Managing key elements of Fraud Risk in Banks
This article examines the key elements of RBI’s Master Directions on Fraud Risk Management, focusing on RFAs, EWS, staff accountability, and governance requirements. Red Flagged Accounts (RFA) A Red Flagged Account is identified when one or more Early Warning Signals indicate the possibility of fraudulent activity in a loan or credit facility. RBI mandates banks…
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Credit Risk Management Amendment Directions, 2026: An Overview
The Reserve Bank of India (RBI) issued the *Commercial Banks – Credit Risk Management (Amendment) Directions, 2026* on January 5, 2026, which will come into force from April 1, 2026. Commercial banks have also been given the flexibility to adopt these directions earlier, in full. These amendments represent a significant step towards strengthening credit risk…
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RBI’s Draft Guidelines to strengthen Credit Risk and Provisioning Frameworks
Moving Towards a More Risk-Sensitive Banking System, the Reserve Bank of India (RBI) has released two important draft directions to strengthen the prudential framework for credit risk assessment and provisioning in line with international best practices under the Basel III reforms. 1. Draft Directions on Capital Charge for Credit Risk – Standardised Approach (2025) Aligning…
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Option Valuation: Models, Greeks, and Volatility Surfaces
(Step‑by‑step practical examples for the key formulas and relations used in option valuation, using plain numbers and intuitive explanations) Option valuation estimates the fair value of an option by modeling expected payoffs under risk‑neutral probabilities and discounting at the risk‑free rate, with price sensitivities captured by Greeks and implied volatility extracted from market prices for…
Read article Probability Theory and Its Applications in Finance
[At the bottom of this article you will find, practical, finance‑ready examples that apply each formula step by step, with clean numbers and brief interpretations] Executive SummaryProbability theory underpins quantitative risk analysis and investment decision-making by modeling uncertainty, measuring variability, and estimating tail risks across portfolios and credit exposures. This article explains core concepts—probability, conditional…
Understanding Key Statistical Concepts in Finance and Data Analysis
Statistics forms the backbone of data-driven decision-making in banking, finance, and economics. By applying various statistical measures, financial professionals can identify patterns, assess risks, and evaluate performance across portfolios and business activities. This article explores key statistical concepts essential for financial analysis, ranging from frequency distributions to advanced portfolio metrics. Statistical Measures and Frequency Distribution…
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