Credit Risk Management
Risk Management in SBI
Risk Management Structure
The Risk Governance Structure in place in the Bank is as under:
• An independent Risk Governance Structure is in place for Integrated Risk Management covering Enterprise, Credit, Market, Operational and Group Risks. This framework visualizes empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.
Basel Implementation
• In accordance with RBI guidelines, the Bank has migrated to the Basel II framework, with the Standardized Approach for Credit Risk and Basic Indicator approach for Operational Risk w.e.f. March 31, 2008, having already implemented the Standardized Measurement Method for Market Risk w.e.f. March 31, 2006.
• RBI has issued Guidelines on Implementation of Basel III Capital Regulations in India on 2nd May, 2012. These Guidelines will become effective from January 1, 2013. Bank is in the process of putting in place appropriate mechanism to comply with these guidelines.
Enterprise Risk Management
• During the year, the Bank has set in motion the due process required for filing of application/letter of intent to RBI for implementing Advanced Approaches under Basel II, comprising of the three Pillar I Risks viz. Internal Rating Based (IRB) approach for Credit Risk, Internal Model Approach for Market Risk and Advanced Measurement Approach for Operational Risk.
• The Bank has in place the Internal Capital Adequacy Assessment Process (ICAAP) Document as required by Pillar II of New Capital Adequacy Framework under Basel II as prescribed by RBI.
• The ICAAP process covers identification, measurement, management, capital assessment and stress testing of material risks and also detailed additional capital requirements on account of such risks. Besides the aforesaid three Pillar I Risks, the ICAAP also covers Pillar II Risks such as Liquidity Risk, Interest Rate Risk in the Banking Book, Credit
Risk Management Structure
The Risk Governance Structure in place in the Bank is as under:
• An independent Risk Governance Structure is in place for Integrated Risk Management covering Enterprise, Credit, Market, Operational and Group Risks. This framework visualizes empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination.
Basel Implementation
• In accordance with RBI guidelines, the Bank has migrated to the Basel II framework, with the Standardized Approach for Credit Risk and Basic Indicator approach for Operational Risk w.e.f. March 31, 2008, having already implemented the Standardized Measurement Method for Market Risk w.e.f. March 31, 2006.
• RBI has issued Guidelines on Implementation of Basel III Capital Regulations in India on 2nd May, 2012. These Guidelines will become effective from January 1, 2013. Bank is in the process of putting in place appropriate mechanism to comply with these guidelines.
Enterprise Risk Management
• During the year, the Bank has set in motion the due process required for filing of application/letter of intent to RBI for implementing Advanced Approaches under Basel II, comprising of the three Pillar I Risks viz. Internal Rating Based (IRB) approach for Credit Risk, Internal Model Approach for Market Risk and Advanced Measurement Approach for Operational Risk.
• The Bank has in place the Internal Capital Adequacy Assessment Process (ICAAP) Document as required by Pillar II of New Capital Adequacy Framework under Basel II as prescribed by RBI.
• The ICAAP process covers identification, measurement, management, capital assessment and stress testing of material risks and also detailed additional capital requirements on account of such risks. Besides the aforesaid three Pillar I Risks, the ICAAP also covers Pillar II Risks such as Liquidity Risk, Interest Rate Risk in the Banking Book, Credit