While many senior executives continue to talk about the "voice of the customer," few demonstrate their commitment to this concept by spending time with customers. Many continue to use their intuition or `golden gut' in their attempt to provide superior customer value. Unfortunately, `senior executive intuition' is rarely attuned to the needs of their customers. While the competitive environment continues to intensify, executives have cut back on the time devoted to customers just when it should be increasing. This article discusses the need for senior executives to spend time with customers and provides examples of the benefits that this approach will provide.

In most of the countries of the world, banks have been facing serious credit issue-related problems besides market risk and operational risk because 90-95% of a bank's business stems from credit operations. Managing credit risk is crucial on account of default of principal itself. Banks have to appropriately price their loan products on the basis of directions given by the Reserve Bank of India such as fixation of exposure limits, provisioning of NPAs, risk rating models, risk diversification, risk sharing techniques such as credit derivatives, securitization, intra-bank participation, consortium finance, risk insurance, etc. In fact, adopting risk management practices, proper governance and disclosure practices reduce losses and provide more robust framework for evaluating the creditworthiness of the borrowers. Apart from these, the Board of Directors and the executive management should conduct the credit risk management process with competence and integrity. Only then will our credit system in banks grow stronger. Although the Basel Accord guidelines are well-intended, these are substantially focused on the Western banking environment, which is why Indian banks are not in a position to implement them within the year 2006. Indian banks, particularly the public sector banks, are ready to migrate to Basel II Accord only at a conceptual level and academic level. They have to make necessary changes in the risk management framework and the technological framework, enhance further adoption of sound MIS, best international banking practices, upgrade skills and developments of the staffs, appropriate credit rating mechanism, etc. Indian banking sector can then implement the Basel Norms, and can face international banking competition smoothly.

The emergence of risk management practices in banks is a recent phenomenon, which came about after the opening up of the banking sector to private and foreign players as a result of deregulation and liberalization reforms. Recently, the commercial banks have come across major categories of risk, viz., market risk, credit risk and operational risk. Operational risk is an omnibus group and in strict sense, it contains the elements of both credit risk and market risk. Further, human failure, be it intentional or unintentional, which is also a part of operational risk may exist both in credit transaction and market-related transaction. Basel Committee has defined operational risk as "the risk of default or indirect loss resulting from an inadequate or failed internal processes, people, systems or from external events. This definition excludes strategic and reputation risk but includes legal risk."

Managing Credit Risk: An Overview of Basel Norms, credit issue-related problems, business stems, credit operations, Reserve Bank of India, credit derivatives, securitization, intra-bank participation, consortium finance, risk insurance, Operational risk.