'Speed up adoption of risk mitigation technologies'; RBI tells banks

Mumbai, Sep 27 (UNI) The Reserve Bank of India (RBI) has urged banks to accelerate the pace of risk management and stressed the need for convergence with the regulatory agencies and market players alongwith upscaling the skill levels of staff to effectively deal with operational risks.

Addressing the FICCI-IBA conference on 'Global Banking: Paradigm Shift' here today, the RBI Deputy Governor, Shyamala Gopinath said, 'Risk management should be the concern of all, not just the top management or a division in a bank and it is imperative for banks to equip themselves with risk mitigation technologies.' She added that the RBI has advised all banks to exercise due diligence with regard to derivatives, under the proposed guidelines for fair value accounting, the Central bank would allow gains and losses to be reflected in the P&L account.

Gilles Galludec, IFC Country Manager, Sri Lanka&Maldives, pointed out that in view of increased competition and disintermediation corporate banking margins were shrinking. A traditional bank, he said, would need to design a SME-focused organisation and strategy, segment clients by characteristics, behavior, needs and profitability, standardise products and processes, optimise delivery cost of products and services through appropriate delivery channels, create a strong sales culture, implement independent and objective risk management.

He underscored the need for using credit scoring and rating tools for risk appraisal, underwriting, process streamlining and risk-based pricing and called for leveraging technology to reduce cost-to-serve.

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