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TitleA Project Report on Asset Liability Management in Andhra Bank
File Size3.0 MB
Total Pages91
Table of Contents
                            Securitization
Is conversion of future cash flows into marketable securities .It is the process through which illiquid assets are packed and converted into tradable securities and sold to third parties.
Banking on Human Resources
	FINDIGS AND ANALYSIS
                        
Document Text Contents
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“Asset Liability Management in Andhra Bank”





EXECUTIVE SUMMARY

INTRODUCTION

The Indian banking can be broadly categories into nationalized [government owned],

private Bank and specialized banking institution. The Reserve Bank of India acts a

centralized body monitoring any discrepancies and shortcoming in the system. The

nationalization of Bank in 1923, gave rise to the public sector Bank to play a prominent

role, which led to tremendous progress. The Indian banking has finally worked up to

the competitive dynamics of the ‘new’ Indian market and addressing the relevant issues

to take on the multifarious challenges of globalization.

INRODUCTION TO ANDHRA BANK

Andhra Bank is one of the premier Bank in the country, accredited with distinction. The

present statures of the Bank are due to its strong fundamental and quality customer’s

orientations. Profit making since inception, the Bank today symbolizes a perfect blend

of commercial and social banking. For the year march 2007, the bank clocked the

highest net profit [rs.1110 crore] among nationalized Bank, with significant

improvement in capital adequacy ratio [12.78%] and assets quality [net NPA of1.88%]

Introduction to ALM

Risk Management is the strategic tool, which helps in identifying, qualifying,

monitoring and controlling risk. Risk management protects An organization from dying

due to insolvency resulting from the adverse effects of risk.

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“Asset Liability Management in Andhra Bank”



Though universally relevant it is of immense to a banking organization or financial

institution. In view of the same Risk Management is analyzed here from the banking

perspective. However with the larger corporate houses establishing their own

independent dealing rooms, risk management systems are no longer limited to banking

organizations.

A banking organization has to constantly strike a risk & reward balance. A

proposal, which ma seem very rewarding in the short term, may wipe out the bank

completely in the run due to high risk embedded in it. Risk Management systems are

not a solution, but a tool to aid decision-making.



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“Asset Liability Management in Andhra Bank”





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“Asset Liability Management in Andhra Bank”



BALANCESHEET MANAGEMENT

Once the loans receivables transferred to special purpose vehicle [SPV].They are

removed from the originators balance sheet .Thus

Securitization offers an of balance sheet funding alternative.

REVELANCE OF BASEL II IN ASSET LIABILITY OF BANK

1. Basel accord on capital adequacy aims at stregentning the financial health of the

bank

2. The accord is in the direction of further strengthening of capital

3. The prime motto is “less capital for safe loans and more capital for risky loans”.

4. It hopes to create the regulator system and promote rewarding Bank for

managing risks better

5. There is no adequate differentiation of credit risk

6. No recognitions to credit risk mitigation technique

5. Maturity structure of credit exposure did not have any relevance

6. No capital charged for operational risks

7. Economic capital allocation allows Bank to have better Understanding of risk

and better loans pricing the proposed adequacy framework contains refined

proposals for three pillar of new accord that is namely



1. Minimum capital requirements

2. Supervisory review

3. Market discipline

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“Asset Liability Management in Andhra Bank”



CONCLUSION

The Andhra Bank require sophisticated analytical tool for in depth analysis of asset

Liability management which helps in managing their asset and liability. There are

number of models for doing analysis for effective results. As per Alco

recommendations, Bank have to decide which model helps them based on the

architecture of their branches .It is recommended that analysis be done based on basic

model that is gap analysis as the start up for Analyzing the position of Bank .As

expertise go one can adopt high end Models like SP models for analyzing the

uncertainty factors and validate to suit there goals. The braches which provide the

database for asset liability management should be provided with feedback for the

statement generated at the head office for better results and performance. The Efficient

performance of every branch is important for the overall asset Liability management of

the entire Bank. Avoiding the gap in literal terms may not be possible for all the Bank.

Given the constraints of the Bank that they operate at, Bank could manage to effectively

minimize the Gap.

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“Asset Liability Management in Andhra Bank”





BIBLIOGRAPHY

1. Asset liability in Andhra bank

2. risk measurement in bank

3. treasury management

4. www. Indianinfoline.com

5. Andhra bank website

6. Annual report 2006- 2007 of Andhra bank

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