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BANKING OMBUDSMAN AND ITS ROLE

  The Banking Ombudsman is an authority created by the Reserve Bank of India (RBI) to address customer grievances regarding banking services. It provides a cost-free, quick, and impartial resolution process for complaints against banks.  Customers can file complaints if they are dissatisfied with the services of a bank or have not received a satisfactory response from the bank within 30 days of lodging a complaint. Complaints given to Ombudsman Cover  -  Non-payment or delay in payment of cheques, drafts, or bills. Issues related to loans or advances. Non-adherence to fair practices code. Unauthorized debits or service charges. Complaints regarding internet banking or mobile banking. Delay in providing banking services. Unauthorized ATM withdrawals. Wrongful Charges. Ombudsman cannot accept complaints those are  handled by a court, tribunal, or arbitrator. Cases older than one year from the cause of action also do not entertained by Ombudsman.  How to File ...
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RISK IN BANKING - PART 1

Risk in Banking - Part 2

 Banking Book - Deposits and Landing and Some Investment required for Statuary Requirement
Banking Book exposed to
1) Liquidity Risk
2) Defaulter Credit Risk
3) Interest Rate Risk
4) Operational Risk

Off Balance Sheet Exposure-
- Contingent in nature
- Not involve immediate funding but become fund based obligations.Subject to certain contingencies.
Example- Guarantee, Derivatives like swaps, Futures, Forward contract, Options.

 Off Balance Sheet Exposed to
1) Liquidity Risk
2) Interest Rate Risk
3) Market Risk
4) Credit Risk
5) Operational Risk

 Sources of Risks in Banks-
1) Corporate Finance
2) Trading and Sales
3) Retail Banking
4) Private Banking
5) Commercial Banking
6) Payment and Settlement
7) Agency  Services
8) Asset Management
9) Retail Brokerage

 Banking book exposed to-

 Liquidity Risk, Defaulter Credit Risk, Interest Rate Risk, Operational Risk

 Trading Book Exposed to-

 Market Risk, Liquidation Risk, Market Liquidity Risk, Default or Credit Risk, Operation Risk

 Credit or Default Risk- 

 Credit Risk - Potential of a borrower or counter party failing to meet obligation.

 Counter Party Risk - Is a credit risk generally associated with a trading transaction.
Country or Sovereign Risk - In case of cross country.

 Market Risk - Also known as price risk, adverse mark to market risk and arises due to movement in prices of interest rate instrument, equity, commodity and currency.
Forex Risk or Exchange Risk - market liquidity risk.

 Operational Risk - Risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.
  • Fraud Risk (internal or external)
  • Model Risk
  • Compliance Risk
  • Regulatory Risk
  • Technology/System Risk
  • Legal risk
Other Risks - 
  • Strategic Risk
  • Reputation Risk
  • Political Risk
  • Environment Risk
  • Natural Calamities Risk etc.
Interest Rate Risk - Risk to interest income due to adverse interest rate movement.



Interest Rate Movement Impact-
  • Earning of bank     
  • Economic value of equity
  • Off balance sheet exposures like derivatives.


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