MUMBAI, February 13: The Industrial Credit & Investment Corporation (ICICI) is planning to appoint an information technology consultant to restructure its treasury and risk management operation.This is the first time that the term lending institution will be hiring an outside agency for restructuring one of its important area of operations since KV Kamath took over as the chief executive officer. "The restructuring is necessary to enable us provide a wide range of financial services and prepare the ground work for turning the institution into a universal bank," a top ICICI official said. The list of consultants bidding for the prestigious project include Price Waterhouse, McKinsey, Arthur Anderson, Tata Consultancy Services and Tata-IBM.
"We may go for more than one consultant if necessary," said the official, and added that the names will be announced next month. According to ICICI officials, the institution wants a pro-active treasury operation which is responsible for cash management, asset andliability management as also providing risk management products to its clients. The treasury operation intends to reduce cost of funds and further optimise yields.
ICICI, which has also introduced foreign currency risk management products, plans to launch sophisticated risk management services for its clients and meet the challenges posed by the rapid deregulation of the money and foreign exchange market, said the officials. Referring to the risk management operation of the institution, the officials said it includes credit risk, market risk, interest rate risk, liquidity risk and exchange rate risk.
Risk management involves not only taking and managing risk as a business but also takes into account risk control function, assessing risk factors, measuring the same and identifying mitigation measures, said the officials.
The institution has a risk management group which evaluates, monitors and controls risk under the supervision of a general manager who reports directly to the managing director and chiefexecutive officer.
As a comprehensive and integrated risk controlling unit, the group is also responsible for the audit function and corporate governance, in addition to managing different risks encountered by the institution.
The project specific risk of the institution is evaluated by detailed appraisal comprising evaluation of technical, financial, commercial and managerial factors, said the officials. Other risks, to which the institution is exposed to are, systems, legal and reputation risk. The process to identify and measure and control them are being tightened, said the officials. As a part of market risk, ICICI maintains an integrated asset and liability management system to provide analysis of risk positions wherein evaluations are made periodically of both liquidity profile and the impact of unexpected adverse changes in interest rates, said the officials.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
