A Study on Risk Management Practices in Cooperative Banks in India

Abstract

Banking Industry has done wonders for the global economy. The banking business merely takes money from savers in the form of various deposits and then gives the same money in the form of loans to borrowers. Banking activities promote and encourages the flow of money for investment to productive use this helps in development of economy to grow. It cannot be denied that the cooperative banks have not only contributed to the development of the banking system by connecting the common people in the villages and towns of the country but also played an important role in the development of the country's economy. Banking industry is facing various type of risk and Risk Management is the Process to plan, lead, organize, and control various types of risks which are faced by a cooperative Banks. Credit risk is one of the main cause of banking failure such as When a bank lends money to one of its clients, the client defaults on the loan, causing the bank to suffer a financial loss. Risks associated with the banking industry include liquidity risk, interest rate risk, market risk, credit risk, and operational risk in various forms. .All of these risks have one thing in common: they could have a negative influence on revenue of banking industry. For all banking organizations, the totality of risk-effects is a crucial variable. In this paper identify the different risks faced by the cooperative banks and the process of risk management. This paper also studied the different techniques implemented by cooperative banks for risk management. The goal of risk management is to identify business activities and opportunities that are connected to the organization's objectives and to manage the risks associated with those actions in order to take advantage of the chances. For the financial risk management process a cooperative banks must control financial risk by proper identification of various risk, timely assessment and monitoring of risk and risk reduction. This study explores framework of risk management in Cooperative banks.