Feature Post

UFBU Calls Off Nationwide Bank Strike on 24th and 25th Mar 2025 After Assurances from Finance Ministry and IBA

I n a significant development on March 21, 2025, the United Forum of Bank Unions (UFBU) has decided to call off their two-day nationwide strike, which was originally planned for March 24 and 25. This decision was made after the UFBU received positive reassurances from both the Finance Ministry and the Indian Banks’ Association (IBA) regarding their key demands. The banking unions, under the umbrella body of UFBU, represent employees from nine major unions across the country, including AIBEA, AIBOC, NCBE, AIBOA, and BEFI. The unions had earlier called for the nationwide strike to protest against several ongoing issues that they believe impact the welfare and job security of bank employees. Key Issues Behind the Proposed Strike The strike was initially called by UFBU to address a range of pressing concerns, some of which have been lingering for years. The union's main demands included: Five-Day Workweek for Bank Employees:  One of the most anticipated demands was the implementation o...
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RISK IN BANKING - PART 2


Risk in Banking - Part 1

 Types of Interest Rate Risk - 


 Gap or Mismatch Risks - Mismatch in amounts, maturities, repricing dates.

 Basis Risk - Due to Interest Rate changes by different magnitudes on assets and liabilities.

 Yield Curve Risk - Due to non parallel movement of interest rates.

 Embedded Option Risk - Due to premature withdrawal and prepayment of loans.

 Reinvestment Risks - Due to mismatch in future cash flows.

 Net Interest Position Risk - Due to position in different in repricing buckets.

 Liquidity Risk - Inability to meet cash outflow.

  • Funding Risk - Net outflows due to unanticipated withdrawals
  • Time Risk - Non receipt of expected inflows (NPA)
  • Call Risk - Crystallization of contingent liabilities
BASEL  III-(Aimed to control risk)

BASEL I - 1988 - An agreement to foster international convergence of capital measurement and capital standard.
BASEL II - 2004 - Accommodate diversified global banking practices. It covers credit risk operational risk along with Basel I - creditors market risk

International financial organizations such as IMF(International Monitory Fund) and world bank group use Basel standard as a benchmark of good banking regulation.

Why Basel III ?
  • Financial crisis due to inadequate bank  regulation.
  • Improvement of capital standard.
  • New global minimum liquidity stands.  
Components of Basel III
  • Common Equity Tier 1(CE Tier 1) capital must be at least 8.5% RWAs for credit risk and market risk and operational risk on an ongoing basis.
  • Tier 1 capital must be at least 7 % of RWAs on an ongoing basis.
  • Total capital (Tier 1 capital plus Tier 2 capital) must be at least 9% of RWAs on an ongoing basis. Thus within the minimum CRAR of 9%, tier 2 capital can be admitted maximum up to    2%  .
  • In Basel 3, The Tier 1 is divided into common equity Tier 1 and additional Tier 1 and such a distinction is not made in Basel II.
  • Introduced Capital Conservation Buffer - when buffer have been drawn down , one way banks should look to rebuild them is through reducing discretionary distributions of earnings. This could include not paying dividend payments, staff bonus, incentives and increase in salary structure.
  • Basel I comes under RBI
  • Basel II comes under RBI
  • Basel III comes under SEBI
  • IRRBB - Interest Rate Risk in the banking book.
  • Credit Concentration Risk - If banks advance is concentrated say on Iron and Steel sector.
  • Liquidity Risk  - Pillar do not talk about it.
  • Settlement Risk - Failure of counter party bank.
  • Reputation Risk - If affects the bank indirectly through credit, market and/or operational risk.
  • Strategic Risk - Failure of strategies in making profit.


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