With risk management becoming a mantra, even public sector undertaking (PSU) banks have to sit up and put their risk management strategies into place. It is required, especially now, as the government has decided to bring down its holding in public sector banks thereby cutting primary funding source for these banks.
"If the banks have to go to the market to raise money, their asset portfolio has to be strong for which the credit risk management policy has to be detailed," said R Raghuttama Rao, executive director and chief consulting officer, Icra Advisory Services.
"That is where we come into the picture. We will evaluate and frame risk policies for various organisation with Moody's help in technological aspects as well as arithmetical tools and improve the credit risk scenario in India," he added.
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Moody's Risk Management Services (Moody's RMS) with Icra's help will market its globally set benchmarks for risk management to banks and financial institutions in India.
Some of the institutions and banks that already have these policies in various stages of implementation are Dena Bank, Industrial Development Bank of India (IDBI), Centurion Bank and the Credit Development Bank.
Moody's RMS, which has managed the risks as a product for over 4,000 banks worldwide, is now looking at banks in emerging economies, of which India is one of the first markets for their marketing foray. Most of these banks are in the US, Canada and Australia.
"Though we have shifted our focus to emerging economies, we will still use our benchmarks from our experience in other markets to customise to suit Indian needs," said managing director, Moody's RMS, Jack Gregory.
"Our technology also allows us to project a default pattern for companies to evaluate their risk, despite all data not being available, which is a major obstacle in Indian markets," he continued.
"In our collaboration with Icra, with our products, we will allow the credit risk to move in and out of the books of the organisation, thus managing the risk itself. This will help the banks tremendously in any securitisation deals that it chooses to enter and will increase transparency," he added.