Guest Lecture by Mr. Balaji Venkatasubramanian on Liquidity Risk Management

ImageOn the auspicious occasion of Krishna Janmashtami, the students of TAPMI had the privilege of attending a guest lecture session delivered by honourable Mr. Balaji Venkatasubramanian. An alumnus of XLRI, Jamshedpur Mr. Venkatasubramanian has worked on various financial projects from Fortune 500 companies, involving complex developments and scope definitions. He has extensive experience in relationship development and people management functions and leads a team of Business Analysts and Financial Consultants at Maveric Systems Ltd.

Mr. Venkatasubramanian provided a brief introduction about Liquidity Risk and what’s and why’s of it. He introduced the audience to the BASEL Accord and the further evolution of the BASEL Accord to BASEL II and BASEL III in the subsequent years of its implementation and the challenges involved with them.

He spoke about the various factors that leads to liquidity risks such as, lack of marketability of assets, wide bid-ask spreads and smaller size of the security or issuer and provided practical real world examples from the financial sectors where in such risks are prevalent. He structured the discussion around the Causes, Drivers and Ways of Measurement of such risks. He introduced the students to concepts like Liquidity Coverage Ratio, Net Stable Funding Ratio, run on the bank etc.

He further spoke about the BASEL Accord that was formed in 1988 and the various amendments and updates of the same in the subsequent years. Students were led through the nuances of credit risk, market risk and operational risks and how the BASEL Accord caters to such risks. The real world examples that he shared with the students, time and again, proved very helpful for the visualization of the concepts being discussed thus allowing the students to better appreciate the topics and concepts. He shed light on the Three Pillar structure of BASEL II which speaks about capital adequacy. Followed by this, were the various weaknesses associated with BASEL II and why there was a pressing need to update it to BASEL III.

Mr. Venkatasubramanian, spoke about the micro-prudential and macro-prudential factors that BASEL III offered to contain the short term and long term risks associated with liquid securities. He coursed the discussion further, through the Implementation and Implications of the BASEL III. He concluded the discussion by throwing some light on the challenges involved with implementation of BASEL III and the role of Regulatory Measures implemented by the Central Banks of countries on various monetary policies that govern their economies.

Overall, the students of TAPMI got the chance to interact with an industry leader and learn from his experiences. As, the topic under discussion was a very relevant one the interaction was interspersed with questions and inputs from the students. The students had a very enlightening experience, and were able to comprehend the topic due to the relevant instances shared by Mr. Venkatasubramanian. The session came to an end with memento presentation by the MIP team on behalf of the TAPMI family and a vote of thanks proposed by the TAPMI MIP Team.

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