Risks events / incidents have been increasing considerably in the Industry in the recent days. The auction notices and operational risk events related news, which are published virtually every day, substantiate the same.
Risk events relating to operational risks used to take place rarely in the past, which has however increased substantially in the recent years on account of increase in business, distribution outlets, products & services, staffs and dependency on technology. Due to increase in number of BFIs, competition has also increased immensely. BFIs have brought out various new and innovative products and services to cope with competition, meet the expectation of customers, diversify the risks and enhance income, which has also increased the operational risk.
Non-performing Assets (NPA) of the industry as at Falgun end 2072 (Mid March 2016) is about Rs 45 billion, which also indicates the credit defaults level.
More notably, Banks and Financial Institutions (BFIs) lodged 2,797 cases claiming Rs 43 billion at Debt Recovery Tribunal (DRT) as on Baisakh end 2071 after establishment of DRT in 2062, which number indicates that BFIs have been affected by a large amount of bad debts. Astonishingly, commercial banks have the lion’s share of about 95% out of the total cases lodged both in numbers and claim amount.
4 BFIs went into the liquidation whereas 11 BFIs have been announced as Problem Institutions due to erosion of capital on account of Credit Risks and Operational Risks. Criminal Investigation Bureau has lodged the cases of about Rs 20 billion at the court claiming credit and operational risk offences.
Taking above facts into account, NBI has taken an initiative to organize "National Risk Management Conference", where national and international risk management experts shall make paper presentations, share their views and prescribe risk management tools to manage the risk proactively and effectively and maximize the profit from Risk.
