Finomenal 2017: Day 2: “Compliance and Risk Management in Banking”- Mr.Mitul Desai, Head – Compliance and Operational Risk, National Australian Bank

Mitul-3On 29th October 2017, Day 2 of Finomenal 2017, Mr. Mitual Desai delivered a guest lecture on “Compliance and Risk Management in Banking“ in our campus. He started off by giving a brief background of himself. He then gave an overview into the various business divisions in a Banking company such as Treasury, Retail Banking, Corporate Banking, Compliance and Risk Management, Trade Finance and so on.

A significant part of his lecture was on Risk Management in Banking and the various types of risk associated in Banking such as Credit risk, Market risk, Operational risk, Regulatory risk and Technology Risk. Risk Management teams are often referred to as “second line of defence” in a bank’s risk strategy – sitting between management(1st) and internal audit(3rd). He also spoke on the significance of compliance and risk management departments and how they have become an indispensable part of the banking sector. He used examples of top banks which are investing more to strengthen their compliance department.

Mr. Mitul Desai later dwelled on the different aspects of compliance departments and some key compliance regulations in India. He then offered career advice to students who are aspiring for a career in the compliance roles within banking. He elaborated on the different skill sets which are required for successful risk and compliance professionals. He also threw light on the various career paths in risk and compliance such as jobs in credit risk, market risk, operational risk, anti-money laundering (AML) etc.

Mr. Mitul Desai later did a SWOT Analysis of Foreign Banks in India and did a comparative analysis with their Indian counterparts bringing down the curtains on what has been a fascinating discourse on Compliance and Risk Management in Banking.

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COBCAM 2017 Inauguration Ceremony

The Inaugural Ceremony of COBCAM 2017 began with the ceremonial lighting of the lamp by the Director, Dr. Madhu Veera Raghavan, Admissions Chair, Professor Aditya Mohan Jadhav, BKFS Representative Mr. Dhanyakumar Malali and the Key Note Speaker of COBCAM 2017, Mr. Deepak Reddy, Group Head HR, Bajaj Finserv.

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Professor Aditya Mohan Jadhav emphasized the grounded industrial exposure the students of TAPMI get by the very structure of the curriculum. Dr. Madhu Veera Raghavan opened COBCAM 2017 by sharing his dream for TAPMI to be one of the top 10 Business Schools in India and for BKFS students to play an integral role in the financial services sector. He stressed on continuous revival and revamping of the curriculum to keep in constant touch with the changes in the industry.

The Key Speaker, Mr. Deepak Reddy refreshed on some of his fondest memories and biggest learnings as a TAPMI student. He urged the students to learn as much as possible in as many diverse sectors and fields. He noted the change in the perception of the consumers towards the banking industry and how that the most important factors that influence the success in the banking service sector are customer’s ease of obtaining information and customer fulfillment.

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He praised the change from the traditional banking practices to modern digitized methods which vastly reduced the processing speed. While this has greatly increased customer satisfaction, it has simultaneously reduced employment requirements; replacing man with machine. A case in point, he reminded the students that the financial sector is highly volatile with uncertainty around every turn.

On what he expects from students and future leaders, he demands that we find our purpose in life; a field where we can create an impact and lead change. He also stressed the importance of being socially aware and developing capabilities to collaborate with other individuals. He urged the students to work hard and learn continuously.

The insightful and informative speech set the tone for an evening of learning at COBCAM 2017.

Bounded Rationality: “Introduction and Heuristics in Decision Making”, Professor Gerd Gigerenzer, Director, Max Planck Institute for Human Development; Director, Harding Center for Risk Literacy in Berlin

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On the 9th of January, T. A. Pai Management Institute was honoured to have Professor Gerd Gigerenzer, Director at the Max Planck Institute for Human Development and Director of the Harding Center for Risk Literacy in Berlin to give a lecture on Bounded Rationality. His work is renowned globally and participants and students got to hear about his work directly from Prof. Gerd.

He said that if one looks into a book on rational decision-making, good decisions follow logic and their goal is to maximize utility. Although he says it is a beautiful theory, it does not truly capture the essence of how we make decisions. Prof. Gerd’s main objective is to dispel the darkness in which much of our decision theory is based on. Simple heuristics that make us smart because it gives us the basics, and alternatives to think while making a decision.

There are times when we do not know what the consequences of a decision will be. These uncertainties according to Prof. Gerd are mainly when the situation is regarding whom to trust, where to invest and whom to marry. When the consequences of our decision is unknown, rationality cannot be counted as a factor for decision-making. This is when heuristics is used to evaluate our decision making. Optimisation may be a very good model but it gives us the illusion of certainty, thus heuristics is not a second choice.

Prof. Gerd spoke about ecological intuition and toolbox method of thinking as a part of heuristics. He even introduced a concept called Hiatus Heuristics. These concepts and theories were broken down for our convenience and delivered with high simplicity. It was an enriching experience to be sitting in the audience and watch such complex ideas delivered so simply

 

 

FINOMENAL 2016: DAY 2:”CAREERS IN FRM”-Mr. Lalit Taneja, Regional Director, Global Association of Risk Professionals

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In an interactive session with students Mr. Lalit Taneja, Regional Director, Global Association of  Risk Professionals gave the students insights about the various career prospects in the field of Financial Risk Management. The session started off with him telling the students about the key forces driving the demand for risk managers. Before 2008 financial crisis market was driven by sales then post the crisis operations took over and presently the focus has completely shifted to regulation. This demand is the result of many historical drivers some of which are globalisation and integration of markets, increased product complexity, technological advances, regulations and market crisis. Sovereign risk, commodity market volatility, increased focus on organizational risk are some of the factors that have recently further accelerated the demand for risk managers.

He further stated why people are increasingly shifting to jobs in the field of FRM. Financial Risk Management assesses an individual’s ability to measure and manage risk in a real-world environment. What sets FRM apart is reliability, maintenance, validity, and acceptance. In the recent years, new trends have been constantly emerging in FRM. Due to current issues like cyber risk, liquidity risk, and regulatory stress, FRM has become a prerequisite for every organisation. GARP plays an active role in monitoring the work of certified FMR practitioners.

As the session approached its end, he concluded by stating some of the latest trends shaping the role of risk management which includes regulations, technology, advanced analytics and the emergence of newly arrived risks such as model risk, cyber security risk, and contagious risk. With these emerging trends, companies are gearing up to tackle these risks. Organisations are imparting risk education to their employees and are encouraging them to learn by providing benefits like exam preparation leaves, study groups in office and in-house course instructor.

FINOMENAL 2016: Day 2: “Solving NPA Crisis”-Mr.Tamal Bandyopadhyay, Adviser, Strategy at Bandhan Bank Ltd, & Consulting Editor, Mint

Mr Tamal Bandyopadhyay started the lecture by explaining how the noise over NPA has become louder after Raghuram Rajan initiated Asset Quality Review. In response to which the banks started to announce huge provisions to deal with NPAs which led to huge losses.

If the bad loans include restructured loans and written off loans along with NPA, the percentage will be much higher i.e., if it is 9% now it will increase to 20%. Most of the public sector banks have high NPA and they blame the environment and economic eco-system for their current condition. But, private banks which co-exist in the same ecosystem have low NPA between 1-2% except for ICICI which has 4%.Public sector banks are inefficient in relative to private sector banks because they are culturally different. The employee selection process is not transparent and the talent pool is poor. Public sector bankers have little incentive to remain honest as the pay is low. Hence the sector fails to attract better talent pool.

Talking about the impact of NPA on banks, Mr Bandyopadhyay said that it will affect the health and profitability of the banks. The deposit and loan growth have come down to the lowest because banks are scared to give loans, which adversely affects the investment.

Mr Bandyopadhyay said that this can be solved through privatisation of public banks by letting the government control banks through holding companies. This will take the banks out of government wage structure and investigation agencies. But this is a politically sensitive issue as it might lead to the violation of Bank Regulations Act of India. Recently, the government launched Indradhanush, brought down its stake to 52% and provided huge capitalization to public sector banks.

Mr Bandyopadhyay concluded by stating that the surgical strikes on banks might have led to the death of few banks but it is a necessity and the positive part is that we are no more in denial and are finally recognising the problem.dsc_0446-1

Finomenal 2016: Day 2: Closing Ceremony

The Closing ceremony saw batch address by Prof Animesh Bahadur, Dean of Admissions, Mr. Harsh Upadhyay, Chief Guest, Prof Aditya Mohan Jadhav, BKFS- Area Chair & Convenor & Co-Convenor of Finance Forum, Ms. Shruthi Chander & Ms. Monica Veer.

Prof. Animesh Bahadur appreciated the events of FINOMENAL and explained how the events & guest lectures gave a glimpse of what the practitioners & veterans from the field of finance feel about this discipline. In his opinion, he felt that the events were fruitful and was positive that the students gained a lot from this 2 day event.

Mr. Harsh Upadhyay spoke about how the events must have given perspective to students who wish to make a career in finance and what it takes to be a finance professional. He also mentioned about how this must have been especially important for the BKFS students who are into a specialised finance program. He also mentioned about the importance of communication skills which will go a long way not only during placements but also in the corporate world.

Prof Aditya Jadhav spoke about how the Finance Forum has grown over the last 3 years. He applauded the efforts of the students, members of the various committees and the management for doing an excellent job for the event. He thanked Prof Animesh Bahadur, Ex-Director Prof RC Natarajan, Prof Seena Biju, Prof Madhu Veerraghavan, Prof Vidya, Alumni Relations Committee, Prof Surya Mahadevan & Mr Nayak & Mr Ananth Pai for taking care of all the organisational responsibilities.

The ceremony concluded with Ms. Shruthi Chander & Ms. Monica Veer expressing their thanks to all the participating teams for making the event such a success, Professors of TAPMI and the committees namely, the Student Council, Literary & Media Committee (LiMe), Welfare Committee, Alumni Relations Committee (ARC) & the Logistics Committee for their continuous support.

FINOMENAL 2016: Day 2: “Corporate Bond Market in India”- Mr. Atul Khadilkar, Member- India Management Committee and Head- Financial Institutions Group, South Asia (National Australia Bank)

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Mr. Khadilkar started the lecture with discussing the usual financing options available to the corporates in India and where India stands in terms of the bond market in the global context.

A company starts with investing their own Equity in the business but there are other sources such as debts in the form of loans from banks and the bond market. Both the equity market and the debt market consists of a wide range of market participants. Drawing a comparison between loans and bonds, he explained how banks chose between loans and bonds. Loan in a bank is a bilateral arrangement and has its own risks and challenges attached to it, and is therefore no longer the most attractive source of income for them in today’s market. On the other hand, bonds are more standardized and liquid in nature. Unlike loans, bonds are also rated, which attracts a wide range of investor pool. So, bonds are better than loans in these aspects and therefore there is a need for the development of the bond market in India.

He also gave an overview of the Indian bond market in the global context, in comparison to some of the developed and developing economies like the US and Japan.

Talking about the creation of demand for bonds in the Indian market, he discussed why the country needs it in terms of infrastructure financing, GDP growth and the Government’s take on fiscal discipline. He also discussed the working of the RBI Working Group in the Indian financial market.

In the end, he concluded by discussing the various kinds of bonds avaiable to the investors today in the Indian market, how the bond market is evolving in the financial system and will bring about a sea change in the coming years for banks and corporates, not only in India but all over the world.