Liquidity risks can, however, be effectively managed if banks address the fundamental problem of maturity mismatches stemming largely because of bank’s unwillingness to extend their deposit tenor which has limited bank’s capacity to lend long too. Operational risk: Growth in business did stress the individual and system wide financial infrastructure.
However, industry is launching initiatives to strengthen its operational capacities by augmenting its systems and processes & adapting information technology solution and outsourcing. Growing wave of mergers and acquisitions leading to conforming business practices have introduced fresh complexity in the operational processes and procedures of the financial institutions.