Industry:
NBCF
Department:
Treasury
Process:
ALM & LCR
Achieved
RBI compliance
100%
accuracy achieved
6-7
man days saved
Client Overview
PNB Housing Finance is a leading financial institution in India, specializing in affordable housing loans. With a diverse range of home loan products, they make homeownership accessible to a broad customer base. Their treasury department plays a critical role in managing liquidity, interest rate risk, and ensuring financial resilience in compliance with Reserve Bank of India (RBI) regulations.
The Challenge
As mandated by the Reserve Bank of India (RBI), PNB Housing’s treasury department was required to prepare and submit LCR and ALM reports daily to ensure regulatory compliance and effective risk management. However, the manual nature of their report generation processes created a significant compliance gap. The team could only produce these critical reports weekly instead of the required daily frequency.
The manual process involved sourcing data from multiple systems and spreadsheets, performing complex calculations, and generating regulatory reports. All these tasks were too time-consuming to meet daily deadlines.
(1) Liquidity Coverage Ratio (LCR)
LCR ensures the bank maintains sufficient High-Quality Liquid Assets (HQLAs) to meet its 30-day liquidity needs under stress scenarios, reinforcing financial stability.
Challenges in creating report:
- Manual identification, classification, and calculation of HQLAs
- Manual collation of cash inflows and outflows
- Stress scenarios created and applied manually in spreadsheets
- High-frequency reporting placing strain on resources
(2) Asset-Liability Management (ALM)
ALM focuses on balancing assets and liabilities to meet financial obligations while maximizing returns.
Challenges in creating report:
- Manual collation of data from multiple systems
- Complex mapping of cash flows into RBI-defined maturity buckets
- Inefficient generation of key reports such as Structural Liquidity and Interest Rate Sensitivity Statements
Key Issues in the Earlier Process
- High Error Probability: Manual processes were prone to human error, leading to potential financial and regulatory risks.
- Operational Inefficiencies: Manual data collection, analysis, and reporting consumed significant time and effort.
- Reporting Delays: The complexity of manual processes often delayed regulatory submissions.
Addressing these challenges was critical to ensure regulatory compliance, timely reporting, and effective risk management.
The Solution
RPATech designed and implemented a comprehensive automation solution that transformed PNB Housing’s LCR and ALM reporting from a weekly manual struggle into a seamless daily automated process. The intelligent automation tool integrates data from multiple systems, tracks assets and liabilities in real time, and automates ratio calculations, stress testing, and report generation, eliminating manual effort entirely.
Key aspects of the solution:
- Automated data integration from multiple source systems
- Real-time asset and liability tracking with intelligent HQLA classification
- Automated cash flow mapping into RBI-defined maturity buckets
- Built-in stress testing scenarios applied without manual intervention
- Daily automated generation of regulatory-compliant LCR and ALM reports
- Secure data handling with built-in protection measures
The Outcomes
- Achieved RBI compliance by enabling daily report generation as mandated
- Eliminated compliance risk moving from weekly to daily reporting frequency
- Resource optimization saving 6-7 man-days per month for strategic work
- 100% accuracy in complex calculations and data classification
- Enhanced risk management through real-time visibility into liquidity exposure
- Timely regulatory submissions with consistent on-time delivery
Recognition
The automation significantly transformed PNB Housing’s treasury operations, enabling regulatory compliance while dramatically improving operational efficiency. This innovation was recognized as the winner of the “Great Indian Best Treasury Technology Innovation Award“ at the Great Indian Treasury Leaders Awards-2024.
“An innovation that generates various complex regulatory reports like Liquidity Coverage Ratio and Asset Liability Management. This is one-of-a-kind solution.”
