RITESH KUMAR

NIMISH BANSAL
ANKUR MITTAL
SHWETAB KUMAR
 What is Risk?
Classification of Risk
Risk Management in PNB
Trend Analysis of NPA
Comparative Anlaysis
Conclusion
The potential loss an
asset or a portfolio is
likely to suffer due to a
variety of reasons.
Survival of the organization
Efficiency in Operations
Uninterrupted Operations
Identifying and achieving acceptable level of
risk
Earning Stability
Continued and sustained Growth
 RISKS

FINANCIAL RISK NON FINANCIAL RISK

OPERATING RISK

CREDIT RISK MARKET RISK SYSTEMATIC RISK

POLITICAL RISK
TRANSACTION RISK INTEREST RATE RISK
HUMAN RISK
PORTFOLIO RISK LIQUIDITY RISK

TECHNOLOGY RISK
FOREX RISK
New Capital Adequacy Framework:
Bank has migrated to New Capital Adequacy
Framework, popularly known as BASEL II
w.e.f. from March 2008. The approaches
prescribed by the 'Regulator', namely
Standardised Approach under Credit Risk
and Basic Indicator Approach under
Operational Risk have been
implemented.The Bank had adopted
Standard Duration Approach for Market
Risk, since March 2006.
Bank has already placed credit risk rating
models on central server based system ‘PNB
TRAC’, which provides a scientific method for
assessing credit risk rating of a client. The
Bank has developed and placed on central
server score based rating model ‘PNB SCORE’ in
respect of retail loans and traders up to total
limits of Rs 50 lacs. “Accept/Reject” decisions
are also based on the score obtained. Scoring
models for remaining sectors like SME
segments have been developed and are under
testing stage.
Bank is also developing framework for estimating
LGD (Loss Given Default) and EAD ( Exposure at
Default) and also framework for identifying
concentration risk. A data warehouse is being
established for effective data management and use
of application tools for quantification of risks.
For the Market risk bank has a Mid-Office with
separate desks for Treasury & Asset Liability
Management (ALM). Asset Liability Management
Committee (ALCO) is primarily responsible for
establishing the market Risk Management, asset
liability management of the bank, implementing
the risk management of the bank. The policies for
hedging and mitigating risk are discussed in ALCO.
A separate independent Division known as
Credit Audit & Review Division has been formed
to ensure LRM implementation. LRM examines
compliance with extant sanction and post-
sanction process/procedures laid down by the
Bank from time to time.
Preventive Monitoring System (PMS): It is a tool
used by bank for detection of early warning
signals with a view to prevent/minimize the
loan losses.
Liquidity Risk of bank is assessed through
gap analysis for maturity mismatch based on
residual maturity in different time buckets &
management of same is done through
prudential limits fixed thereon.
Bank is also monitoring the liquidity through
various stock options.
The Bank is proactively using duration gap
and interest rate forecasting to minimize
impact of interest rate changes.
Advance techniques such as Stress testing,
simulation, sensitivity analysis etc, are
conducted at regular intervals to draw
contingency funding plan under different
liquidity scenarios.
Comparative Analysis of Gross NPA
 In the Banking industry where risk is the
norm , rather than the exception, we have to
adopt many measures like reducing exposure
in high risk areas, emphasising more on the
promising industries, optimising the return
by striking a balance between the risk and
the return on the assets. Our motto should
be effective management of risks towards
ensuring quality credit portfolio.
Thank you