Asset-liability management is the core discipline in banking, and one that must be mastered by every bank, irrespective of its operating model or product suite. The post-crash Basel III environment emphasizes a strong adherence to conservative principles of capital and liquidity management – the traditional role of the Treasury function in a bank. Attending the BTRM Conference provides delegates not only with a professional guidance demonstrating excellence in the Treasury space, it is also a sign of genuine commitment to excellence in risk management.
Given the complex regulatory environment of BFSI sector in India, often banks and financial institutions find it difficult to arrive at the impact and analysis of the guidelines issued by them. The financial sector in India is governed by mainly the following regulators:
1.RBI (Banking &NBFC)
2.SEBI (Capital Markets)
All the regulators are required to work in sync and come up with regulations that are compliant with both domestic and international requirements.
Due to the low percentage of people under the banking umbrella, RBI has been trying to come up with different models to enhance the financial literacy and achieve its objective of financial inclusion, thereby coming up with unique regulations applicable to Small Finance Banks and Payments Banks. In a similar way SEBI has been working with RBI and MOF to come up with a single FPI(Foreign Portfolio Investors) governing all types of foreign investors by simplifying the rules applicable to them, and also coming up with regulations for their registration and limits applicable for investments.
Another challenge for the BFSI sector is high level of NPAs. RBI has been trying to come up with regulations to tackle this structural problem in our banking system. Recently it has allowed banks and NBFCs to come up under one umbrella to form a Joint Lending Forum(JLF), thus allowing them to work in sync in tackling the accounts which have turned bad. Further recent bond defaults by Indian Corporates have presented a new challenge for Capital Markets Regulator SEBI, to come up with rules and regulations which would be governing such issues so that it can provide impetus to the newly developed Bond market in India.
Hence its imperative for the BFSI sector to understand the regulations, assess the impact of the same on their operations and if required do a representation to the regulators, as it’s a common goal both for the regulators and the industry to provide an environment to the players, which contributes to the growth of the economy and also help the country enhance its ranking in ease of doing business.
Maintenance of Liquidity for loan disbursements and repayments is one of the most important functions at an NBFC. Fleshing out the details of this underrated risk, the topics dealt with would include
Liquidity Coverage, Surplus Management and reducing A-L mismatch.
The discussion will include
- Managing avenues for fund raising like bank borrowings, capital markets and deciding on optimum proportions
- Monitoring tools for liquidity planning and budgeting like tenor, fixed and floating rate borrowing etc.
- Liquidity risk management with optimum Liquidity coverage in normal business scenario and stress conditions
- Avenues of investment in High quality liquid assets (HQLA)
- Benefits and risks of diversification of lenders and sources of funding
- Matching tenors of asset and liabilities and aim to reduce gapping risk
With an increasing volatility of asset classes and globalisation, the role of the treasury in financial risk management of the company has become a priority in the recent years. Turbulent economic conditions have created new challenges in treasury and the fallout of failed financial risk policies have become an uncomfortably regular feature in headlines. Having a strategy in place to deal with risk is of utmost importance to today’s treasury professionals and it has served as a key differentiator between the firms which have wielded resilience in the storm and others which virtually perished.
From a functional perspective, a corporate treasury has the ownership of managing market risk (i.e on account of foreign exchange, interest rates, and commodity price), cash management and liquidity risks, financial planning, managing credit ratings etc. The first step in managing risk is to identify areas that expose the company to potential risk and then prepare a risk management framework to measure and at upon the same for risk reduction to acceptable levels. Financial markets have been in turmoil over the past few years with currencies and commodities displaying high degree of volatility which merits a proactive assessment and action. Treasurers are also proactively seeking to secure funding for longer terms and exploring various possible alternatives of financing in order to mitigate liquidity and refinancing risks.
Treasury’s internal operational risk is another area which necessitates prudent consideration on behalf of the company. Automation using a Treasury management system (TMS) in the routine treasury operations reduces the manual operational risk, provides transparency and enhances efficiency of the routine processes. Companies utilize the treasury system to simulate the impact of different risk scenarios, provide adequate management reporting and integration with accounting and other business functions. A treasury manual/policy documentation and centralization of treasury function is also crucial to standardize the risk management activities for the company.
1. Why assets and liability management (ALM)is necessary in the life insurance business for its financial health and what are the implications?
2. How assets and liability management is performed in the life insurance business?
Assets and Liability Management in Life Insurance
3. What are the factors affecting the ALM?
4. What are the issues and challenges in the Indian market in managing the ALM risk?
5. What are the simple measures used in managing the ALM risk?
* Optimal treasury structure
* Mitigation of trading risk
* Liquidity risk management
*Contingency funding plan
*Good governance practices to reduce operational risk
"Was an excellent event!"
"We are truly committed to this events and have seen a great return from the events we have been involved with this year. The real value for us here is having the opportunity to present and talk to the delegates during the breaks."
"Well done – an excellent event! We were very happy with the number and quality of delegates"
"Good format! Good focus and quality of delegates"
This Conference is open to all, but is aimed and produced for those professionals working in the space of treasury, risk, asset liability management, equity and other related topics
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