A Study on Asset Liability Management of Scheduled Commercial Banks in India

Abstract
Asset liability management is a significant task for banks and financial institutions because of volatile global financial markets, the propagation of new financial products, and changing regulatory environments. Asset-liability management of commercial banks may be defined as the concurrent development of all asset and liability positions on the bank's balance sheet under deliberation of the different bank management objectives and lawful, managerial, and market constraints, for enhancing the value of the bank, providing liquidity, and extenuating interest rate risk. Scheduled commercial bank in India plays a significant role in the distribution of credit and mobilization of deposits. This study has been carried out to test the logic behind the management of assets and liabilities of Indian scheduled commercial banks. Public sector banks, private sector banks, and foreign banks are considered for the study. Three financial years starting from 2009 to 2011 have been selected and all bank's balance sheets are analyzed for the sample period. To know the quantum of asset liability management canonical correlation analysis has been performed, and redundancy factors show the effective management of assets or liabilities. This study concluded that all scheduled banks effectively manage their assets and liability management is dependent on asset management.
Keywords used: Asset liability management, scheduled commercial banks, canonical correlation analysis, public sector banks, private sector banks, foreign banks.

Reference

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