Project Presentation

TABLE OF CONTENTS
 i) Title of the project
 ii) Objective & Scope of the study
 iii) Literature Survey
 iv) Methodology
 v) Observaion
 vi) Results and Discussion
 vii)Findings and Conclusions
 “An exploratory study on
“Risk Management in Banking
Sector”
 Name of Candidate: Alka Gautam
 Roll no. : 1505003833
 The award: The degree of Master of Business
Administration in Finance
 The year of submission: 2018
 Objective of the study
Primary objective:
 To study and understand the foreign exchange.

Secondary objective :
 To study and analyze the revenues of the company when the exchange rates
fluctuate.
 To analyze income statement and find out the revenues when the dollars are
converted into Indian rupees.
 To study the different types of foreign exchange exposure including risk and risk
management techniques which the company is used to minimize the risk.
 To present the findings and conclusions of the company in respect of foreign
exchange risk management
 Scope of the study

SCOPE OF THE SURVEY

The Banking Industry has been assessed the readiness in seven areas:
•Organizational structure
•Reporting ability
•Awareness of regulations
•Compliance with Basel II
•Capital allocation
•Basel II action plan
•Technology
 Literature Survey

Firms dealing in multiple currencies face a risk of unanticipated gains/ losses due to
sudden changes in exchange rates. Because of this a lot of researches had been conducted
on financial risk management. The literature on financial risk has grown rapidly more
specifically after the financial crises in 1990s. These crises have made it clear that
exchange rates may have significant real economy effects. There are a large number of
theories of why companies manage risk, including foreign exchange risk and interest rate
risk. Coping with risk has become an important managerial function, especially after the
increased volatility in the foreign exchange market in recent years. Different financial
analysts and experts have their different opinions regarding financial risk management. On
the basis of those studies and research articles, various strategies have been suggested with
the help of which multinational companies can manage their financial risk.
 Methodology
 Research is defined as human activity based on intellectual application in the investigation of
matter. The primary aim for applied research is discovering, interpreting, and the development of
methods and systems for the advancement of human knowledge on a wide variety of scientific
matters of our world and the universe. It is exploratory and often driven by the researcher’s
curiosity, interest, and intuition. It is conducted without any practical end in mind, although it
may have unexpected results pointing to practical applications.
 TYPES OF RESEARCH:
To accomplish the objective of the study, descriptive research design is adopted to collect the data
from the consumers of the different brands. Descriptive research simply describes things such as
demography characteristics of consumers who use the product. The descriptive study is typically
concerned with determining frequency with which same thing occurs. This study is typically guided
by initial hypothesis.
 DATA COLLECTION METHODS:
For any research these two types of data are necessary:
1. Primary data
2. Secondary data
 Methodology ..contd….
 Primary Data:
For this project the primary data is collected in four ways:
Through observations, Through discussion (Department Heads & Executives), Through
questionnaires and Through Sampling procedure

 Secondary Data:
The secondary data is collected from various sources available with in the organization like
Organizational web site, Company Past records, Library books, Internet, Annual reports, Consulting
administrative staff and from Consulting marketing Managers
 SAMPLING:
“Sampling may be defined as the selection of an aggregate or totally on the basis of which a
judgment of reference about the aggregate of totally is made. “Sampling is used in conducting
surveys and in studying various problems concerning production management, time and motion
studies, market research, various areas of accounting and finance and the like.
 Sample size:
For the project 50 customers were taken into consideration and they are selected on the random
basis.
 Methodology..contd….
 STATISTICAL TOOLS:
Statistical techniques are to obtain findings and average information in logical
sequence from the raw data collected. After tabulation of data research have used
the following quantitative technique.
 Percentage analysis
 Charts

 PERCENTAGE ANALYSIS
Percentage refers to special kind of ratio. This method is used as making comparsion
between two or more services of data. Persenatage are used to decidable
relationship. Persentage can also used to compare thge relative terries, the
distribution of two or more services of data
 CHARTS
Bar charts and pie charts are used to get a clear look at the tabulated data.
 Observations and Concclusions
OBSERVATIONS

• Most of the banks believe that the standard approach is most appropriate for
their purposes.
• On the whole, a cost/benefit analysis has been done for each approach. It
appears that the banks have completed their cost/benefit analysis only for their
elected approach.
• Regulatory capital consumption is motivated for developing activities.

INTERPRETATION

• Most of the banks would prefer to adopt the standard approach, but only few of
those who would like to implement the advanced approach and they will
implement.
• The banks that would prefer to adopt the standard approach should try to adopt
advanced approach.
 Findings and conclusions
 Credit risk is generally well contained, but there are still problems associated with loan
classification, loan loss provisioning, and the absence of consolidated accounts.
 Market risk and Operational risk are clear challenge, as they are relatively new to the
areas that were not well developed under the original Basel Capital Accord.
 The new regulations will allow banks to introduce substantial improvements in their
overall risk management capabilities, improving risk based performance measurement,
capital allocation as portfolio management techniques.
 Future complexity is expected because banks diversify their operations. It is expected
that banks will diversify their operations to generate additional income sources,
particularly fee-based income i.e. non interest income, to improve returns.
 Conclusion

Implementation of Basel II has been described as a long journey rather than a

destination by itself. Undoubtedly, it would require commitment of substantial
capital and human resources on the part of both banks and the supervisors.
RBI has decided to follow a consultative process while implementing Basel II
norms and move in a gradual, sequential and co-ordinate manner. For this
purpose, dialogue has already been initiated with the stakeholders. As
envisaged by the Basel Committee, the accounting profession too, will make a
positive contribution in this respect to make Indian banking system still
stronger.
SUGGESTIONS
 The Banks should review Basel II components and develop a vision, strategy
and action plan for what is expected to be a suitable framework based on how
the banking system evolves over time.

 The Banks need regular engagement for sustained support. A qualified long-
term advisor would be preferable.
 A workshop should be planned to produce a road map to Basel II Compliance.

 Training and additional assistance to make it easier for the banking system to
comply with new guidelines on market and operational risk.

 Data Privacy and security needs more attention

 THE END

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