...ASSET-LIABILITY MANAGEMENT IN THE INDIAN BANKS: ISSUES AND IMPLICATIONS Abstract The development of the banking system is always associated with the contemporary changes in the economy. The Indian banking industry has undergone a metamorphosis in the last two decades due to changes in the political, economic, financial, social, legal and technological environments. The mind boggling advances in technology and deregulation of financial markets across the countries created new opportunities, tempting banks to enter every business that had been thrown open. The banks are now moving towards universal banking concepts, while adding new channels and a series of innovative product offerings catering to various segments at an attractive price. This makes it imperative for the banks to adopt sophisticated risk management techniques and to establish a link between risk exposures and capital. Effective management of risk has always been the focus area for banks owing to the increasing sophistication in the product range and services and the complex channels that deliver them. The challenge for the banks is to put in place a risk control system that minimizes the volatility in profit and engenders risk consciousness across the rank and file of the organization. Sound risk management will ensure a healthy bottom line for the bank as risk taken by the bank will be commensurate with return and will be within an approved risk management policy. As all transactions of the banks revolve around...
Words: 6980 - Pages: 28
...Asset/Liability Management We look at: interest rate risk in banking book; use of repricing gaps and gap reports to quantify and manage interest rate risk via repricing model review notions of duration and modified duration; describe duration model for quantification and management of interest rate risk Chapter 3: Basle Committee guidelines for measurement and management of interest rate risk Interest risk in banking book Use of repricing gaps and gap reports to quantify and manage interest rate risk via repricing model Accrual or banking book of FI consists of interest-rate-sensitive assets and liabilities that affect net interest income (“NII”), but not usually subject to fair value accounting – so not marked-to-market as rates change Throughout this course, we define net interest income as interest income minus interest expense. We present two methods for measuring and monitoring institution’s interest rate risk for banking book: ● Repricing model, or funding gap model: analyzes impact of interest rate shifts on NII via widely-used technique known as gap analysis ● Duration model: analyzes impact of interest rate shifts on market value of assets, liabilities and off balance sheet items, to determine sensitivity of institution’s net worth to those shifts • Second approach offers more comprehensive view than repricing model of aggregate impact of rate volatility on institution’s financial condition over life of existing assets and liabilities ...
Words: 1086 - Pages: 5
... 4. 5. To understand risk management as driven by risk exposure, the R in TRICl( To understand asset-liability management (ALM) as the coordinated management of a bank's on- and off-balance sheet activities driven by interest rate risk and its two components: priee risk and reinvestment risk To undersland accounting and economic measures of ALM performance To understand the duration or maturity imbalance (gap) in banks' balance sheets in terms of rate-sensitive assets (RSAs) and rate-sensitive liabilities (RSLs) To understand ALM risk profiles as pictures of banks' exposure to interest rale risk and how to hedge that risk using on- and off-balance sheet methods CHAPTER THEME The business of banking involves the measuring, managing, and accepting of risk, which means the heart of bank financial management is risk managemcnt. One of the most important risk management functions in banking is asset-liability management or ALM, broadly defined as the coordinated management of a bank's balance sheet to allow for alternative interest rate, liquidity, and prepayment scenarios. Three techniques of ALM are (1) on-balance sheet matching of the repricing o[ assets and liabilities, (2) off-balance shcet hedging of on-balance sheet risks, and (3) securitization, which removes risk from the balance sheet. The key variables of ALM inelude accounling measures such as net interest income (NIl) or its ratio form net inlerest margin (NIM = NIl/average assets) and an economic measure: the...
Words: 6862 - Pages: 28
...qwertyuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopasdfgh jklzxcvbnmqwertyuiopasdfghjklzxcvb nmqwertyuiopasdfghjklzxcvbnmqwer Internship Report on HSBC tyuiopasdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdfghjklzx Submitted To cvbnmqwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqwertyuio pasdfghjklzxcvbnmqwertyuiopasdfghj Submitted By klzxcvbnmqwertyuiopasdfghjklzxcvbn mqwertyuiopasdfghjklzxcvbnmqwerty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmrty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmqwertyuiop Mr. Shawkat Kamal Coordinator, BBA program BRAC Business School BRAC University Mr. Mahmudul Haq (2nd Supervisor) Faculty, BRAC Business School BRAC University Israt Kabir ID: 06304038 BUS 400 BRAC Business School BRAC University Date of Submission 22 April 2010 Thursday, 22 April, 2010 Mr. Shawkat Kamal Coordinator, BBA Program, BRAC Business School BRAC University, Dhaka Subject: Submission of Internship report Sir, In accordance to your advice, I have prepared my Internship report on Expansion Strategy of HSBC in Bangladesh.. In my report, I have tried to focus on the relevant information which would cover the objectives of the report. But no doubt, my effort and contribution will be best evaluated on your sharp scale of acceptance and remarks. Consequently, I am transmitting my project report to...
Words: 7480 - Pages: 30
...Term Paper On Credit Risk Grading Of Non Bank Financial Institution. A Study on IDLC Finance Limited. Submitted To: .......................... Supervisor of Term Paper Committee Faculty of Business Studies Premier University Submitted By: ...................... Student ID: ................ Program: BBA, Major in Finance Department of Business Studies Date of Submission: August 28, 2012 FACULTY OF BUSINESS STUDIES PREMIER UNIVERSITY, CHITTAGONG September 16, 2012 Dr. Mr. Ifthekhar Uddin Chowdhury Dean for the Faculties, Faculty of Business Studies, Premier University. [ Subject: Presentation of The Term Paper On study of “Credit Risk Grading Of Non-Bank Financial Institution”. Dear Sir, With an immense pleasure, I would like to submit my Term Paper titled, “Credit Risk Grading of Non- bank financial Institutions.” to fulfill the requirement of BBA Program. I am very delight to tell you that working on this internship report has given me a wide range of exposure. To prepare this report, I have faced extensive face to face interviews with professionals as well as customers. It has taught me the value of patience, and has given me a higher insight on the level of communication in the practical world. In every segment of the report, I have tried to make an honest endeavor to present it as good combination of my knowledge, intelligence and the information gathering. It is highly pleasure for me to get...
Words: 797 - Pages: 4
...Institutional Asset and Liability Management Group Assignment Words counting: Executive Summary The purpose of this report is to critically evaluate that Bank of Queensland’s liquidity and credit risk management during 2000 and 2010. The report first deals with liquidity risk. It starts with analysing liquidity risk by using various ratios such as quick ratio, financing gap etc. It then followed by evaluate the management of liquidity risk within 11years respectively. After comparing the actual ratio and real management, recommendations are provided. Similar analysis to credit risk, it is first analysed through expert system, loan credit rating and derivative financial instruments to evaluate BOE’s credit risk management. Finally, recommendations for improving risk management are provided. Most information we obtained from the company annual reports, bank homepages, textbook and relevant database such as Finanalysis and Bankscope. Thus, the information we provided is reliable. Table of Content 1. Introduction……………………………………………………………………………… 5 1.1 Background of Bank of Queensland …………………………………………………5 1.2 Structure……………………………………………………………………………… 5 2. Liquidity Risk………………………………………………………………………… 6 2.1 Causes of liquidity Risk………………………………………………………………6 2.2 Measurement of liquidity risk………………………………………………………8 2.2.1 Quick ratio………………………………………………………………………… 8 ...
Words: 3602 - Pages: 15
...Asset - Liability Management System in banks - Guidelines Over the last few years the Indian financial markets have witnessed wide ranging changes at fast pace. Intense competition for business involving both the assets and liabilities, together with increasing volatility in the domestic interest rates as well as foreign exchange rates, has brought pressure on the management of banks to maintain a good balance among spreads, profitability and long-term viability. These pressures call for structured and comprehensive measures and not just ad hoc action. The Management of banks has to base their business decisions on a dynamic and integrated risk management system and process, driven by corporate strategy. Banks are exposed to several major risks in the course of their business - credit risk, interest rate risk, foreign exchange risk, equity / commodity price risk, liquidity risk and operational risks. 2. This note lays down broad guidelines in respect of interest rate and liquidity risks management systems in banks which form part of the Asset-Liability Management (ALM) function. The initial focus of the ALM function would be to enforce the risk management discipline viz. managing business after assessing the risks involved. The objective of good risk management programmes should be that these programmes will evolve into a strategic tool for bank management. 3. The ALM process rests on three pillars: • ALM information systems => Management Information System => Information availability...
Words: 4813 - Pages: 20
...to Liquidity and Asset-liability Management Monnie M. Biety hen a formerly credit-only microfinance institution (MFI) starts raising voluntary savings and using those deposits to finance the loan portfolio, the liquidity and asset-liability management of the institution becomes more complex. The institution not only has to deal with the fluctuating demand and varying interest rates and terms on loans, but also with erratic deposit demands and withdrawals and changing interest rates and terms on savings. Liquidity and assetliability management in savings institutions requires a coordinated, planned approach. Liquidity Management Liquidity refers to the ability of an institution to meet demands for funds. Liquidity management means ensuring that the institution maintains sufficient cash and liquid assets (1) to satisfy client demand for loans and savings withdrawals, and (2) to pay the institution’s expenses. Liquidity management involves a daily analysis and detailed estimation of the size and timing of cash inflows and outflows over the coming days and weeks to minimize the risk that savers will be unable to access their deposits in the moments they demand them. In order to manage liquidity, an institution must have a management information system in place—manual or computerized—that is sufficient to generate the information needed to make realistic growth and liquidity projections. The information needed includes: ■ The actual deposit liabilities of the MFI as of...
Words: 2254 - Pages: 10
...Financial Mathematics for Actuaries Chapter 8 Bond Management Learning Objectives 1. Macaulay duration and modified duration 2. Duration and interest-rate sensitivity 3. Convexity 4. Some rules for duration calculation 5. Asset-liability matching and immunization strategies 6. Target-date immunization and duration matching 7. Redington immunization and full immunization 8. Cases of nonflat term structure 2 8.1 Macaulay Duration and Modified Duration • Suppose an investor purchases a n-year semiannual coupon bond for P0 at time 0 and holds it until maturity. • As the amounts of the payments she receives are different at different times, one way to summarize the horizon is to consider the weighted average of the time of the cash flows. • We use the present values of the cash flows (not their nominal values) to compute the weights. • Consider an investment that generates cash flows of amount Ct at time t = 1, · · · , n, measured in payment periods. Suppose the rate of interest is i per payment period and the initial investment is P . 3 • We denote the present value of Ct by PV(Ct ), which is given by Ct . PV(Ct ) = t (1 + i) and we have P = n X (8.1) PV(Ct ). (8.2) t=1 • Using PV(Ct ) as the factor of proportion, we define the weighted average of the time of the cash flows, denoted by D, as D = = n X t=1 n X t " PV(Ct ) P twt , # (8.3) t=1 where PV(Ct ) wt = . P 4 (8.4) P •...
Words: 7983 - Pages: 32
...JOURNAL OF MANAGEMENT 29(1). 39-48 Copyright ? 1999 - Administrative Staff College of India. R. VAIDYANATHAN Asset-liability management: Issues and trends in Indian context This paper discusses issues in asset-liability management and elaborates on various categories of risk that require to be managed. It examines strategies for asset-liability management from the asset side as well as the liability side, particularly in the Indian context. It also discusses the specificity of financial institutions in India and the new information technology initiatives that beneficially affect asset-liability management. The emerging contours of conglomerate financial services and their implications for asset-liability management are also described. Asset-liability management basically refers to the process by which an institution manages its balance sheet in order to allow for alternative interest rate and liquidity scenarios. Banks and other financial institutions provide services which expose them to various kinds of risks like credit risk, interest risk, and liquidity risk. Asset liability management is an approach that provides institutions with protection that makes such risk acceptable. Asset-liability management models enable institutions to measure and monitor risk, and provide suitable strategies for their management. It is therefore appropriate for institutions (banks, finance companies, leasing companies, insurance companies, and others) to focus on asset-liability management...
Words: 4831 - Pages: 20
...bank’s deposits are its liabilities, and its loans and investments are its assets. It generates revenues in a variety of different ways including interest, transaction fees and fees for financial advices. The main method is via charging interest on the funds it lends out to customers. The bank profits from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges on its lending activities. Fluctuation in market interest rate may adversely affect the profitability of a bank. This fluctuation exposes the bank to interest rate risk. Also, a bank must pay its depositors’ money on demand. If it does not maintain sufficient liquidity it may face liquidity crisis. Again, the price a bank can demand on its loans is often dependent on its cost of fund. Moreover, every scheduled bank in Bangladesh has to maintain 5% of its average total demand and time liabilities in cash with Bangladesh Bank. Also, every scheduled bank has to maintain 18% (including CRR) of its average total demand and time liabilities in cash, gold or as unencumbered approved securities daily with Bangladesh Bank. Again, at present every scheduled bank has to maintain a minimum capital requirement of 9% of Risk Weighted Assets. From July 01, 2011 this requirement will be 10%. To hedge itself against interest rate and liquidity risk, to price its loans, and to meet regulatory requirements a bank must manage its assets...
Words: 543 - Pages: 3
...the DFA emphasized on participation by all present. • The first paper was presented by the Senior Manager, Final Accounts/ K.M.Jemaku. Titled: FIXED ASSET MANAGEMENT – OPERATION & CHALLENGES: It defined and classified fixed assets, their management, depreciation and disposal. The management of Fixed Assets was noted to be a huge challenge to Finance & Accounts Department because of the many lapses imminent. The Sun System Fixed Assets module captured most of the detail data identifying an asset, and provides information automatically. Each asset is then assigned a code to further give the required peculiarity in the database. The presenter identified the challenges as follows; - Time lag between coding and labeling of assets. - Difficulty in tracing assets to assigned locations. - Failure to code some assets making disposal difficult. - Inability to reconcile physical assets with the register. Other issues relating to management of Fixed Assets were mentioned as; - Disposal of such assets without the knowledge of Finance Dept. - State Offices charging assets disposed to sundry income. - Vandalizing of assets particularly computers. - Wrong classification of assets by Admin/Stores. - Unregistered transfer of assets from one user to another. - Non-clarity of location of assets. - Non recognition of...
Words: 2489 - Pages: 10
...process analysis and change management, and cross-functional collaboration leadership. Domain expertise in marketing, product development, technology engineering, healthcare and financial services. Applies strong coordination, analysis, communication, and thought leadership skills to drive project and program success. Core competencies include: Business\IT Liaison Content and Digital Asset Management Team Collaboration Leadership Change Management Leadership User Support and Training Development Requirements Management Business Process Analysis Professional Experience Rockwell Automation, Milwaukee, WI, 2009 to present Business Systems Analyst For a global developer of industrial automation control and information solutions, lead requirements and change management, quality assurance, research and development to support strategic web-based Marketing initiatives. For a multi-phase, multi-million dollar program with Rockwell’s Web Customer Experience Program: Facilitated acquisition and deployment of web content management system (WCMS) in support of corporate web initiatives. Manage business analysis process for redesign of the Allen‐Bradley and Rockwell Automation corporate web sites. Gather and validate business and functional requirements from business process owners and teams. Manage quality assurance and test planning for deployment of new web sites. Perform content analysis and migration for onboarding legacy digital assets into WCMS. Coordinate relationships...
Words: 766 - Pages: 4
...be used as additional reference material by Queensland Government agencies when managing software. Agencies should consider the information provided as reference material and interpret it in the context of their own agency methodologies. ISO/IEC 19770-1 Audit Checklist This checklist has been developed to be used in conjunction with ISO/IEC19770-1 Information technology – Software asset management – Part1: Processes (the ISO Standard), and should not be used in isolation from this Standard. The checklist has been developed to assist agencies to perform self-audits to monitor their progress towards best practice in software license management. The checklist outlines elements that should be met in order to be fully compliant with the ISO Standard. It may be used by Agencies to guide where improvements can be made in managing software licensing. Each element may be audited separately to check on progress towards maturity in specifically targeted areas, however, compliance with all element will ensure that the agency is aligned with industry best practice in software license management. The ‘Evidence’ section of the checklist outlines possible evidence that auditors may consider when evaluating level of compliance. This list can be modified to reflect individual agency requirements and is not intended as an exhaustive list. This checklist includes elements that may not be relevant to every agency, and fall outside the requirements of IS45 – for example, Software Development...
Words: 3033 - Pages: 13
...ASSIGNMENT TCP 1241 – Computer Programming II INSTRUCTIONS A. Grouping | * Min ONE student, Max THREE students * STRICTLY NO COPYING from other group | B. Deliverables | * Report hardcopy- refer Guidelines in part E.- code is not required to be printed. * Demo- prepare the softcopy of the codes (virus free) and ensure it is in proper working condition. You will have to demo how your system works and will be asked for questions to verify your work. The demo date will be announced later.Note: * Anyone caught to have submitted a copied work will be awarded a zero, including the group that the original code belongs to. Codes that are downloaded from the web receives the same fate as well. * Late submission will be punished by deducting 5 marks per day. | C. Important Dates | * Report hardcopy is to be submitted to your lecturer on 23 January 2015 (Friday) before 4pm. | D. Problem StatementThe objective of this assignment is to refresh and enhance the skills of the students in problem solving involving functions, arrays, classes and others using the C++ programming language. Students MUST use the inheritance concepts in the OOP. Students are required to select a title from the list below and register with your tutor (First come first serve). Your program must be able to perform the following functions based on your chosen title: 1. Add/register new accounts. 2. Delete and cancel existing records. 3. Modify existing records. 4...
Words: 653 - Pages: 3
