Paper Number :WP34/2024
Publication Date :Feb. 13, 2024
This paper offers a nontechnical overview of risk management in banks and financial institutions, with special reference to India. It begins with the evolution of banks and risk management practices over several centuries. It describes the genesis of the Basel Accords, against the backdrop of global financial instability during the 1970s. The transition from Basel I to Basel II is explained in the context of a series of financial crises. The article proceeds to describe the salient features of Basel III, in light of the global financial meltdown from 2007 onwards. It discusses the progress made by Indian banks, towards the implementation of the Basel Accords. It describes the important techniques and concepts for measurement of material risks and outlines the Indian experience. It concludes with a snapshot of the emerging risks, and underlines the need for due weightage to the traditional ones.