of Bombay) were
evolved significantly in every business. Banks have been amalgamated to form the Imperial Bank of India. In 1st
making great advancements in terms of technology, qual- July 1955, the controlling interest in the Imperial bank of
ity, quantity as well as stability; such that they have India was acquired by the State Bank of India and State
started to expand and diversify at a rapid rate. However, Bank of India came into existence by an act of parliament
such expansion brings these banks into the context of risk. as successor to the Imperial Bank of India.
Risk is inherent in any walk of life in general and in finan-
cial sectors in particular. In this paper a conceivable attempt has been made to
study the Risk Management Practices in Indian Banks - A
Banks in the process of financial intermediation are con- Study of State Bank of India. In view of this, the study is
fronted with various kinds of financial and non-financial focused on current status of Indian bank; profile of State
risks viz., credit, interest rate, foreign exchange rate, li- Bank of India; Risk Management Practices in SBI; Credit
quidity, equity price, commodity price, legal, regulatory,
44 | 2015 | OCTOBER | BANKING FINANCE
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