Strategic Report: Operational Risk Management in the Indian Housing Finance Sector

Description

Page: 476-480

Anannya¹ and Sajid Parwez² (Department of Management, Sona Devi University, Ghatsila, Jharkhand¹ and Department of Psychology, Sona Devi Uiversity, Ghatsila, Jharkhand²)

This report provides a forensic analysis of operational risk (OR) within the Indian housing finance sector. It synthesizes findings from a detailed academic study with recent market intelligence to construct a comprehensive view of the risk landscape. The central finding of this analysis is a critical chasm between India’s robust, well-defined regulatory framework for operational risk and its inconsistent, often flawed, on-the-ground implementation (Ananya, 2025). This disconnect is a foundational vulnerability. The strategic imperative for the sector is to transition from a reactive, compliance-focused posture to a proactive, predictive, and digitally-enabled risk management culture. Key insights reveal that while formal policies are widely understood in principle, they are frequently bypassed in practice, leading to significant financial losses (Ananya, 2025). Furthermore, the analysis indicates that a banker’s experience shows no significant correlation with effective operational risk mitigation, underscoring a systemic failure in training and the urgent need for a strong, embedded risk-conscious culture (Ananya, 2025). The traditional threat model focused on physical fraud in loan accounts is becoming obsolete as new, insidious forms of digital fraud proliferate on the liability side of banking (Times of India, 2025). This report concludes with actionable recommendations for a comprehensive framework that includes enhanced human, procedural, and technological controls, ultimately leading to a more resilient and secure financial ecosystem (NIBM, 2025).