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Risk Management Initiatives 2023-24
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Risk Management Initiatives 2023-24

Created by
@LuxuriantDryad

Questions and Answers

What is the primary objective of the Risk Management Department's initiatives during FY 2023-24?

To improve enterprise risk management systems and ensure business continuity.

When does the Basel III framework become applicable to NABARD according to the RBI's Master Directions?

01 April 2024.

How many risk management policies related to Basel III were issued or revised during 2023-24?

10 risk management policies.

What types of software applications were fine-tuned to comply with Basel III?

<p>CLMAS, Treasury software, new ALOM Software, and ERMS.</p> Signup and view all the answers

What is the function of the Enterprise Risk Management Software (ERMS) implemented by the Risk Management Department?

<p>To automate risk management functions and strengthen the existing Risk Management Framework.</p> Signup and view all the answers

List two types of risk covered by the modules in the ERMS.

<p>Credit Risk and Market Risk.</p> Signup and view all the answers

What were the main discussions conducted by the Risk Management Department in relation to Basel III?

<p>Deliberations with stakeholder departments to ascertain necessary policy and system changes.</p> Signup and view all the answers

What is one benefit of automating the enterprise risk management functions of the Bank?

<p>Mitigation of risks and enhanced efficiency in risk management.</p> Signup and view all the answers

What are the primary functions of the Enterprise Risk Management Software (ERMS)?

<p>The ERMS is used for risk rating of client institutions, exposure monitoring, and limit utilization.</p> Signup and view all the answers

How has the ERMS been updated in accordance with RBI's 2023 Master Directions?

<p>The ERMS has been revamped to comply with the Basel III framework's requirements under Pillar I, II, and III.</p> Signup and view all the answers

What is the significance of the Asset Liability Management (ALM) software launched in April 2024?

<p>The ALM software aims to enhance the management of liquidity and interest rate risk in the Bank.</p> Signup and view all the answers

Who heads the Risk Management Committees, and what is their focus?

<p>The Risk Management Committees are headed by Deputy Managing Directors and focus on Credit, Market, and Operational risks.</p> Signup and view all the answers

What is the current status of preparing Standard Operating Procedures (SOPs) at NABARD?

<p>The preparation of SOPs for Business Products is in progress along with the concerned Business Departments.</p> Signup and view all the answers

What role does the Credit Risk Management Committee (CRMC) play in the Bank?

<p>The CRMC provides focused attention and guidance on issues related to credit risk management.</p> Signup and view all the answers

What are the key modules included in the refined ERMS?

<p>Key modules include Credit Risk Weighted Assets, Market Risk Weighted Assets, and Operational Risk Weighted Assets.</p> Signup and view all the answers

Why is it important for the Bank to comply with Basel III framework?

<p>Compliance with Basel III framework is essential for maintaining financial stability and minimizing risks.</p> Signup and view all the answers

What is the goal of the Risk Management Department (RMD) in the Bank?

<p>The RMD aims to enhance risk management practices and ensure compliance with regulatory standards.</p> Signup and view all the answers

How does the Market Risk Management Committee (MRMC) contribute to the Bank's operations?

<p>The MRMC focuses on managing and mitigating market risks faced by the Bank.</p> Signup and view all the answers

How did the Regional Risk Awareness Workshops contribute to risk management culture?

<p>They aimed to enhance the effectiveness of the risk culture at all staff levels.</p> Signup and view all the answers

What was NABARD's total outstanding borrowings during FY 2023-24?

<p>₹4,87,233 crore.</p> Signup and view all the answers

What significant bond was issued by NABARD during the year?

<p>India's first ever Rupee-denominated, AAA rated, externally certified Social bond.</p> Signup and view all the answers

How much was the total subscription for NABARD's Social bond issuance?

<p>₹8,560 crore.</p> Signup and view all the answers

What amount of PSL deposits was mobilized by NABARD during FY 2023-24?

<p>₹1,31,459 crore.</p> Signup and view all the answers

What certification did the Social bond receive, and from which organization?

<p>Externally certified by KPMG under the ICMA social bond guidelines.</p> Signup and view all the answers

What was the total amount disbursed towards rural infrastructure creation in FY 2023-24?

<p>₹42,563 crore.</p> Signup and view all the answers

How much did NABARD issue in bonds during FY 2023-24, making it the largest borrower in the market?

<p>₹65,393 crore.</p> Signup and view all the answers

What were the total outstanding PSL deposits managed by NABARD during FY 2023-24?

<p>₹3,01,905 crore.</p> Signup and view all the answers

What was the total size of NABARD's outstanding investments as of 31 March 2024?

<p>₹97,574 crore.</p> Signup and view all the answers

How many meetings did the Asset Liability Management Committee (ALCO) conduct during 2023-24?

<p>14 meetings</p> Signup and view all the answers

What initiative was introduced by the Risk Management Department to promote risk awareness?

<p>Risk Management Corner</p> Signup and view all the answers

What was the total loan outstanding reported as of 31.03.2024?

<p>₹7,95,191 crore (prov.)</p> Signup and view all the answers

What was the purpose of the Enterprise Risk Management Committee (ERMC) meetings conducted during 2023-24?

<p>To review all types of risks and draw appropriate Risk Mitigation Strategies.</p> Signup and view all the answers

As of 31.03.2024, what percentage of total borrowings does ST Refinance represent?

<p>20%</p> Signup and view all the answers

What change was made to the internal risk rating model for NIDA loans?

<p>It was revised from a 4-point scale to a 9-point scale.</p> Signup and view all the answers

How often are knowledge capsules made available on the Risk Management Corner?

<p>Fortnightly</p> Signup and view all the answers

Which category had the highest reported amount in loans as of the data provided for 31.03.2024?

<p>LT Refinance with ₹1,58,706 crore</p> Signup and view all the answers

What is the total amount under 'Other Loans' as of 31.03.2024?

<p>₹73,491 crore</p> Signup and view all the answers

What was the focus of the Default Forecasting Model redesign in relation to NBFCs?

<p>To redevelop the model for NBFCs &amp; NBFC-MFIs.</p> Signup and view all the answers

What is the total amount reported under PSL Products as of 31.03.2024?

<p>₹1,73,767 crore</p> Signup and view all the answers

What type of policies were introduced concerning the management of IT Services?

<p>Two new policies on Outsourcing of IT Services and Market Risk Management.</p> Signup and view all the answers

Which committee was responsible for sanctions related to Stressed Assets Management?

<p>A committee-based approach.</p> Signup and view all the answers

What were the revised screening parameters for according to the market risk section?

<p>Evaluation of mutual funds and empanelment of brokers.</p> Signup and view all the answers

What term describes the knowledge segments provided under the Risk Management Corner?

<p>'Risk InSight', 'kNOw Risk', 'Risk Intel', and 'Risk Aware'.</p> Signup and view all the answers

Study Notes

Risk Management Initiatives 2023-24

  • Aimed to enhance enterprise risk management systems, improve frameworks, and automate risk functions for business continuity.

Basel III Implementation

  • Effective from 01 April 2024, Basel III framework mandated for all AIFIs, including NABARD.
  • Conducted deliberations to identify necessary changes in policies and system software for compliance.
  • Issued or revised 10 risk management policies related to Basel III.
  • Key software like CLMAS and ERMS fine-tuned for compliance, including automated generation of CRAR.

Enterprise Risk Management Software (ERMS)

  • Implemented ERMS to strengthen the Risk Management Framework and automate functions.
  • ERMS consists of 22 modules focused on Credit, Market, Enterprise Risk, and Early Warning Systems (EWS).
  • Enhanced to comply with RBI's guidelines on Basel III, covering modules like CRWA and Market Disclosures.

Asset Liability Management (ALM) Software

  • New ALM software launched on 02 April 2024 to manage liquidity and interest rate risks, developed to meet regulatory standards.

Risk Management Committees

  • Established committees led by Deputy Managing Directors: CRMC, ORMC, and MRMC for focused management of credit, market, and operational risks.

Standard Operation Procedures (SOPs)

  • Preparation of SOPs for NABARD's business products initiated in collaboration with relevant departments.

Enterprise Level Meetings

  • Six meetings of the Risk Management Committee of the Board (RMCB) held for oversight.
  • 14 ALCO meetings conducted for asset-liability alignment with market conditions.
  • Four Enterprise Risk Management Committee (ERMC) meetings held for risk review and mitigation strategies.

Risk Management Culture

  • The "Risk Management Corner" launched to promote risk awareness through knowledge capsules and segmented information.

Other Initiatives

  • Credit Risk: Committee approach introduced for refinancing and stressed asset management; internal rating model upgraded.
  • Market Risk: Revised screening parameters for mutual funds and broker empanelment; new policies on IT outsourcing introduced.
  • Five regional workshops organized to cultivate a robust risk management culture.

Finance Overview for FY 2023-24

  • Total outstanding borrowings of ₹4,87,233 crore and outstanding PSL deposits of ₹3,01,905 crore managed by Finance Department.

Social Bond Issuance

  • NABARD issued India's first AAA-rated social bond with a base issue of ₹1,000 crore, achieving a subscription of ₹8,560 crore.

Domestic Bond Issuance Leadership

  • Issued ₹65,393 crore of bonds, making NABARD the largest borrower in the market.

Financial Position as of 31 March 2024

  • Total outstanding investments reached ₹97,574 crore.
  • ₹1,31,459 crore PSL deposits mobilized, with ₹42,563 crore earmarked for rural infrastructure.

Loan Outstanding

  • Total loans outstanding stood at ₹7,95,191 crore, with various product allocations for ST Refinance, LT Refinance, and PSL products.

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Description

Explore the major initiatives undertaken by the Risk Management Department in FY 2023-24. This quiz covers the improvements in enterprise risk management systems, frameworks, and automation processes aimed at mitigating risks and ensuring business continuity.

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