Edited excerpts of the speech delivered by Shri V.K.Sharma, Executive Director of RBI at Bangalore Chamber of Commerce and Industry on January 5
..................Therefore, to my mind, nothing conveys and expresses the Risk Management mantra more trenchantly than the following: “Just as you make friends when you don't need them, not when you need them and certainly not after you need them, so also you hedge when you don't need it, not when you need it and certainly not after you need it”. Complete internalisation and ingraining of this holistic risk hedging culture, attitude and temper by business and industry will, in equilibrium, reduce cost of both debt and equity capital by reducing volatility of ROE as markets will perceive them as much less risky and more safe. If they do this, they will exemplify the following fairy tale ending viz. “And they lived happily ever after”!
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