In today’s dynamic financial environment, effective risk management has become a cornerstone for sustainable banking operations. Over the decades, global financial crises and domestic challenges have underscored the importance of structured risk frameworks. For banks and financial institutions, a well-designed risk management framework not only ensures regulatory compliance but also safeguards long-term stability and trust.…
In our previous article ‘New Trends in Indian Banking and the Road Ahead for Risk Management, we have covered how India’s banking system is in the midst of a decisive shift driven by digital public infrastructure, AI-enabled operations, regulatory tightening, and a renewed focus on resilience and inclusion. Also the go-forward risk agenda that must…
Why banks are special:Banks are special because they create money-like liabilities, perform maturity transformation, and intermediate information and risk at scale, making risk management central to financial stability and growth. Their position within the safety net—interacting with deposit insurance, capital rules, and lender-of-last-resort facilities—heightens systemic importance and demands disciplined risk-taking and controls. Functions banks perform…
In the world of finance and business, no decision is entirely free from uncertainty. Every investment, loan, or strategic move carries with it some level of exposure to potential loss. This exposure is what we call risk. Banks, businesses, and individuals all face risks—whether financial, operational, or strategic—and the way they identify, measure, and manage…
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(SARFAESI Act 2002) provide for Enforcement of Security Interest for the realization of the dues without the intervention of Courts or Tribunals for recovery of NPAs by banks under various laws. In 2016 NBFC is included under the definition of the financial institution through…
The SARFAESI ACT is the acronym of Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. The Act has been amended by the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act 2004. The SARFAESI Act provides for Enforcement of Security Interest for the realization of the dues without the intervention of Courts or Tribunals which is treated as one…
What is Relevant Cost? A relevant cost is a cost that differs between alternatives in a decision and will affect the future cash flows of a business. It is a cost that is pertinent to a specific business decision because it will be incurred or avoided depending on the choice made. Irrelevant costs, such as…
Introduction While financial metrics like profit, cash flow, and ROI remain central to business decision-making, ethical and non-financial considerations are now recognized as essential to building sustainable, trustworthy, and successful organizations. These additional factors safeguard a company’s reputation, long-term viability, and stakeholder trust—making them critical in today’s highly transparent and accountability-driven business environment. 1. Ethical…
Introduction Activity-Based Costing (ABC) is a refined costing approach that allocates overheads and indirect costs to products, services, or processes based on the activities they consume. In decision-making, ABC gives managers clear insights into true cost drivers, enabling better pricing, product mix selection, and strategic decisions. How ABC Works ABC assigns costs through:• Identifying key…
Introduction Cost-Volume-Profit (CVP) analysis is a powerful financial tool that connects the dots between costs, sales volume, and profits. It helps businesses answer key questions: How many units must be sold to break even? What happens to profit if costs or prices change? CVP analysis is crucial for managers making pricing, production, and resource allocation…