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Sachin Karpe Explains the Fundamental
Principles of a Sound Banking System?
Sachin Karpe talks about the fundamental principles of
a sound banking system. A sound banking system
must have a heavy handed regulator that enforces a
number of best
practices upon the
supervised banks.
This regulator is
usually a Central
Bank, such as the
FED. These best practices are, in sum:
1. Asset/Liability pricing at market levels ensures
banks' numbers reflect the current reality/ health of
their finances.
2. Controls:Controls:Controls:Controls: banks must monitor their activities, liquidity
and solvency daily. They must have sound systems
and controls in place.
3. Capitalization:Capitalization:Capitalization:Capitalization: Regulators must ensure banks hold
enough capital to absorb potential losses. The
capitalization handbook is the Basel regulation, that
establishes leverage levels for all banks worldwide.
4. Risk CRisk CRisk CRisk Controls:ontrols:ontrols:ontrols: Banks must manage risk exposures
pro-actively. Mr. Karpe also adds on the market side,
this means measuring value-at-risk, stress testing
portfolios, etc. On the credit side, it must analyse and
monitor clients constantly, and provision losses based
on credit ratings and probabilities of default says
Sachin Karpe.
Find Sachin Karpe – A Business Consultant @
https://www.facebook.com/sachin.karpe.9638
Follow Sachin Karpe @
https://twitter.com/Karpe_Sachin
Properties of Sachin Karpe :
http://sachinkarpe.in
http://sachinkarpe.org
http://sachinkarpe.net
http://sachinkarpe.co.in
http://sachinkarpe.co.uk
http://karpesachin.org
http://karpesachin.com
http://karpesachin.net
http://sachinkarpe.info

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Fundamental principles of a sound banking system

  • 1. Sachin Karpe Explains the Fundamental Principles of a Sound Banking System? Sachin Karpe talks about the fundamental principles of a sound banking system. A sound banking system must have a heavy handed regulator that enforces a number of best practices upon the supervised banks. This regulator is usually a Central Bank, such as the FED. These best practices are, in sum: 1. Asset/Liability pricing at market levels ensures banks' numbers reflect the current reality/ health of their finances.
  • 2. 2. Controls:Controls:Controls:Controls: banks must monitor their activities, liquidity and solvency daily. They must have sound systems and controls in place. 3. Capitalization:Capitalization:Capitalization:Capitalization: Regulators must ensure banks hold enough capital to absorb potential losses. The capitalization handbook is the Basel regulation, that establishes leverage levels for all banks worldwide. 4. Risk CRisk CRisk CRisk Controls:ontrols:ontrols:ontrols: Banks must manage risk exposures pro-actively. Mr. Karpe also adds on the market side, this means measuring value-at-risk, stress testing portfolios, etc. On the credit side, it must analyse and monitor clients constantly, and provision losses based on credit ratings and probabilities of default says Sachin Karpe. Find Sachin Karpe – A Business Consultant @ https://www.facebook.com/sachin.karpe.9638
  • 3. Follow Sachin Karpe @ https://twitter.com/Karpe_Sachin Properties of Sachin Karpe : http://sachinkarpe.in http://sachinkarpe.org http://sachinkarpe.net http://sachinkarpe.co.in http://sachinkarpe.co.uk http://karpesachin.org http://karpesachin.com http://karpesachin.net http://sachinkarpe.info