Prime Equation LLP’s Post

Lessons from the IL&FS Crisis: Strengthening Credit Risk Management At Prime Equation LLP, we constantly emphasize the importance of robust credit risk management frameworks to ensure financial stability and long-term success. One of the most significant cases that underlines the criticality of this is the IL&FS crisis. This episode in India’s financial history exposed how gaps in credit risk practices—such as overleveraging, concentration risk, and inadequate monitoring—can have far-reaching consequences, not just for individual institutions but for the entire financial ecosystem. Key Takeaways for Financial Institutions: Independent Risk Assessments: Rely on comprehensive evaluations rather than borrower projections or third-party reports. Portfolio Diversification: Avoid overexposure to single borrowers or high-risk sectors. Early Warning Systems: Continuously monitor borrower performance and flag potential risks early. Transparent Structures: Simplify organizational setups for better financial visibility and risk assessment. Regulatory Compliance: Proactively align with evolving guidelines to stay ahead. The IL&FS crisis is a stark reminder that strong credit risk governance isn't just about compliance—it's about sustainability and trust. At Prime Equation LLP, we specialize in process re-engineering and Risk Frameworks tailored to the unique needs of Banks, NBFCs, and Fintechs. By leveraging our expertise, we help institutions build robust systems that anticipate risks, manage exposures, and enable growth. Let’s learn from the past to build a stronger, more resilient financial future. Interested in enhancing your institution's credit risk framework? Let's connect and discuss strategies to safeguard your financial success. Reach out today! #CreditRisk #FinancialResilience #RiskManagement #PrimeEquationLLP #LeadershipInFinance

📜 🔍 What you need to know about the PRA’s thematic findings from the internal audit review of the credit risk management framework – non-systemic UK deposit takers   The PRA asked the IA functions of 33 non-systemic firms (6 banks and 27 building societies, predominantly with lending books of less than £1.5bn) to review their credit risk management framework in September 2023. This stemmed from the high level of uncertainty in the macroeconomic environment and the expected deterioration in credit portfolios.   👇 Swipe through the slides below to see the six key areas requiring improvement based on the PRA’s findings.   Read our full breakdown for more guidance on how to tackle these areas 👉 https://lnkd.in/eU9KyKKk #4most #Banking #CreditRisk #Regulation

Stay ahead in finance with the Bank of England Prudential Regulation Authority's (PRA) 2024 priorities. From risk management to data integrity, we've got you covered. Need help navigating these priorities? Our expert team at MHA is here to support you every step of the way. For more information, visit: https://lnkd.in/eQjUSiya #PRA2024

🚨 Small Risks, Big Losses: Why Risk Management is Key for NBFCs 🚨 In the NBFC sector, even small financial missteps can snowball into massive losses, affecting stability and growth. Credit defaults, liquidity crunches, operational inefficiencies, and regulatory changes—each poses a unique challenge, and when ignored, they can disrupt an entire business.📉💸 At MarketView India, we bring years of expertise in identifying, assessing, and mitigating these risks. With proven strategies, strong risk frameworks, and deep industry insights, we help NBFCs navigate uncertainty and build a resilient, future-ready business. 🌍📊 Let’s secure your NBFC’s growth with smarter risk management! 💡 Brijesh Shukla Vijayendra Karvi Shivprasad Kalwar Janvi Manghnani Sandesh Sakpal #NBFC #RiskManagement #FinancialStability #BusinessGrowth #Fintech #InvestmentManagement #FinanceIndustry #FinancialServices #RegulatoryCompliance #SustainableGrowth

With the increasing complexity of the financial ecosystem, building a resilient management system to combat operational risks is imperative. That’s why the Reserve Bank of India (RBI) updated their Guidance Note on Operational Risk Management and Operational Resilience aligned with the global best practices. Here’s our take on the guidance released on 30 April that focuses on understanding how we can tackle the growing operational risks and strengthen resilience: https://bit.ly/3LCnHvy #PwCIndiaSquad #TogetherWeFuture #TogetherWeGrow #RethinkRisk #OperationalRiskManagement #FinancialServices #RiskMitigation #Compliance Sivarama Krishnan | Rounak Shah | Amol Bhat

On 30 April 2024, the Reserve Bank of India released an updated Guidance Note on Operational Risk Management and Operational Resilience. This guidance note replaces the earlier guidance of October 2005 and is based on the Basel Committee on Banking Supervision (BCBS) revised documents issued in March 2021, on Principles for the Sound Management of Operational Risk as well as on several international best practices. The revised guidelines emphasise the critical importance of managing operational risks—those stemming from people, processes, technology and external events—in today’s complex and dynamic environment in which Regulated Entities (REs) operate. Read PwC’s perspective on the full guidance note and understand how implementing these changes is essential for mitigating operational risk and enhancing operational resilience: https://bit.ly/3LCnHvy #RethinkRisk #OperationalRiskManagement #FinancialServices #RiskMitigation #Compliance

India's shift to the ECL framework marks a significant advancement in credit risk management, enhancing transparency and accountability in the financial sector. This dynamic model is set to transform how banks forecast credit losses and manage risks, fostering a more resilient financial system. Read the full article by Jatin Kalra, Partner, FRAS, #GTBharat: https://brnw.ch/21wPqO3 #CreditRisk #ECLFramework #FinancialInnovation

On 30 April 2024, the Reserve Bank of India released an updated Guidance Note on Operational Risk Management and Operational Resilience. This guidance note replaces the earlier guidance of October 2005 and is based on the Basel Committee on Banking Supervision (BCBS) revised documents issued in March 2021, on Principles for the Sound Management of Operational Risk as well as on several international best practices. The revised guidelines emphasise the critical importance of managing operational risks—those stemming from people, processes, technology and external events—in today’s complex and dynamic environment in which Regulated Entities (REs) operate. Read PwC’s perspective on the full guidance note and understand how implementing these changes is essential for mitigating operational risk and enhancing operational resilience: https://bit.ly/3LCnHvy #RethinkRisk #OperationalRiskManagement #FinancialServices #RiskMitigation #Compliance Sivarama Krishnan | Rounak Shah | Amol Bhat

During a webinar held by the International #Actuarial Association in June 2024, an interesting presentation entitled "Opportunities for #Actuaries in #Banking" highlighting the measurement framework and #modelling process of interest rate risk in the #banking book (#IRRBB). The presentation gives a brief overview on the banking business model alongside presenting an overview of key risks faced by banks today. An introduction to IRRBB is addressed including definition, components and impact on banks as well as the revised Basel standards for IRRBB measurement. An illustrative case study for IRRBB #modelling and economic value of equity (#EVE) calculation is presented while the overall data integrity, model risk management and capital adequacy assessment are covered. Risk governance and oversight as well as IRRBB measurement, modelling and stress testing, reporting, disclosures and supervisory review process are highlighted as well in addition to the challenges and opportunities in IRRBB measurement. #GRC #riskmanagement #riskmeasurement #stresstesting #BaselIII #interestraterisk #economicvalueofequity #SREP #MRM #modellingrisk #internalmodeling #capitaladequacy #Pillar2 #solvency #stresstesting #scenarioanalysis

May 29, 2024-BaFin publishes the 8th amendment to #MaRisk In Circular 06/2024 (BA), BaFin published the 8th amendment to the minimum requirements for risk management ("MaRisk") on May 29, 2024. In doing so, it implements the guidelines of the #European Banking Authority (EBA) on interest rate and credit margin risks (#EBA/GL /2022/14 - "EBA Guidelines") and fully integrate them into its #supervisory management practices. The attached is an unofficial translation of the Circular where the most notable changes are summarized below: -Focus on Credit Spread Risk in the Banking Book (#CSRBB) as well as Interest Rate Risk in the Banking Book (#IRRBB) where the latter should now be incorporated within the risk appetite determination from a present value and a periodic perspective. Moreover they should be included when designing any type of stress test scenario. -CSRBB was included for the first time however as per #BaFin not considered as material. -Deposit modeling: financial customer deposits are assumed to be payable on demand. Despite criticism of the consultation process, BaFin did not explicitly accept the EBA's exemption for operational deposits in its guidelines. #riskmanagement #GRC #riskrequirements #bestpractices #SREP #stresstesting #creditrisk #marketrisk #operationalrisk