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2021-01-22 23:19
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2021年1月22日发(作者:羡慕英文)
银行风险中英文对照外文翻译文献



银行风险中英文对照外文翻译文献


(
文档含英文原文和中文翻译
)

“RISK MANAGEMENT IN COMMERCIAL BANKS”

(A CASE STUDY OF PUBLIC AND PRIVATE SECTOR BANKS) - ABSTRACT ONLY

1. PREAMBLE:
1.1 Risk Management:
The future of banking will undoubtedly rest on risk management dynamics. Only those banks that
have
efficient
risk
management
system
will
survive
in
the
market
in
the
long
run.
The
effective
management
of
credit
risk
is
a
critical
component
of
comprehensive
risk
management
essential
for
long-term success of a banking institution. Credit risk is the oldest and biggest risk that bank, by virtue
of its very nature of business, inherits. This has however, acquired a greater significance in the recent
past for various reasons. Foremost among them is the wind of economic liberalization that is blowing
across the globe. India is no exception to this swing towards market driven economy. Competition from
within and outside the country has intensified. This has resulted in multiplicity of risks both in number
and volume resulting in volatile markets. A precursor to successful management of credit risk is a clear
understanding about risks involved in lending, quantifications of risks within each item of the portfolio
and reaching a conclusion as to the likely composite credit risk profile of a bank.
银行风险中英文对照外文翻译文献

The
corner
stone
of
credit
risk
management
is
the
establishment
of
a
framework
that
defines
corporate
priorities,
loan
approval
process,
credit
risk
rating
system,
risk-adjusted
pricing
system,
loan-review mechanism and comprehensive reporting system.
1.2 Significance of the study:
The
fundamental
business
of
lending
has
brought
trouble
to
individual
banks
and
entire
banking
system.
It
is,
therefore,
imperative
that
the
banks
are
adequate
systems
for
credit
assessment
of
individual
projects
and
evaluating
risk
associated
therewith
as
well
as
the
industry
as
a
whole.
Generally,
Banks
in
India
evaluate
a
proposal
through
the
traditional
tools
of
project
financing,
computing
maximum permissible limits, assessing
management capabilities and prescribing a ceiling
for an industry exposure. As banks move in to a new high powered world of financial operations and
trading,
with
new
risks,
the
need
is
felt
for
more
sophisticated
and
versatile
instruments
for
risk
assessment,
monitoring and controlling risk exposures. It is, therefore, time that banks
managements
equip themselves fully to grapple with the demands of creating tools and systems capable of assessing,
monitoring and controlling risk exposures in a more scientific manner.




Credit Risk, that is, default by the borrower to repay lent money, remains the most important risk
to manage till date. The predominance of credit risk is even reflected in the composition of economic
capital, which banks are required to keep a side for protection against various risks. According to one
estimate,
Credit Risk takes about 70%
and 30%

remaining is shared between the other two primary
risks,
namely
Market
risk
(change
in
the

market
price
and
operational
risk
i.e.,
failure
of
internal
controls,
etc.).
Quality
borrowers
(Tier-I
borrowers)
were
able
to
access
the
capital
market
directly
without
going
through
the
debt
route.
Hence,
the
credit
route
is
now
more
open
to
lesser
mortals
(Tier-II borrowers).With margin levels going down, banks are unable to absorb the level of loan losses.
There
has
been
very
little
effort
to
develop
a
method
where
risks
could
be
identified
and
measured.
Most of the banks have developed internal rating systems for their borrowers, but there hasbeen very
little study to compare such ratings
with the final
asset classification and also to fine-tune the rating
system. Also risks peculiar to each industry are not identified and evaluated openly. Data collection is
regular
driven.
Data
on
industry-wise,
region-wise
lending,
industry-wise
rehabilitated
loan,
can
provide an insight into the future course to be adopted.

Better
and
effective
strategic
credit
risk
management
process
is
a
better
way
to
Manage
portfolio
credit
risk.
The
process
provides
a
framework
to
ensure
consistency
between
strategy
and
implementation that reduces potential volatility in earnings and maximize shareholders wealth. Beyond
and over riding the specifics of risk modeling issues, the challenge is moving towards improved credit
risk
management
lies
in
addressing
banks’

readiness
and
openness
to
accept
change
to
a
more
transparent
system,
to
rapidly
metamorphosing
markets,
to
more
effective
and
efficient
ways
of
operating and to meet market requirements and increased answerability to stake holders.
There is a need for Strategic approach to Credit Risk Management (CRM) in Indian Commercial
Banks, particularly in view of;
银行风险中英文对照外文翻译文献

(1) Higher NPAs level in comparison with global benchmark
(2) RBI’ s stipulation about dividend distribution by the banks

(3) Revised NPAs level and CAR norms
(4) New Basel Capital Accord (Basel

II) revolution
According
to
the
study
conducted
by
ICRA
Limited,
the
gross
NPAs
as
a
proportion
of
total
advances
for
Indian
Banks
was
9.40
percent
for
financial
year
2003
and
10.60
percent
for
financial
year
2002
1
.
The
value
of
the
gross
NPAs
as
ratio
for
financial
year
2003
for
the
global
benchmark
banks was as low as 2.26 percent. Net NPAs as a proportion of net advances of Indian banks was 4.33
percent for financial year 2003 and 5.39 percent for financial year 2002. As against this, the value of
net NPAs ratio
for financial
year 2003 for the global benchmark banks
was 0.37 percent. Further, it
was
found
that,
the
total
advances
of
the
banking
sector
to
the
commercial
and
agricultural
sectors
stood at Rs.8,00,000 crore. Of this, Rs.75,000 crore, or 9.40 percent of the total advances is bad and
doubtful debt. The size of the NPAs portfolio in the Indian banking industry is close to Rs.1,00,000
crore which is
around 6 percent of India’ s GDP
2
.
The
RBI
has
recently
announced
that
the
banks
should
not
pay
dividends
at
more
than
33.33
percent of their net profit. It has further provided that the banks having NPA levels less than 3 percent
and having Capital
Adequacy Reserve Ratio (CARR) of
more than 11 percent for the last two
years
will
only
be
eligible
to
declare
dividends
without
the
permission
from
RBI
3
.
This
step
is
for
strengthening
the
balance
sheet
of
all
the
banks
in
the
country.
The
banks
should
provide
sufficient
provisions from their profits so as to bring down the net NPAs level to 3 percent of their advances.
NPAs are the primary indicators of credit risk. Capital Adequacy Ratio (CAR) is another measure
of credit risk. CAR is supposed to act as a buffer against credit loss, which isset at 9 percent under the
RBI
stipulation
4
.
With
a
view
to
moving
towards
International
best
practices
and
to
ensure
greater
transparency, it has been decided to adopt the ’ 90 days’ ‘ over

due’ norm for identification of NPAs
from the year ending March 31, 2004.

The New Basel Capital Accord is scheduled to be implemented by the end of 2006. All the banking
supervisors may have to join the Accord. Even the domestic banks in addition to internationally active
banks may have to conform to the Accord principles in the coming decades. The RBI as the regulator
of the Indian banking industry has shown keen interest in strengthening the system, and the individual
banks have responded in good measure in orienting themselves towards global best practices.
银行风险中英文对照外文翻译文献

1.3 Credit Risk Management(CRM) dynamics:
The
world
over,
credit
risk
has
proved
to
be
the
most
critical
of
all
risks
faced
by
a
banking
institution.
A study of bank
failures in New England found that, of the 62 banks in existence before
1984, which failed from 1989 to 1992, in 58 cases it was observed that loans and advances were not
being repaid in time
5
. This signifies the role of credit risk management and therefore it forms the basis
of present research analysis.
Researchers
and
risk
management
practitioners
have
constantly
tried
to
improve
on
current
techniques and in recent years, enormous strides have been made in the art and science of credit risk
measurement and management
6
. Much of the progress in this field has resulted form the limitations of
traditional
approaches
to
credit
risk
management
and
with
the
current
Bank
for
International
Settlement’
(BIS)
regulatory
model.
Even
in
banks
which

regularly
fine-tune
credit
policies
and
streamline credit processes, it is a real challenge for credit risk managers to correctly identify pockets
of
risk
concentration,
quantify
extent
of
risk
carried,
identify
opportunities
for
diversification
and
balance the risk- return trade-off in their credit portfolio.
The
two
distinct
dimensions
of
credit
risk
management
can
readily
be
identified
as
preventive
measures and curative measures. Preventive measures include risk assessment, risk measurement and
risk
pricing,
early
warning
system
to
pick
early
signals
of
future
defaults
and
better
credit
portfolio
diversification. The curative measures, on the other hand, aim at minimizing post-sanction loan losses
through such steps as securitization, derivative trading, risk sharing, legal enforcement etc. It is widely
believed that
an ounce of prevention

is worth a pound of cure
. Therefore, the focus of the study is on
preventive measures in tune with the norms prescribed by New Basel Capital Accord.
The study also intends to throw some light on the two most significant developments impacting the
fundamentals of credit risk management practices of banking industry

New Basel Capital Accord and
Risk
Based
Supervision.
Apart
from
highlighting
the
salient
features
of
credit
risk
management
prescriptions
under
New
Basel
Accord,
attempts
are
made
to
codify
the
response
of
Indian
banking
professionals to various proposals under the accord. Similarly, RBI proposed Risk Based Supervision
(RBS) is examined to capture its direction and implementation problems


1.4 Objectives of the research:
The present study attempts to achieve the following objectives:
1. Analysis of trends in Non- Performing Assets of commercial banks in India.
银行风险中英文对照外文翻译文献

2. Analysis of trends in credit portfolio diversification during the post-liberalization period.
3.
Studying
relationship
between
diversified
portfolio
and non-performing
assets of
public
sector
banks vis-à
-vis private sector banks.
4. Profiling and analysis of concentration risk in public sector banks vis-à
-vis private sector banks.
5. Evaluating the credit risk
management practices in public sector banks vis-à
-vis private sector
banks.
6.
Reviewing
the
New
Basel
Capital
Accord
norms
and
their
likely
impact
on
credit
risk
management practices of Indian commercial banks.
7. Examining the role of Risk Based Supervision in strengthening credit risk management practices
of Indian commercials banks.
8. Suggesting a broad outline of measures for improving credit risk management practices of Indian
commercial banks.
2. THE PROBLEM OF NON-PERFORMING ASSETS
2.1 Introduction:
Liberlization and Globalization ushered in by the
government in the early 90s
have thrown open
many challenges to the Indian financial sector. Banks, amongst other things, were set on a path to align
their accounting standards with the International standards and by global players. They had to have a
fresh look into their balance sheet and analyze them critically in the light of the prudential norms of
income
recognition
and
provisioning
that
were
stipulated
by
the
regulator,
based
on
Narasimhan
Committee recommendations.
Loans and Advances as assets of the bank play an important part in gross earnings and net profits of
banks. The share of advances in the total assets of the banks forms more than 60 percent
7
and as such it
is the backbone of banking structure. Bank lending is very crucial for it make possible the financing of
agricultural,
industrial
and
commercial
activities
of
the
country.
The
strength
and
soundness
of
the
banking system primarily depends upon health of the advances. In other words, improvement in assets
quality is fundamental to strengthening working of banks and improving their financial viability. Most
domestic public sector banks in the country are expected to completely wipeout their outstanding NPAs
between 2006 and 2008
8
.
NPAs are an inevitable burden on the banking industry. Hence the success of a bank depends upon
methods
of
managing
NPAs
and
keeping
them
within
tolerance
level,
of
late,
several
institutional
银行风险中英文对照外文翻译文献

mechanisms
have
been
developed
in
India
to
deal
with
NPAs
and
there
has
also
been
tightening
of
legal
provisions.
Perhaps
more
importantly,
effective
management
of
NPAs
requires
an
appropriate
internal checks and balances system in a bank
9
.
In this background, this chapter is designed to give an outline of trends in NPAs in Indian banking
industry
vis-à
-vis
other
countries
and
highlight
the
importance
of
NPAs
management.
NPA
is
an
advance where payment of interest or repayment of installment of principal (in case of Term loans) or
both remains unpaid for a period of 90 days
10
(new norms with effect from 31
st
March, 2004) or more.
2.2 Trends in NPA levels:
The
study
has
been
carried
out
using
the
RBI
reports
on
banks
(Annual
Financial
Reports),
information
/
data
obtained
from
the
banks
and
discussion
with
bank
officials.
For
assessing
comparative position on CARR, NPAs and their recoveries in all scheduled banks viz., Public sector
Banks, Private sector banks were perused to identify the level of NPAs.
The Table
2.1
lists
the
level
of
non-performing
assets as
percentage
of
advances
of
pubic
sector
banks
and
private
sector
banks.
An
analysis
of
NPAs of
different
banks
groups
indicates,
the
public
sector
banks
hold
larger
share
of
NPAs
during
the
year
1993-94
and
gradually
decreased
to
9.36
percent in the year 2003. On the contrary, the private sector banks show fluctuating trend with starting
at
6.23
percent
in
the
year
1994-95
rising
upto
10.44
percent
in
year
1998
and
decreased
to
8.08
percent in the year 2002-03
2.3 International comparison of NPA levles:
Comparison
of
the
problem
loan
levels
in
the
Indian
banking
system
vis-à
-vis
those
in
other
countries,
particularly
those
in
developed
economies,
is
often
made,
more
so
in
the
context
of
the
opening up of our financial sector. The data in respect of NPAs level of banking system available for
countries like USA, Japan, Hong Kong, Korea, Taiwan & Malaysia reveal that it ranged from 1 percent
to
8.1
percent
during
1993-94,
0.9
percent
to
5.5
percent
during
1994-95,
0.6
to
3.0
percent
during
2000
as
against
23.6
percent,
19.5
percent
and
14
percent
respectively
for
Indian
banks
during
this
year
11
.
The NPAs level in Japan, for example is at 3.3 percent of total loans, it is 3.1 percent in Hong Kong,
7.6 percent in Thailand, 11.2 percent in Indonesia, and 8.2 percent in Malaysia during 94-95, whereas
the corresponding figure for India is very high at 19.5 percent
12
.

According to Ernst & Young
13
, the actual level of NPAs of banks in India is around $$40 billion,
银行风险中英文对照外文翻译文献

much higher than the government own estimates of $$16.7 billion
14
. This difference is largely due to
the discrepancy in the accounting of NPAs followed by India and rest of the world. According to Ernst
&
Young,
the
accounting
norms
in
India
are
less
stringent
than
those
of
the
developed
economies.
Further more, Indian banks also have the
tendency to extend past due loans. Considering India’ s GDP
of around $$ 470 billion, NPAs were around 8 percent of the GDP which was better than many Asian
economic
power
houses.
In
China,
NPAs
were
around
45
percent
of
GDP,
while
equilent
figure
for
Japan
was
around
28
percent
and
the
level
of
NPAs
for
Malaysia
was
around
42
percent.
On
an
aggregate
level.
Asia’
s
NPAs have
increased
from
$$
1.5
trillion
in
2000
to
$$
2
trillion
in
2002
-
an
increase of
33 percent. This accounts for 29 percent of the Asian’ s countries total GDP. As per the E &

Y’
s
Asian
NPL
report
for
2002,
the
global
slowdown,
governm
ent
heisting
and
inconsistency
in
dealing with the NPAs problem and lender complacency have caused the region’ s NPAs
problem to
increase.
However
looking
from
a
positive
angle,
India’
s
ordinance,
on

Securitization
and
Reconstruction of Financial Assets and Enforcements of Security Interest is a step in the right direction.
This
ordinance
will
help
banks
to
concentrate
on
good
business
by
eliminating
the
business
of
bad
loans
15
.
2.4 Reasons for NPAs in India:
An internal study conducted by RBI
16
shows that in the order of prominence, the following factors
contribute to NPAs.
Internal Factors:
* diversion of funds for
- expansion / diversification / modernization
- taking up new projects
- helping promoting associate concerns
* time / cost overrun during the project implementation stage
* business (product, marketing etc) failure
* inefficiency in management
* slackness in Credit Management and monitoring
* inappropriate technology / technical problems
* lack of co-ordination among lenders.
External Factors:

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