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REPORT On Asset Liability Management

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Contents

➢ Asset - Liability Management concept and its Emergence

➢ Asset - Liability Management in Banks 

➢ Three requirements to implement ALM in Banks

➢ Components of Assets & Liabilities

➢ Purpose and Objectives of Asset - Liability Management

➢ Advantages of Asset - Liability Management

➢ Risk Categories

➢ Risk Measurement Techniques

➢ Pre - Conditions for the Success of ALM in Banks

➢ Asset - Liability Management Strategies for Correcting Mismatch

➢ Information Technology and Asset - Liability Management in the Indian context

➢ Emerging Issues in the Indian context

➢ Conclusion

➢ Bibliography

Asset - Liability Management concept and its Emergence:

In banking, asset liability management is the practice of managing risks that arise due to mismatches between the assets and liabilities (debts and assets) of the bank.

Banks face several risks such as the liquidity risk, interest rate risk, credit risk and operational risk. Asset Liability management (ALM) is a strategic management tool to manage interest rate risk and liquidity risk faced by banks, other financial services companies and corporations.

Banks manage the risks of Asset liability mismatch by matching the assets and liabilities according to the maturity pattern or the matching the duration, by hedging and by securitization. The early origins of asset and liability management date to the high interest rate periods of 1975-6 and the late 1970s and early 1980s in the United States.

Modern risk management now takes place from an integrated approach to enterprise risk management that reflects the fact that interest rate risk, credit risk, market risk, and liquidity risk are all interrelated.

Asset-liability management (ALM) is a term whose meaning has evolved. It is used in slightly different ways in different contexts. ALM was pioneered by financial institutions, but...