A Comprehensive Guide to Basel Norms
In this comprehensive guide, we explore the Basel norms (1, 2 and 3) in detail, simplifying key concepts to provide a clear understanding of how these regulations work, their evolution, and their importance in maintaining the stability of the global financial system.
Credit Risk Blindspots: Hidden Biases in Lending
Bias is an inherent human tendency, and recognising and minimising it requires deliberate effort. No matter how advanced the financial models or how experienced the analysts, Credit Risk decisions are inevitably influenced by personal experiences and context. The challenge lies in identifying when this reliance on past-experience crosses the line into bias.
Assessing Borrower Liquidity: The Monsters Hide in the Details
For lenders, the Current Ratio is the staple measure of a borrowerâs liquidity position. A good ratio shows that the inflows in the short term will easily take care of expected outflows, such as creditor payments. However, this is only a superficial analysis. The real story lies beneath the surface, where surprises may be lurking.
Liquidity Assessment for Credit Risk
Even after we have taken due care of matching correctly graded current assets to current liabilities, the business eventualities, customer behaviour and business exigencies may still bring new challenges. How does a lender factor in these potential risks on companyâs liquidity?
In Part 2 of the #LiquidityAssessment series, Amit Balooni explains the concept of #NetWorkingCapital and the caution that a Credit Analyst needs to take.
Liquidity Assessment for Credit Risk
Liquidity assessment using Current Ratio is a powerful tool and a staple for credit risk analysts . But it has its limitations. In this three part series, Amit Balooni shares his perspectives and how to fine tune liquidity assessment for credit risk
How many Credit Covenants are necessary in a Sanction Letter?
While there are no set parameters on how many credit covenants should be there in a Sanction Letter, one has to keep in mind that ratios tend be inter-linked. One does not become a better banker by stipulating multiple covenants. Two covenants are sufficient to trigger any recourse against the borrower.
How WFH impacts the Risk Management culture in Banks?
Many in the banking industry have talked about the amazing cost savings that WFH brings. But beyond some savings, there are many costs we may have paid too. Amit Balooni evaluates the impact this may have on the risk management culture in banks
Lessons from Greensillâs insolvency: Nothing to do with Supply Chain Finance
Greensill Capital, a UK based SCF company, filed for insolvency early this month. The companyâs SCF business was ostensibly built on âReverse Factoringâ (RF) arrangement. While media reports and regulators evaluate what went wrong, we as practitioners need discern facts from fiction and pick up our lessons. Amit Balooni share the learnings this case has for bankers
Will it remain a lenderâs market for long!
Market is rejoicing that credit growth is back. But it was not the doing of the banks. Instead it seems to be lender’s market with long wait for credit approvals and straight jacketed approach followed by banks. But times can change to Borrower’s market very soon. Sumit Kakkar shares his perspectives
Credit Evaluation: How much information is Enough?
How much information is enough for credit evaluation? For a streamlined process a delicate balance needs to be maintained between timeliness and need for facts. Sumit Kakkar shares his perspectives