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Speaking on the Occasion R.Seetharaman highlighted the areas which derived attention from regulatory perspective during the current crisis. He said that “Light-touch regulation failed to spot risk, Scope of regulation to be expanded, Market discipline needs to be strengthened, Procyclicality in regulation and accounting should be minimized, Information gaps should be filled and Central banks should strengthen their frameworks for systemic liquidity provision.
Mr. Seetharaman highlighted macroeconomic policies to avoid crisis. He said “ Monetary policy should respond to the buildup of systemic risk, Imbalances international capital flows are on the have to be addressed, Fiscal policy and Monetary policies to be aligned, Rules for cross-border financial sector resolution are needed. A credible global liquidity framework is needed”
Mr. Seetharaman stated the challenges faced by GCC economies during the crisis. He said “In Feb- March 2009 the Government of Qatar bought $1.8B worth of local Qatari banks’ portfolios of local shares listed on Doha Securities Market .Subsequent to this in June 2009 State of Qatar bought $4.12B of banks’ real estate investments at a sale price equivalent to the net value of property loans and investments. Public – private partnership enabled GCC economies to recover from the crisis.”
Mr. Seetharaman emphasized the key factors for creation of risk governance framework. He said “Management accountability, Regulation and customer advantage, Staff and Management execution are the key pillars for effective risk governance framework .Instilling a risk culture, focusing on quality staff and aligning the business model to the new regulatory framework are part of risk governance framework.Risk Management can also contribute to the value chain of the organization. After the crisis there is increased visibility of Chief risk officers, involved in strategic direction, compensation and development. The Report size of Group risk function and Business unit risk function increased”
Mr. Seetharaman highlighted on the recent global regulatory reforms and its impact on the risk governance framework. He stated “Central counterparties have been introduced to clear credit default swaps, reducing the systemic risks from this market. Stronger oversight regimes for credit rating agencies have been developed.Internationally agreed principles for the oversight of hedge funds have been issued. Basel 3 implementation will improve the risk governance framework in banks. The risk environment in organisation should promote sustainability and value creation”
On the Question and answer round Mr. Seetharaman answered to the shortcomings in risk governance in the region. He said “ Foreign currency lending has increased by 170% in 2011 mainly in govt, real estate and service sectors and Foreign currency deposits has increased by 105.9% in 2011.Increased foreign currency exposure in Qatar increases systemic risk. Restructuring risks on loans and investment book have increased in recent years in the region which requires skills of specalised people. Counterparties and Sovereign risks evaluations are lot more challenging in current times. Liquidity risk requires close monitoring due to the volatile nature of global and regional financial markets. On the operation risk side business continuity plans and risks in new distribution channels are some of the areas which require attention.
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