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Fraud at Bank of Baroda: Manage Risk or Manage Crisis
內容大綱
Bank of Baroda was the second-largest commercial bank in India, but it was struggling with a decline in profits and an increase in non-performing assets. Only a week before the new chief executive officer's term commenced, Bank of Baroda was in the news due to reports of fraud occurring at the bank’s Ahmedabad and New Delhi operations. The frauds involved bill discounting schemes and money laundering. The bank’s violations of its know your client and anti-money laundering standards raised concerns about its risk management practices—or lack of such practices. The new chief executive officer was only the second executive from the private sector to head a public sector bank. He needed to prove his value in the world of public sector banking by managing the crisis, implementing a strategy to stabilize the bank’s financial health, and preventing a recurrence of the problems.
學習目標
The case is intended for MBA courses on bank management, especially those involving management of financial services and risk. It can be used to develop an understanding of know your client and anti-money laundering policies as integral components of operational risk management, and the risks that arise when the guidelines are not followed. More specifically, the case<br><ul><li>provides an overview of risk management functions in a large bank with multiple locations;</li><li>highlights the importance of know your client and anti-money laundering norms for a bank, and the key issues in implementing risk policies;</li><li>explores the interrelationship between the different types of risks that a bank faces, including operational, credit, reputational, regulatory, and liquidity risks; and</li><li>emphasizes the consequences of poor risk management as well as how to respond to a crisis situation.</li></ul>