18 January 2020, Kathmandu
With the increase of capital, expansion of branches and expansion of investment and advancement of technology, the business of the bank has increased as well as the risks are increasing. Banking institutes are currently facing huge stress to increase profit and decrease the risks. They are finding it difficult to maintain a balance between business expansion and risk mitigation.
A bank is linked with its shareholders, employees, cooperatives, and customers. Every bank is under pressure to make a profit. Shareholders expect a bonus along with a stock price increase. If the employees want a raise, then the customer will want more service. The institute forced to increase profits every year. On top of that, there is a competitive market added with the pressure from the board of directors for better performance. Banks cannot act contrary to the rule provided by the Rastra Bank just to increase profits. Everything must be done in accordance with the rules, including interest rates, deposit collection, loan investments. Debt can’t be invested simply because of demand rather just in designated areas as per the central bank. Interest rates have to be calculated according to the rules. The Rastra Bank has tightened its focus on expanding loans on things that are not only profitable such as real estate, cars but for the benefit of the country. Expanding investment in the productive sector takes time to get a return. Committing financial misconduct leads to banking faults. Such incidents are becoming more frequent and hence are under. Investing in schemes that are contrary to the rules, for their own benefit, can sometimes get caught. It also damages the bank’s reputation and may result in bad credits.
With the development and expansion of hacking technologies, the number of abusers is increasing. Hackers are widespread worldwide and cause fear to implement newer models. The use of technology helps the business expand while also facilitating the customer. Therefore, the adaption of security in the use of technology is also a challenge for a banker. The banker should think about the long-term development of the bank, not its own development. With the development of the bank, all aspects related to it develop.