Risk Management Practices of Indian Banks: A Survey based Study

Abstract

Financial System is the most important institutional and functional vehicle for economic transformation of any country. Banking sector is reckoned as a hub and barometer of the financial system. As a pillar of the economy, this sector plays a predominant role in the economic development of the country. Undoubtedly all banks in the present-day volatile environment are facing a large number of risks such as credit risk, market risk, operational risk, liquidity risk, foreign exchange risk, interest rate risk, etc. which may threaten a bank's survival and success. In other words, banking is a business of risk. For this reason, efficient risk management is absolutely required. The purpose of this research is to examine the degree to which the Indian banks use risk management practices and techniques in dealing with different types of risk. The secondary objective is to compare risk management practices between the public, private and foreign banks. It can be concluded that the banks should take risk more consciously, anticipates adverse changes and hedges accordingly, it becomes a source of competitive advantage, and efficient management of the banking industry.