Preview

Risk Management in Banks

Powerful Essays
Open Document
Open Document
1647 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Risk Management in Banks
SYNOPSIS
[pic]

A Project Report on
“Credit Risk Management in Kotak Mahindra”

SUBMITTED TO

SUBMITTED BY

Jaya Sree

CONTENTS

1. Introduction. 2. Objectives. 3. Limitations. 4. Methodology. 5. Reference

Introduction of the Topic:

CREDIT: The word ‘credit’ comes from the Latin word ‘credere’, meaning ‘trust’. When sellers transfer his wealth to a buyer who has agreed to pay later, there is a clear implication of trust that the payment will be made at the agreed date. The credit period and the amount of credit depend upon the degree of trust.

Credit is an essential marketing tool. It bears a cost, the cost of the seller having to borrow until the customers payment arrives. Ideally, that cost is the price but, as most customers pay later than agreed, the extra unplanned cost erodes the planned net profit.

RISK : Risk is defined as uncertain resulting in adverse outcome, adverse in relation to planned objective or expectation. It is very difficult o find a risk free investment. An important input to risk management is risk assessment. Many public bodies such as advisory committees concerned with risk management. There are mainly three types of risk they are follows • Market risk • Credit Risk • Operational risk

Risk analysis and allocation is central to the design of any project finance, risk management is of paramount concern. Thus quantifying risk along with profit projections is usually the first step in gauging the feasibility of the project. once risk have been identified they can be allocated to participants and appropriate mechanisms put in place. [pic]
MARKET RISK: Market risk is the risk of adverse deviation of the mark to market value of the trading portfolio, due to market movement, during the period required to liquidate the transactions.

OPERTIONAL RISK: Operational risk is one area of risk that is faced by all organization s.

You May Also Find These Documents Helpful

  • Good Essays

    * Risk - The potential that a chosen action or activity will lead to a loss. Investors sometimes choose to put their money in risky investments because these investments offer higher expected returns. The more risk an investment has, the higher will be its expected return.…

    • 618 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Credit: Is an agreement between two parties where one provides the ability for the other to purchase something of value as long as it is paid off over time.…

    • 474 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Offering trade credit can help win sakes and retain customers. However credit sales do not necessarily create cash problems, as long as John Adams plans for the delay in payment for sales. The longer the credit period offered to customers, the longer it will before cash flows into the business. The wider the gap between having to pay expenses involved in meeting orders and receiving money from sales, the greater the risk of cash flow turning negative. John Adams selling on credit may also struggle if customers fail to pay by the date agreed, or go out of business without paying all.…

    • 966 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Credit Policy

    • 1000 Words
    • 4 Pages

    Credit is temporary capital and the objective of credit is to lend with the purpose of increasing profits and sales. A sound credit policy in business is the blue print to managing by measurement and benchmark…

    • 1000 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    A risk is if a person has a change that they will be harmed due to a hazard. Factors that can affect the risk are; how much the person has been affected by the hazard and how severe the effects were.…

    • 1349 Words
    • 6 Pages
    Good Essays
  • Powerful Essays

    Credit Risk in Bank

    • 11454 Words
    • 46 Pages

    This thesis has been completed with a lot of valuable assistance and cooperation from many people, whom I am sincerely grateful for.…

    • 11454 Words
    • 46 Pages
    Powerful Essays
  • Better Essays

    Credit Cards

    • 2615 Words
    • 11 Pages

    Credit is derived from the Latin word “credo” meaning “I believe.” Credit is when goods, services, or money is received in exchange for a promise to pay a definite sum of money at a future date. The lender “trusts” the borrower to repay the money. A lender is the person or organization who has the resources to provide the individual with a loan. A borrower is the person or organization that is receiving the money from the lender. When the privilege of borrowing has been extended, the borrower is usually expected to pay interest in addition to the amount borrowed. Interest is the price of money. When referring to credit, interest is the charge for borrowing money.…

    • 2615 Words
    • 11 Pages
    Better Essays
  • Good Essays

    zzzzzzzzzz

    • 9921 Words
    • 40 Pages

    All entities, regardless of size, structure, nature, or industry, encounter risks at all levels. Risk is defined in the Framework as the possibility that an event will occur and adversely affect the achievement of objectives.…

    • 9921 Words
    • 40 Pages
    Good Essays
  • Good Essays

    Risk management is all about trying to address areas of uncertainty that may affect the project outcome. Uncertainty can express itself in varying ways e.g. range of costs, durations, differing pathways dependant on the outcome of certain assumptions and results.…

    • 2930 Words
    • 9 Pages
    Good Essays
  • Powerful Essays

    1. Credit sales transfer products and services to a customer today while bearing the risk of collecting payment from that customer in the future.…

    • 14932 Words
    • 105 Pages
    Powerful Essays
  • Powerful Essays

    Internship Report

    • 16958 Words
    • 68 Pages

    References: 1. Cole, Robert H, Consumer and Commercial Credit Management, Irwin Publisher, 5th edition, 1976.…

    • 16958 Words
    • 68 Pages
    Powerful Essays
  • Satisfactory Essays

    This theory is related to our study because there were negotiations involved between two parties which are the lender and borrower and the transaction cost can be conceptualized as a non financial cost incurred in credit delivery by the borrower and the lender before, during and after the disbursement of loan.…

    • 376 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Fin 370

    • 461 Words
    • 3 Pages

    Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome).…

    • 461 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    In the 1920’s it was known as installments, today it is known as the credit card. Both are the same concept, you get the product now, and then you pay back the original price along with a certain amount of interest. It is a great concept in theory, especially since the companies are earning money on the interest but when too much credit is given out it can adversely affect the economy. There is a type of credit known as a mortgage; mortgages are used…

    • 753 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    To manage credit risk banks can employ various strategies. To start with they try to predict the consumers’ behaviour before the loan agreement is made. By using stringent vetting processes to sort out and deny borrowing to those most likely to default on their loan they can protect themselves from the majority of credit risk. This process is done in the form of credit…

    • 2527 Words
    • 11 Pages
    Powerful Essays