Risk Management

The finance section of the RBI grade B phase 2 examination covers various topics, one of which is Risk Management. This is in relation to banks, i.e. risk management in banks. To continue and develop in the market, banks need to relieve or check for risks. In this way risk management comes into the picture which gives rules and acts as a guide for a bank to diminish the risk factor.

Refer to the best sources that contain the main information of the topics you have to get ready for. By doing this, you will have to read less, yet you end up reading the most significant stuff.

Some of you probably won't plan for topics that did not show up in the earlier year RBI Grade B Exams, assuming the topics probably won't show up this year as well. Try not to depend on the earlier year RBI Grade B question papers alone for your preparation because this exam is unpredictable. Hence make sure that you cover all topics.

Types of risks which banks must manage are:

Liquidity Risk

Liquidity risk is the hazard that a bank might be unfit to satisfy momentary monetary needs. This typically happens because of the inability to change a security or hard asset for money without losing capital or income.

Interest Rate Risk

Interest rate risk is the hazard that emerges for bond holders from fluctuating interests. How much interest rate risk a bond has relies upon how sensitive its cost is to financing cost changes in the market. The sensitivity relies upon two things, the time taken by the bond to mature and the coupon rate of the bond.

Credit Risk

A credit risk is the danger of default on an obligation that may emerge from a borrower neglecting to make required payments. The hazard is to the moneylender and includes lost premium, disturbance to cash flows, and high collection costs.

Operational Risk

Operational risk is the danger of an adjustment in value brought about by the way that real losses, caused for insufficient or failed internal or external procedures, individuals and frameworks, vary from the normal losses.

Prepare your own technique for studying and attempting questions in the exam. Be sure to study about all the types of risks which a bank faces and how it manages them. The impact of these risks to the economy and the reasons why they occur should also be covered in your preparation.

The finance section includes current undertakings and numbers. Questions in the test will be direct, i.e., factual in nature. You should remember facts, figures, rates and numbers. For the finance section repo rate, policy dates, interest rates, SLR, CRR, and so forth can be asked.

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