How agriculture insurance helps farmers on crop losses?
The farmers in India have been inherently facing with on-farm risks like famine; flood, extreme weather etc. Though these types of natural risks cannot be totally avoided, there are many new on-field techniques developed in India to minimize the loss. However, the most important strategy to mitigate the risk is agriculture insurance. The insurance company…
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Loan to value ratio and Risk Weight percentage on housing Loans
Loan to value ratio means Loan amount disbursed by the bank proportionate to the property value.LTV ratio is calculated by dividing the amount borrowed by the appraised value of the property, expressed as a percentage. For example, if you buy a home appraised at Rs.1 Crore for its appraised value and make a Rs.20 lac…
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How the Liquidity Risk manifests in Banks?
Liquidity risk arises when a bank fails to meet its contractual obligation in its daily operations due to non-receipt of adequate inflow of funds. If you call a bank is having adequate liquidity, it means that bank is in a position to efficiently discharge its financial obligations both at expected and unexpected short term financial…
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What is Integrated Risk Management in Banks?
Traditionally, banks used to have two separate track approach for credit risks and market risks. The Asset –Liability Management Committee (ALCO) of the bank used to deal with various types of market risks whereas the Credit Policy Committee (CPC) continued taking care of credit/counterparty and country risks. However, in the recent years, as a result…
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How to mitigate Counterparty Risks?
The flows of credit from commercial banks are the major and the most noticeable cause of credit risk. Besides loans there is other type of credit risks in banking operations which is called counterparty risk. Loan has default risk; a derivative has counterparty risk. We are discussing here on Counterparty risks. What is the meaning…
Fraud Risk Management in Banks
The increasing incidences of frauds in general and in loan portfolios of banks in particular are the matter of serious concern to all stake holders. Unfortunately, most often banks even after identifying the frauds, take times to file complaints with CBI / Police on the grounds of cheating, misappropriation of funds, diversion of funds etc.…
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