Relook risk management: Letter to BS on Rs 114-billion PNB scam

The recent fraud in PNB, and it is suspected that its contagion will affect several other Indian banks, is a classic example of operational risk faced by banks

With reference to “Dump it, sell it, forget it” (February 17), one can understand the public outcry in the recent Punjab National Bank (PNB) scam. Linking fraud with public sector undertaking (PSU) status is not true. We should not forget that banks deal in money, where risk is inherent that can't be eliminated but only mitigated. The big problem with banks in India now is that all the three risks of banking-credit risk, operational risk and market risk-hit the banks almost simultaneously. Banks are plagued with huge non-performing loan, which attributes to credit risk. Recent quarterly results have shown how