Indian banks move to upgrade risk technology

A number of Indian banks have been upgrading their risk technology in a bid to meet Reserve Bank of India (RBI) guidelines on prudent risk management practices issued in 1999.

Bank of Rajasthan, Bank of Baroda, Exim Bank, IndusInd Bank and Jammu & Kashmir Bank, as well as the Gilts Securities Trading Corporation, now have risk management systems in place. And consultants in India have recently experienced a substantial surge in interest by local banks in risk management systems, despite the initial lukewarm response to the RBI’s 1999 guidelines.

Other high-profile public sector banks, such as Central Bank of India and Union Bank of India, have not yet made the necessary commitments, but have moved in that direction by awarding mandates to international consultants PricewaterhouseCoopers (PwC) and Boston Consultancy Group, respectively.

PwC is bidding for a number of other financial institutions, the majority of which are from the public sector, to undertake a similar exercise of risk management. "Private sector banks are responding to the RBI’s guidelines by making the necessary systems upgrades, but foreign banks have inherited the controls system from their overseas headquarters," PwC principal consultant Shakti Saran told RiskNews’ sister publication Risk Technology www.risktechnology.com.

According to Saran, risk management is being undertaken in three key areas – operational, market and credit risks. Operational risk is currently being considered as a less crucial area of focus, as banks are concentrating their efforts on market and credit risk. In terms of design, consultants are deploying enterprise-wide solutions, which include risk organisation structures, management reporting frameworks, limits and authorisation frameworks and risk measurement methodologies.