Components –Balance Sheet
•Liabilities or Sources:
•Capital- owner`s funds
•Reserves- Statutory, Capital Redemption , Share Premium, Balance in P& L A/C, Revenue Res.
•Deposits- SA, CA, FD, RD
•Borrowings- Banks, RBI, Refinance- IDBI, NABARD, EXIM Bank
•Other Liabilities- Bills Payable-Draft., Travellers cheques C, Mail transfer payable , Sundries
•HO cr. Balance
•Contingent Liabilities-Appear as a footnote
Contingent Liabilities
•LC
•LG
•Co-acceptance of Bills
•Claims Against the bank not acknowledged as Debts
•Liability for partly paid Investments
•Forward Exchange Contract
•Arrears of cumulative Dividends
•Bills Rediscounted
•Underwriting Business
Assets or Uses of Funds
•Cash & Bank Balance in India & abroad
•Balance with RBI-
•Money At Call & Short Notice- up to 15 days
•Investments
•Advances-CC, OD, TL, DL, BP, BD
•Fixed Assets
•HO Dr. Balance
•Other assets-Intt. O/S On advances, Suspense
P & L A/ C- components
INCOME EXPENDITURE
• Interest & Discount Intt. Paid on Deposit
•Comm./Exch./ Brok Intt. On borrowings
•Profit on sale of Assets Establishment cost
•Dividend Earned Rent Taxes Lighting
• PTG. & STY
• Depreciation
• Advertisement
• Law Charges
• Auditor`s & other Fees
• Insurance
ASSET LIABILITY MANAGEMENT
•Components of Balance Sheet
•Components of P&L A/C
•ALM – Most imp. Risk mgt. Function
•Involves matching of Assets & Liabilities-against credit, interest, liquidity & exchange risks.
•It involves decision to hold certain mix of Assets & Liabilities to maximise profits & ensure liquidity
Growing Need for ALM
•Volatility of Interest, Exchange rates & prices of securities
•Innovative products- sweep in sweep out/ Flexi deposit products
•Regulatory guidelines- Basel/ RBI
• Management Awareness
3 Parameters To Monitor ALM
•N.I.I= Intt. Income – Intt Exp.
•N.I.M. = N.I.I./Average Earning Assets
•Economic Equity Ratio=Shareholders Funds/Total Assets
Be continue…….
