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In a crowded and competitive market like India , 95% of participants do not follow...

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Finance

  1. In a crowded and competitive market like India , 95% of participants do not follow the risk based pricing . There is a change in the management of an existing private sector bank . The bank is in existence for last 75 years but new management took over about 10 years back . Since the taking over the new management , the bank did not follow the risk based pricing like other banks of the market . Due to sharp increase in bad loan , the regulator did not sanction the extension request of the former CEO. A new CEO joined the bank about two months ago . The new CEO has decided to implement the risk based pricing of its loan book on immediate basis . However , huge resistance came up from the business and other stake holders . These stakeholders have pointed that introduction of such harsh measures would only exasperate the existing problems due to reduction on credit growth post implementation of the risk based pricing . With COVID 19 induced stress in the system , these stakeholders expressed the concern that such steps would cause more harm .

Please analyse the above situation and as a CEO mention strategies to introduce risk based pricing framework in a successful manner.

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