1

A PROJECT REPORT

ON

A STUDY OF

“ROLE OF RETAIL BRANCH

&

TREASURY IN ASSETS AND LIABILITIES MANAGEMENT”

WITH SPECIAL REFERENCE TO

WEST ZONE (NASHIK)

SUBMITTED TO

UNIVERSITY OF PUNE

SUBMITTED BY

JITENDRA M. KALWANI

M.B.A. (FINANCE)

GUIDED BY

PROF.D.D.WALKE

NASIK DISTRICT MARATHA VIDYA PRASARAK SAMAJ’S

INSTITUTE OF MANAGEMENT RESEARCH & TECHNOLOGY, NASIK

2008-2009

2

ACKNOWLEDGEMENT

“In the arena of human life the honors and rewards fall to

those who show their good qualities in action” – Aristotle

I would like to give sincere thanks to Branch Manger Mr. M. Ismail, Asst. Manager

Mr. M. Banerjee (GUIDE) and each member of IDBI BANK LTD, (West Zone) Nasik for

their extreme help, self-guidance, cooperation and friendliness; they did it in one-way or

other for successful completion of the project.

My deep gratitude to Mr. D. D. Walke, the Principle of I.M.R.T. Institute, Nasik,

who always been playing a great role in all round development of the student.

I would like to put on record my thanks to my faculty project Guide Prof.

D.D.Walke Sir and all teaching and non teaching staff for their kind support, help and

assistance, which they extended as and when required.

Last but not the least I wish to thank my friends for providing technical and

especially moral support. I hope that this project report would meet the high standards

of all concerned people.

Date: ( Jitendra M. Kalwani )

3

DECLARATION

I, Jitendra M. Kalwani, MBA-II(2008-09) at IMRT, Nasik hereby solemnly declare

that project on “A study of Role of Retail Branch & Treasury in Assets and Liabilities

Management” was completed at IDBI, Nasik, as a result of my research.

The project was undertaken as a part of academic curriculum, according to the

university rules and with no commercial interest and motives. It is my original work

and not submitted elsewhere for any other purpose earlier.

The project report does not contain any fake information and data collected is

included in the project with prior permission of Manager at IDBI, Nasik.

Place: Date:

(Jitendra M. Kalwani)

4

CONTENTS

Chapter. Topics Page No.

1. Introduction:

1.1) Objectives, Scope and Limitation of the Study

1.2) Scenario of Banking Sector Prior & After 1991

1.3) Function of Banking

1.4) Research Methodology:

A) Primary Data & Secondary Data

B) Interpretation of Data

1.5) Introduction about Project

6-15

6

7-9

10

11-15

15

2. Profile of the Organization:

2.1) IDBI to IDBI Bank Ltd.

2.2) Vertical Limit of IDBI Bank Ltd.

2.3) Profile of Branch where Project was Undertaken.

17-21

17-19

20

21

3. Concept related with Project:

3.1) Role of Retail Branch Banking:

A) Role of Retail Liabilities

B) Role of Retail Assets

3.2) Role of Treasury in Assets and Liabilities Management

3.3) RBI Guidelines for Assets and Liabilities Management

23-45

23-34

34-42

42-45

4. Data Collection, Analysis and Interpretation 47-54

5. Finding & Suggestion 56-61

6. Literature Review & Bibliography 63-68

5

CHAPTER I

INTRODUCTION

6

OBJECTIVE

Objective of this project is to study the Role of Retail Branch and Treasury in Assets and

Liabilities Management at IDBI Bank Ltd. as a part of financial Management System in

the organization.

The objectives of the project are enumerated as follows:

• To analyses and understand the Role of Retail Branch and Treasury in IDBI Bank

Ltd. with the help of annual report of the company.

• To analyses and understand the various products of Liabilities.

• To analyses and understand the various products of Assets.

• To analyses and understand the Role of Treasury in Risk Management.

• To analyses and understand the Maturity Pattern of the Assets and Liabilities.

SCOPE:

The scope of the study was limited to the Role of Retail Branch and Treasury in Assets

and Liabilities Management of IDBI BANK LTD. due to the period of 8 weeks. The major

portion of the data for the project was taken from the annual report of the Bank from

2006-2008, from the website: www.idbibank.com, intranet: www2.idbibank.com

LIMIATION OF THE PROJECT:

• The time period of the project itself is a major limitation. The period of two

months is insufficient to understand the entire Role of Treasury and Retail

Branch of the Bank, because the volume of transition in the organization is vast.

• Limitation to access certain data which is classified in nature of any organization.

• The limitations of the trend analysis which has been made are:

1. The year selected as base may not be representative year or a normal

year and the trend based on an abnormal year shall be misleading.

2. Trend analysis fails to analyze the important events of the base year

7

1.2)SCENARIO OF BANKING SECTOR

Origin of the word: “Bank”

The name bank derives from the Italian word banco "desk/bench", used during the

Renaissance by Florentines bankers, who used to make their transactions above a desk

covered by a green tablecloth.

BANKING SECTOR – SCENARIO PRIOR 1991.

Reflecting these views, all large private banks were nationalized in two stages:

the first in 1969 and the second in 1980. Subsequently, quantitative loan targets were

imposed on these banks to expand their networks in rural areas and they were directed

to extend credit to priority sectors. These nationalized banks were then increasingly

used to finance fiscal deficits. Although non-nationalized private banks and foreign

banks were allowed to coexist with public-sector banks at that time, their activities

were highly restricted through entry regulations and strict branch licensing policies.

Thus, their activities remained negligible. Nevertheless, many banks remained

unprofitable, inefficient, and unsound owing to their poor lending strategy and lack of

internal risk management under government ownership. The major factors that

contributed to deteriorating bank performance included:

A) Too strict regulatory requirements i.e., a cash reserve requirement [CRR] and

statutory liquidity requirement [SLR] that required banks to hold a certain

amount of government and eligible securities;

B) Low interest rates charged on government bonds as compared with those on

commercial advances;

C) Directed and concession all ending;

D) Un-practiced interest rates; and

E) Lack of competition

The following are the steps taken by the Government of India to Regulate Banking

Institutions in the Country:

• 1949: Enactment of Banking Regulation Act.

• 1955: Nationalization of State Bank of India.

• 1959: Nationalization of SBI subsidiaries.

• 1961: Insurance cover extended to deposits.

• 1969: Nationalization of 14 major banks.

• 1971: Creation of Credit Guarantee Corporation.

• 1975: Creation of Regional Rural Banks(RRB).

• 1980: Nationalization of seven banks with deposits over 200 crore.

8

BANKING SECTOR – SCENARIO AFTER 1991.

This phase has introduced many more products and facilities in the banking

sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a

committee was set up by his name which worked for the liberalization of banking

practice.

RBI has introduced the BASEL ACCORD for the Bank. Basel Accord-I was

implemented in the year 1988. But RBI felt that there should be some changes in Basel

Accord-I, so RBI introduced Basel Accord-II in year 2004.

The major distinguish between these accords are as follows:

1.) What is Basel Accord-I?

� This is and agreement on a world wide standard for minimum capital or

solvency requirement by each financial institution. The Basel Committee

on banking supervision (Constituted by the Bank for International

settlement) supervises the accord entered into by the member countries.

2.) How many Accords are there at present?

� Until May 04 only one Accord Basel I was effective since 1988. In June 04

the Basel II Accord was released.

3.) Why is the Basel II Accord now necessary and when is it likely to be

implemented?

� Over the last two decades (after implementation of Basel I in 1988)

significant developments in technology and telecommunication have

taken place. Along with this, innovation in banking products and services

e.g. credit derivative, securitized assets in the globalised environment

have enhance risk levels of banks and financial institutions. The 1988

Accord is too broad and not fully sensitive to such risks. Furthermore,

operational risk has also become very central to the risk management

process. Hence the new Accord Basel II was conceived. Implementation by

the concerned banks is slated to be towards the end of 2006.

4.) What are the points of distinction between Basel I and Basel II Accord?

� The points of distinction between Basel I and Basel II are as under:

A.) Basel I focus on single risk measure in the form of minimum capital

requirement of 8% on risk weighted assets (in India however the RBI has

prescribed 1% more i.e. 9%). Basel II will focus on internal rating

methodologies, supervisory, review process and market discipline, besides

minimum capital.

9

B.) Basel I is considered to be a too simple approach in capital regulation and is

not effective in the present day market environment. Basel II provides a

number of approaches for risk management with incentives for good risk

measurement.

C.) Basel I is rigid and is not risk sensitive. The proposed Basel II provides

increased risk sensitivity and is also flexible.

D.) There was no risk category under “operational risk” in Basel I. However,

Basel II provides a definition of Operational Risk detailed guidelines thereof.

5.) What is “Three Pillar” approach under proposed Basel II?

� The Three Pillar approach is a combination of quantitative, qualitative

and element of market forces as under:

• Pillar I (Quantitative): Calculation of regulatory capital requirement

(minimum 8%). This is already in Basel I. however, only some

refinements in risk weight computation will be introduced.

• Pillar II (Qualitative): Supervisory review process of assessing overall

capital requirements of a bank and early intervention when necessary,

(new in Basel II).

• Pillar III (Market Forces): Market discipline is sought to be ensured by

transparency and disclosure, especially in regards to capital structure,

risk exposure(NPA), etc. (new in Basel II).

6.) What are the various categories of risks identified under proposed Basel II?

� Credit Risk, Market Risk and Operational Risk will be the three risk

categories.

7.) How risk is based pricing being handled under the proposed Basel II?

� Assuming that credit pricing is required to be made for ‘A’ rated borrower

the following example may be useful:

a.) Cost of Fund 6.00%

b.) Administrative overheads for monitoring account 1.25%

c.) Risk Factor in ‘A’ rated Borrower (Expected Loss) 1.00%

d.) Unexpected Loss Factor 0.25%

e.) Expected Profit 2.00%

Credit pricing for the Borrower is 10.50%.

10.) Objectives intended to be achieved through regulatory capital & economic capital

under proposed Basel II?

� Regulatory capital (min. 8%) in India min. 9% is toward expected losses

while economic capital (each bank to assess) is for unexpected losses. For

computation of economic capital, the use of statistical tools may be

necessary as computation of economic capital is a complicated process..

10

1.3)Function of Banking :

• Issue of money, in the form of bank notes and current accounts subject to

cheque or payment at the customer's order. These claims on banks can act as

money because they are negotiable and/or repayable on demand, and hence

valued at par and effectively transferable by mere delivery in the case of

banknotes, or by drawing a cheque, delivering it to the payee to bank or cash.

• Settlement of payments -Banks act both as collection agent and paying

agents for customers, and participate in inter-bank clearing and settlement

systems to collect, present, be presented with, and pay payment instruments.

• Credit intermediation -Banks borrow and lend back-to-back on their own

account as middle men.

• Credit quality improvement -Banks lend money to ordinary commercial

and personal borrowers (ordinary credit quality), but are high quality

borrowers losses without defaulting on its own obligations.

• Maturity transformation -Banks borrow more on demand debt and short

term debt, but provide more long term loans. Bank can do this because they

can aggregate issues (e.g. accepting deposits and issuing banknotes) and

redemptions (e.g. withdrawals and redemptions of banknotes), maintain

reserves of cash, invest in marketable securities that can be readily converted

to cash if needed, and raise replacement funding as needed from various

sources (e.g. wholesale cash markets and securities markets) because they

have a high and more well known credit quality than most other borrowers.

11

1.4)RESEARCH METHODOLOGY

Research is the activity on the basis of which investigation can be done & problems can

be solved & decisions can be made.

Analysis of data should be done scientifically frame work within which the research

activities are carried is called Research Methodology.

There are two reasons for which research is done:

a) To find solution for the problem

b) To take decision

For Research there are different ways but for this project I collect the data in two ways:

A) Primary Data

B) Secondary Data

A) Primary Data:

Primary Data is the data which is not readily available. The primary data is

collected by questionnaire method, interviewing method and observation. This

data one has to collect on his own.

With the help of the Primary Data I collected the information about the

PRODUCTS OF THE IDBI BANK LTD. under assets side and liabilities side.

This data is very useful for my project.

Following are the information related to this data:

I) Questionnaire Method: With the help of questionnaire method I made a

question in a set of forms. From which I conducted survey for the

information about ASSETS SIDE OF PRODUCTS and LIABILITIES SIDE OF

PRODUCTS. The respondents answer the question according to their

knowledge on such products. It helps me to know the product information

by which I can analysis into my project.

II) Observation Method: Observation method is of two type: participative

and non-participative. I used non-participative method to know the

Operation of the Bank, Treatment with the customer, etc.

B) Secondary Data:

Secondary Data is the data that has been collected earlier for the some purpose

other than purpose of present study. This data is useful for the reference of the

project. Secondary data is readily available. This data is available in the library,

on the site, etc.

12

With the help of secondary data I collected information about the ANNUAL

REPORT OF THE IDBI BANK LTD, from 2006-08 for how it is related with the primary

data. Also from the Annual Report details like Maturity Pattern of Assets and Liabilities

and Brief idea about the Role of Treasury has been taken.

I would like to thanks to whole staff of the IDBI BANK LTD, NASHIK for giving

information about the data what I required for my project.

INTERPRETATION OF THE DATA:

With the help of the primary data, the data is interpreted as:

ASSETS side of the products is as follows:

• Home Loan

• Loan Against Property (LAP

• Educational Loan

• Personal Loan

• Loan against Securities

• Agri Loan

• SME Finance

IDBI Bank Ltd. has introduced new Loan i.e.,

• Holiday Travel Loan

LIABILITIES side of the products is as follows:

SAVING ACCOUNT PRODUCTS

CURRENT ACCOUNT

13

With the help of secondary data, the data is interpreted as:

The ASSETS SIDE OF THE PRODUCTS in the Annual Report of the IDBI BANK LTD is

shown in:

Schedule 6:

Cash & Bank Balance with RBI

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

Schedule 7:

Balance with Banks and Money at Call & Short

Notice

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

Schedule 8:

Investments

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

Schedule 9:

Advances

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

Schedule 10:

Fixed Assets

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

14

Schedule11:

Other Assets

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

The LIABILITIES SIDE OF THE PRODUCTS in the Annual Report of the IDBI BANK LTD is

shown in:

Schedule 3:

Deposits

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

Schedule 4:

Borrowings

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

Schedule 5:

Other Liabilities and Provisions

As on 31-3-

2007

(Current

Year)

As on 31-3-

2007

(Previous

Year)

TOTAL

Accordingly ASSET LIABILITIES MANAGEMENT COMMITTEE has to manage the ASSET

AND LIABILITIES MANAGEMENT. Same as forth in ANNUAL REPORT OF IDBI BANK

LTD, Maturity Patter of certain items of ASSETS AND LIABILITIES as on 31-3-2007 is

shown:

15

Upto

14

days

15-28

days

29days

to 3

months

Over 3

months

upto 6

months

Over 6

months

upto 1

year

Over

1

year

upto

3

year

Over

3

year

upto

5

year

Over

5

years

Total

Deposits

Advances

Investments

Borrowings

Foreign

Currency

Assets

Foreign

Currency

Liabilities.

1.5)INTRODUCTION ABOUT THE PROJECT

In this project the Role of Retail Liabilities, Retail Assets and Treasury in Assets

and Liabilities Management is described. The Role of all of them is important in Banking

Sector. These Roles are described in details in Chapter-5. Also the Maturity Buckets of

certain Assets and Liabilities is also explained, which is the function of ALCO (Assets

Liabilities Committee).

16

CHAPTER II

PROFILE OF ORGANIZATION

17

2.1)PROFILE OF IDBI to IDBI BANK LTD.

The Industrial Development Bank of India (IDBI) was established on July 1, 1964

under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India.

In February 1976, the ownership of IDBI was transferred to the Government of India

and it was made the principal financial institution for coordinating the activities of

institutions engaged in financing, promoting and developing industry in the country.

Although Government shareholding in the Bank came down below 100% following

IDBI’s public issue in July 1995, the former continues to be the major shareholder

(current shareholding: 52.3%). During the four decades of its existence, IDBI has been

instrumental not only in establishing a well-developed, diversified and efficient

industrial and institutional structure but also adding a qualitative dimension to the

process of industrial development in the country.

IDBI has played a pioneering role, particularly in the pre-reform era (1964-91),in

catalyzing broad based industrial development in the country in keeping with its

Government-ordained ‘development banking’ charter. Narasimam committee

recommends that IDBI should give up its direct financing functions and concentrate

only in promotional and refinancing role. But this recommendation was rejected by the

government. Latter RBI constituted a committee under the chairmanship of S.H.Khan to

examine the concept of development financing in the changed global challenges. This

committee is the first to recommend the concept of universal banking. The committee

wanted to the development financial institution to diversify its activity. It recommended

to harmonies the role of development financing and banking activities by getting away

from the conventional distinction between commercial banking and developmental

banking.

In September 2003, IDBI diversified its business domain further by acquiring the

entire shareholding of Tata Finance Limited in Tata Home finance Ltd., signaling IDBI’s

foray into the retail finance sector. The fully-owned housing finance subsidiary has

since been renamed ‘IDBI Home finance Limited’.

Towards this end, the IDBI (Transfer of Undertaking and Repeal) Act 2003 was

passed by Parliament in December 2003. The Act provides for repeal of IDBI Act,

corporatization of IDBI (with majority Government holding; current share: 58.47%) and

transformation into a commercial bank. The provisions of the Act have come into force

from July 2, 2004 in terms of a Government Notification to this effect. The Notification

facilitated formation, incorporation and registration of Industrial Development Bank of

India Ltd. as a company under the Companies Act, 1956 and a deemed Banking Company

under the Banking Regulation Act 1949 and helped in obtaining requisite regulatory and

statutory clearances, including those from RBI.

18

IDBI would commence banking business in accordance with the provisions of the

new Act in addition to the business being transacted under IDBI Act, 1964 from October

1, 2004, the ‘Appointed Date’ notified by the Central Government. IDBI has firmed up

the infrastructure, technology platform and reorientation of its human capital to achieve

a smooth transition.

On July 29, 2004, the Board of Directors of IDBI and IDBI Bank accorded in

principle approval to the merger of IDBI Bank with the Industrial Development Bank of

India Ltd. to be formed incorporated under the Companies Act, 1956 pursuant to the IDB

(Transfer of Undertaking and Repeal) Act, 2003 (53 of 2003), subject to the approval of

shareholders and other regulatory and statutory approvals. A mutually gainful

proposition with positive implications for all stakeholders and clients, the merger

process is expected to be completed during the current financial year ending March 31,

2005.

In 2004, IDBI Bank and IDBI Limited were merged to form IDBI - a Universal

Bank. IDBI created history as the company profile includes the building up of leading

financial institutions in India namely:

� National Stock Exchange of India (NSE)

� The National Securities Depository Services Limited (NSDL)

� Stock Holding Corporation of India Ltd. (SHCIL)

Currently enjoying the position of the eighth-largest development bank in the

world, IDBI has employee strength of around 7500 employees. The careers at IDBI are

among the most desired ones for anyone in the finance industry.

With a web of 501 branches, 851 ATM and 312 Centres, IDBI plans to reach as

many customers as possible and provide finance solutions to one and all.

Board of Directors of IDBI:

The Chairman and MD - Mr. Yogesh Agarwal

The Deputy Managing Director – Mr. O.V. Bundellu & Mr. Jitendra Balakrishnan aims

to take the bank to universal standards fulfilling the commitments made to the people in

India. The head office of IDBI is situated in Mumbai. They have multiple branches in

major cities like Delhi, Indore, Jaipur, Kolkata, Noida, Bangalore, Chennai and Pune. The

bank is growing its reach to the Indian population by incorporating newer and more

customer oriented financial services.

19

Thus, from the above information following is the short summary:

1964: On July 1, IDBI was established by an Act of Parliament, as a wholly-owned

subsidiary of Reserve Bank of India, to catalyze the development of a diversified

and efficient industrial structure in the country, in tune with national priorities.

1976: 100% ownership was transferred from RBI to the Government of India (GOI).

1995: Domestic IPO reduced GOI’s Stake, initially to 72% and post-capital

restructuring to 58.1%. The Current GOI shareholding is around 53%.

2004: On October 1, IDBI was converted into a banking company (as Industrial

Development Bank of India Limited) to undertake the entire banking activities

while continuing to play its secular DFI role.

2005: On April 2, IDBI merged its thereto banking subsidiary (IDBI Bank Ltd.) with

itself. However, the ‘appointed date’ of merger was fixed as October 1, 2004.

2006: On October 3, The United Western Bank Ltd. (UWB), a private sector bank, was

merged with IDBI.

2006: IDBI announced its foray into Life Insurance business jointly with FEDERAL

BANK and FORTIS INSURANCE International N.V.(Fortis). A Memorandum of

Undertaking (MoU) was signed by the three partners on July 11, 2006 to this effect,

followed by a Joint Venture Agreement on November 23, 2006.

2006: IDBI Gilts Ltd. was incorporated as a wholly-owned subsidiary of the Bank on

December 13, 2006 to undertake Primary Dealership Business.

20

2.2) IDBI Bank Ltd. has various vertical limits for its core business. Following are

vertical limits of IDBI Bank Ltd.:

IDBI BANK LTD’s. CORE BUSINESS

CORPORATE BANKING: -Project Finance

-Film Finance

-Infrastructure Finance

-Working Capital Finance

-Cash Management Services

RETAIL BANKING:

RETAIL LIABILITIES: -Current Account

-Saving Account

-Demat Account

RETAIL ASSETS: -Home Loan

-Personal Loan

-Educational Loan

-Loan Against Property (LAP)

THIRD PARTY PRODUCTS: -Mutual Fund

-Insurance Product

-Bonds & Debentures

SME BANKING: -Auto vendor Financing

-Business Finance Program

-Program for Co-financing of

SME with SIDBI

AGRI LOAN

21

Profile of the Branch where Project was undertaken:

There are 501 branches of IDBI BANK LTD. But in these 501 Branches of IDBI BANK

LTD. the project was undertaken in Nasik (West Zone) Sole ID-103 Branch. This Branch

is situated at Gangapur Road, Nasik.

Under this branch there are two more branches. First branch is of Retail Assets and

other is United Western Bank Merge Branch. There are overall 40 employees working

under this branch.

The Branch Head is Mr. M. Ismail as Branch Manager, who looks after Retail Liabilities.

For Retail Assets, Mr. Y. Mahaskar who is Center Head.

The function under this branch as follows:

• Operation Work and Selling of Current Account, Saving Account, Term Deposits.

• Third Party Products like Mutual Fund, Insurance Products and Bonds &

Debenture.

• Operation Work and Disbursement of Home Loan, Personal Loan and

Educational Loan.

• Collection Department for Recovery & NPA Management.

22

CHAPTER III

Concept Related with Project

23

3.1) INFORMATION/CONCEPT RELATED TO THE ROLE OF RETAIL BRANCHES AND

TREASUTY IN ASSETS AND LIABILITIES MANAGEMENT:

ROLE OF RETAIL BRANCH BANKING:

Each bank has one objective i.e., social service.

Retail Branch Banking plays an important role in banking sector. But HOW ?

Taking example of Tree, Retail Branch Banking is the base of the tree. Without base

layer cant be strong. The objective of the Retail Branch banking i.e. Retail Liabilities is to

collect deposit and pay the interest.

Like, Bank is giving to the customer on deposit 10% and this deposit is lend to other

customer on 13%, than 3% is the margin for the bank. This 3% margin is used for the

cost of fund. In cost of fund, costs are like printing and stationary, salaries, maintenance

expenses, etc.

So, Retail Branch Banking plays an important role. The bank is running on “CASA

(Current Account Saving Account) Badayein, Bank Banayein”.

This objective makes available fund to the bank and maintains cost of fund

24

RETAIL BANKING CYCLE:

EXPLANATION OF THE RETAIL BANKING CYCLE:

1) Retail Branch (Liabilities) Banking collects the fund from the market with the

help of the CURRENT ACCOUNT, SAVING ACCOUNT, and FIXED DEPOSITS.

2) This fund is managed by the TREASURY DEPARTMENT.

3) Treasury Department looks after this fund.

4) Treasury Department bifurcate the fund into INVESTMENT and RETAIL ASSETS.

The INVESTMENT is done as per the guideline of the RBI. Mostly INVESTMENT is

done in capital market, debt market, G-sec, etc. Where from RETAIL ASSETS, loan

TREASURY

RETAIL

LIABILITIES

RETAIL

ASSETS

Via, CURRENT A/C,

SAVING A/C, FIXED

DEPOSIT

For Home Loan, Personal

Loan, Educational Loan,

SME Finance, etc.

BORROWS

LENDING INVESTMENT

RETURN

25

is given to the project like infrastructure, manufacturing, Home loan, Personal

Loan, Educational Loan, SME Finance, Agri Loan,etc. and from this loan interest is

earned.

5) This interest earned by the RETAIL ASSETS is used by the Treasury Department

for the REINVESTMENT in RETAIL ASSETS or for INVESTMENT in equity sector

or for incurring the Cost of Fund of the Bank.

6) Like this the flow of the money is done from the RETAIL BRANCH BANKING.

This was the Role of the Retail Banking Cycle. Same way the Role of Retail Liabilities,

Retail Assets and Treasury Department in Assets and Liabilities Management is

explained. This Role is explained as below:

A.) ROLE OF RETAIL LIABILITIES:

The explanation of the above role is as follows:

The Retail Liabilities collects the fund in the form of the Saving A/c, Current A/c and

Fixed Deposits.

With this Retail Liabilities gives the services like: Phone Banking, Internet Banking, ATM

facilities, Card (Debit or Credit) Facilities, Cheque Book Facilities, etc.

The services given to the client of the bank is added to the cost of the fund of the banks.

This is the role of the Retail Liabilities.

RETAIL LIABILIITES

GIVES SERVICES like COLLECTS FUND via,

SAVING

ACCOUNTS

CURRENT

ACCOUNT

FIXED

DEPOSITS

ATM

FACILIITES

INTERNET

BANKING

PHONE

BANKING

26

As IDBI Bank Ltd has Retail Liabilities Section. Following are the services which are

offered by the IDBI Bank Ltd.:

A.) SAVING ACCOUNT PRODUCTS:

i.) IDBI’s Super Savings Account:

The Super Savings Account is a complete financial package that provides easy access to

money and complete banking convenience too. It offers whole range of options for

optimal management of your money, which means, with Super Savings Account not only

money is saved but also it grows.

Under this account following are services:

• Instant Banking

• International Debit Card

• Family Account

• Quick Money Transfer

• Easy Payments

ii.) IDBI’s Jubilee Plus Savings Account - Senior Citizens:

IDBI has brought to the senior citizens an account which can facilitate banking

transactions with to the needs of the customer. Also get the benefit of getting another

account with an AQB of Rs. 1,000.

� Free Sponsor’s account with AQB of Rs 1000 with the senior citizen account.

� Tax Savings options via: Fixed Deposit

� Free debit card

� Free monthly statement of account.

� Free Demand Draft at home branch and Free Pay order

� Phone Banking

� Mobile Banking

� Free Statement by email

� Locker services at a concessional rate

B.) CURRENT ACCOUNT:

i.) IDBI’s Roaming Current Account:

Roaming Current Account from IDBI Bank comes packed with a host of services and

facilities that makes banking convenient and hassle-free. With these services

electronic funds transfers, 24x7 cash withdrawals from ATMs, Internet Banking,

Phone Banking and SMS Banking, are assured at competitive rates.

27

Features of Roaming Current Account:

• Make payments to vendors in different cities without any costs

• Receive payments form customers without any charge

• Do banking right from wherever we travel

• Most importantly, maintain better relations with our vendors and customers.

All this, only with the IDBI Bank Roaming Current Account.

We can open a Current Account (Basic Roaming Current Account) with only Rs 10,000.

Keep in mind; we have to maintain an average quarterly balance of Rs 10,000.

IDBI Bank offers five Roaming Current Accounts – Basic, Special, Bronze, Silver and Gold

to suit business needs.

Under this account following are services:

• Free electronic access facilities

• Internet Banking

o Funds transfer to third party (to any person in any other bank).

o Online transactions - Stop payment facility, account opening and request

for cheque book

o Account information - Complete transaction details, loan schedule, etc.

• Phone Banking

• Mobile Banking

• ATM Banking

• Monthly statements by courier/email

• Standing instructions facility

C.) IDBI’s Sabka Account:

IDBI introduces Sabka Account - a savings account that’s literally meant for

everyone; absolutely elementary in its approach and with an average quarterly

balance requirement of just Rs 250.

Salient features of Sabka Account:

• Low average quarterly balance:

Modern banking facilities with IDBI’s Sabka Account with just Rs 250

• Debit cum ATM Card and Cheque Book

• Unique services like Phone Banking, SMS Banking and Internet Banking

anywhere, anytime

• Quarterly Account Statements

Recurring Deposits:

This account offers you a recurring fixed deposits service wherein you can earn a higher

rate of interest just by investing a small amount (as low as Rs 500) every month.

28

D.) IDBI ‘Super Shakti’ Account for Women

Understanding the specific requirements of customers, IDBI Bank have

introduced a special Savings Account for Women. Not only has this, along with this

account bank offered Zero Balance Savings Account absolutely free for her child below

the age of eighteen years.

This Account offers features like:

� Free Transactions at other Bank ATMs.

� An account opening balance of just Rs.1000

� An AQB requirement of Rs. 5000.

� A Zero balance account for your child below the age of 18 years.

� Debit Card Free for the first year.

� Quarterly Account Statement

� Phone Banking

� Mobile Banking

� Free Statement by e-mail

� Demat Account at just Rs.200.

� Locker services at a concessional rate

� Investment advisory services.

DEPOSITS

• Fixed Deposits

• Recurring FD's

As Fixed Deposits rate of interest keeps on changing so current rates of Fixed

Deposit is available on website: www.idbibank.com or call on

Other services like:

INVESTMENT SERVICES

� Insurance

� Mutual Funds

� Bonds and Debentures

CARDS

� National And International ATM Cum Debit Cards

� World Currency Cards

� Cash Cards

� Gold Cards

29

ANYTIME AND ANYWHERE BANKING SERVICES

� ATM

� Mobile and Phone Banking

� Net Banking

� Payment of Taxes

� Bill Payment

� Prepaid Mobile Refill Service

� Air and Railway Ticket Booking

These all are the services under IDBI Bank Ltd. (Retail Liabilities)

B.) ROLE OF RETAIL ASSETS:

This role of Retail Assets is as follows:

In Retail Assets Loan like home, personal, educational, etc. are there. The rate of

interest of the loan varies from bank to bank. But the cycle of Retail Assets is same.

The Loan under Retail Assets is given to the proprietor, existing customer of

bank, entrepreneur, etc. Before Disbursement of the loan to such clients, operation work

is done. In operations, all the verification of the documents of the client, calculation of

the amount for the loan as per income of the client, etc. is done. Afterwards, successful

completion of the operation work, loan amount is disbursed to the client for his use.

Loans are like term loan, demand loan and cash credit.

• Term Loan: This loan is given for the period of 1year-upto 3years. The term

loan is given for the purchase of the Land & Building, Machinery, Shops,

Furniture, etc.

NPA MANAGEMENT

SALES OPERATION

CREDIT

30

• Demand Loan: This loan is given up to 35months. The Demand Loan is given for

the same as for the Term Loan

• Cash Credit: This loan is given against hypothecation of stocks. The Cash Credit

limit is sanctioned for the period of 12 months.

Under all Loans the possession is under Bank. This possession is known as

Pledge. Installment of such loan is collected monthly, quarterly, and yearly, as per the

agreement between the client and banks.

If Client pays the installment of the loan as per the agreement and completes the

dues then his account is well settled and becomes the creditworthiness client for the

bank. If any client who do not pays installment up to 90 days or above then his account

is treated as Non Performing Assets for the banks.

Then, the collection of such dues is done by the recovery agents on behalf of the

banks.

RETAIL ASSETS:

As IDBI Bank Ltd has Retail Assets Section. Following are the services which are offered

by the IDBI Bank Ltd.

The above chart of Retail Assets is explained as follows:

A) Home Loans :

IDBI Bank helps you realize your long cherished dream of owning your home through

hassle free and customer friendly home loans.

Advantages due to IDBI Bank's ultra flexible home loan are as follows:

• Maximum Funding

• Flexibility of choosing between Floating or Fixed interest rate

• Attractive rate of interest

HOME

LOANS

LAP (LOAN

AGAINST

PROPERTY)

PERSONAL

LOAN

CONSUMER

DURABLE LOANS

EDUCATIONAL

LOAN

HOLIDAY TRAVEL LOAN

RETAIL ASSETS

31

• EMI on daily reducing balance

• Simple documentation

• Legal and technical assistance

• Balance transfer facility

B) Loan Against Property :

IDBI realize how important it is to raise money in the face of exigencies. Loans

against Property could be used for:

• Education

• Business

• Marriage

• Purchase or improvement of property

Advantages due to IDBI Bank's are as follows:

• Tenor up to 15 years

• Attractive Rate of Interest

• Maximum Funding

• Interest rate on daily reducing balance

• Fixed and floating interest rate options

• Simple documentations

• Free legal and technical assistance

C) Education Loans:

Education loans from IDBI aim at providing financial support to deserving/

meritorious students for pursuing higher education in India and abroad.

D) Personal Loan

E) Loan Against Securities:

Loan against Securities is provided in the form of an overdraft facility Against your

Securities. The Securities are considered as:

• Loan against Shares

• Loan against GOI Bonds

• Loan against Mutual Fund Units

• Loan against Life Insurance Policies

• Loan against NSCs/KVPs

• Loan against other Securities

IDBI Bank Ltd. has introduced new Loan i.e.,

32

F) Holiday Travel Loan:

• Purpose

Tailor-made loans to meet all your travel expenses such as cost of ticket, hotel

stay, visa, taxes, insurance or any sundry / incidental cost pertaining to travel to

be undertaken by self / spouse / children family members of applicant within

India or abroad.

• Eligibility

All individuals, existing bank customers and proprietorship firms.

IDBI Bank Ltd. also gives loan to the Agri Business as well as SME (Small and Medium

Enterprises) Sector.

The loan for the Agri Business is given for Contract Farming, financing for wells,

finance to hi-tech agriculture, land development loan, purchase of new tractor, purchase

of bullock carts, etc.

The Loan to SME Sector is given for working capital financing, auto vendor

financing, development of the industries, purchasing of the machineries, etc.

HOW LOAN IS CREATED IN RETAIL ASSET?

ABOVE Chart is explained as below:

1) LEAD: When customer approach the bank for taking loan is known as lead.

2) LOGIN: When lead is activated, than from customer certain document is taken.

This document is verified by the LOGIN CO-ORDINATOR. Login Coordinator

verifies each document in details. If Login Coordinator founds some queries than

unless and until that query is not solved out, it cannot be processed further.

Queries can be of two types. First could be document query and next could be off

document query. Document query be like address verification not matched, etc.

and off document query be like location in which customer do his business, etc.

Unless and until all the queries are not solved, communication oscillates between

customer and login coordinator. If all queries are solved out, than on the basis of

the requirement of the customer calculation is done for disbursement of the loan.

Than his login is sent to the CREDIT MANAGER by the Login Coordinator for

LEAD LOGIN SANCTION DISBURSEMENT

COLLECTION

33

verification. Credit Manager verifies his data and on that basis loan gets sanction.

If Credit Manager finds some queries than communication oscillates between

Login Coordinator and Customer. If there are no queries than procedure follows

further.

3) Sanction: Before sanctioning loan some verification is done from the bank side.

For this verification certain agencies are appointed for this verification. This

agencies are FI, RCU, CIBIL, DV, Legal and Technical. This all agencies are the

third party. They work for the bank This agencies are discussed below:

a) FI (Field Investigation): This agency verify the document like

Residence & office.

b) RCU (Risk Containment Unit): This agency verify the Salary slip of the

salaried person and Income Tax Return(ITR)/Balance Sheet of the Self

Employed Non Professional/Self Employed Professional.

c) CIBIL (Credit Information Bureau of India Ltd): This is the agency

where all the database of the customer is available. Earlier there used to

the fraud like customer could take the loan from the 2-3 and intimate to

the other bank that he has not taken any loan. This used to make fraud. So

CIBIL has all the information of the customer like account in which bank,

loan from which bank if any, which type of the loan in the bank, any

default case, etc. So RBI made it compulsory to all the bank report of the

CIBIL is must for the customer.

d) DV (Document Verification): This agency verify the document like bank

statement.

e) Legal: Every bank has Panel Member. In each Panel Member bank

appoints the lawyer. This lawyer looks after all the cases of the bank.

Bank has to give loan like home loan, loan against property, etc. So in this

case bank takes the document, but those documents are as per the title or

not it is look after the lawyer.

f) Technical: In this the technical things are looked into the matter.

Technical things like the layout of the premises, assets of the premises,

etc.

In case of Personal Loan this verification is done before sanction. While in

other cases it is done after sanction. This is just because Personal Loan does

not have any security for mortgage. Personal loan is like unsecured loan.

Once all the documents are verified from the bank side, than

4) Disbursement: The amount which is calculated at the time of the Login, that

amount is disbursed to the customer. After wards the EMI is done. After amount

is disbursed than the operation work starts. In operation work, the EMI

amount collection, informing to the customer for the EMI, etc. If rate of interest

34

changes, than the EMI and Tenure of the loan changes. So under operation work,

this change in EMI and Tenure of the loan is informed to the particular client.

5) Collection and NPA Management: Some parties are there whose payment is on

the time, and some party’s payment is not on the time. So whose payment is not

on the time for 90 days or above consequently than that account is transferred in

to the NPA (Non Performing Assets). Than the collection work starts. Each bank

wants that NPA A/c should be less. So NPA Management is done. In this

management, letter is forwarded to them regarding the EMI; personal visit is

given to the customer place, etc.

Like this way asset are created and handled.

Thus, the objectives of the Retail Banking (ASSETS & LIABILITIES) are:

1) To tap the fund at the grass root level

2) To absorb the fund from the market and release the fund into the market.

3) To give service at the satisfactory level.

4) To control the liquidity of the market.

3.2)Role of Treasury in Assets and Liabilities Management

Treasury management is management of a total wealth from the viewpoint of

liquidity, safety and returns in tune with its mission or business objectives to achieve

the interest of stakeholders (maximization of yields, minimum cost and control risks).

While treasury activity in an organization is based on its size, area of operation

and risk profile. It actually revolves around market risk management covering

monetary assets and liabilities. Thus, treasury management plays an important role in

assets (loans) and liabilities (deposits) management.

In short, treasury deals with the management of cash flows from the time

pattern, places of occurrences of cash flows, etc,

In any organization, risk is broadly classified in to three classes namely, credit

risk, operation risk and market risk. In banking organization, market risk management

has to be treated differently from other two classes. This is because the components of

market risk are focused on liquidity, interest rate, foreign exchange and equity and

commodity prices, and changes in market variables.

The Board of Directors of the Bank is the supreme authority for overall

management of Treasury Risk Management. As per guidelines of RBI this committee of

Treasury Risk Management is constituted as Chairman and Managing Director, Head of

Credit, Market and Operational Risk Management Committees.

The key to success of Market Risk management in an Organization especially in

Bank is due to the effectiveness functioning of ALCO. The composition of ALCO is as

follows:

35

• CMD or CEO or ED as Chairman of ALCO

• Chief of Investment

• Chief of Credit

• Chief of Resources Management or Planning

• Chief of Fund Management

• Chief of International Operations

• Chief of Economic Research

• Chief of Technology

Thus, it will appear from the above organizational set-up that ALM aspect is

supported by identification, measurement, monitoring and control cells, which

comprise middle office, dealing room and back office. Together, these function as the

treasury wing of bank.

The management of the Assets and Liabilities is done by the ALCO. ALM system

was born in the banking world in the year 1979, when US introduce the policy of

deregulation of interest rates.

ALM involves the deliberate mismatching of a bank’s assets and liabilities in the

terms of their maturity and re-pricing characteristics.

OBJECTIVES of ALM:

• Collection of a set of information in a structured manner upon break-up of

relative items of assets and liabilities.

• Arriving at residual maturity of assets and liabilities

• Working out behavioral pattern of liabilities and assets.

• To promote feedback with a view to maintaining an appropriate balance in

interest or earning spread profitability and long term viability of the

organization.

Key objectives of ALM are:

• Stabilization of Net Interest Income;

• Maximization of Shareholder wealth;

• Managing Liquidity

Function of ALCO:

The RBI desires that ALCO be responsible inter alia:

• To ensure compliance with market risk limits fixed by the Board of Directors

• To work out strategies in line with Corporate Risk Management objectives

and budgeted targets in area of Market Risk Management

• To price out a major portion of a bank’s liabilities with various product types

and loans and advances.

• To arrive at the appropriate level of maturity profile of the various types of

assets and liabilities in regard to an ideal mix thereof.

36

• To frame in a professional manner the likely position of interest rate on

assets and liabilities and accordingly to decide business strategies.

• To manage transfer pricing of liabilities in the best interest of the

organization

In essence, ALCO is entrusted with all inclusive function of balance sheet management

in the form of asset liability management, and keeping a regular and effective watch on

market variables and their impact on organization.

TREASURY DEALING ROOM:

Front office function of entire treasury risk management is performed by its dealing

room. Its main functions include:

• Matching and managing market risk aspects of the portfolio

• Extending support in areas of funding, liquidity and investment of assets and

liabilities.

• Pricing of business propositions from the perspective of market risk.

• The dealing room has to act strictly in accordance with its delegated powers and any action

beyond the powers may create organizational crisis.

ASSET-LIABILITY MANAGEMENT PROCESS:

The success of ALM system in a bank is obviously depended upon the quality and speed

of the ALM information system as well as the ALM organization structure.

The ALM process should be designed taking into account size and variety of operations

of the organization. However the primary goal is to identify risk parameters with

respect to particular segment market risk and to facilitate measurement and control of

risk content.

Under the ALM guidelines of RBI the ALM process has to take care of the risks in

following categories:

• Liquidity

• Interest Rate

• Currency

• Equity(Investment)

• Commodity

Thus, The RBI has prescribed the following working tools for liquidity management in

banks in on an ongoing basis:

1. Fortnightly statement of structural liquidity

2. Fortnightly statement of short term i.e. up to 90 days dynamic liquidity.

37

1.) Statement of Structural Liquidity:

This fortnightly statement reflects the tentative outflows and inflows of various

categories of liabilities and assets in a structured form i.e. time-bucketed on a residual

maturity basis with the initial bucket up to 14 days and remaining spread over seven

further buckets.

The format prescribed by the RBI is as per ANNEXURE I.

• A fortnightly statement is prepared on the basis of liabilities and assets on the last

reporting Friday.

• Time bucketing on the residual maturity of each item of assets and liabilities is to be

made.

• Both outflows and inflows are to be identified bucket wise.

• In all there are eight time bucket of outflows and inflows. They are:

2.) 1-14 days

3.) 15-28 days

4.) 29 days to 3 months

5.) Over 3 months to 6 months

6.) Over 6 months to 1 year

7.) Over 1 year to 3 years

8.) Over 3 years to 5 years

9.) Over 5 years.

Mismatch as well as cumulative mismatch is to be computed bucket wise.

HOW TIME BUCKETING IS TO BE MADE:

Time bucketing is the essence of the liquidity statement, since mismatch – positive and

negative – is required to be worked out bucket wise. In this respects, the guidelines of

the RBI to be followed by banks are summarized as follows:

For Outflows of Bucketing:

A) Capital & Reserve & Surplus : Over 5 years Bucket

B) Saving Account and Current

Account Deposits : 10-15% in 1-14 days & 85-90%

in 1-3 days

C) Time deposits : To be placed in respective time

buckets

D) Certificate of Deposits : To be placed in respective time

buckets.

E) Bills Payable : 1-3 years

38

F) Inter office Adjustment : 1-14 days

G) Other Liabilities : over 5 years

H) Letters of Credit:

Based on the suitable time buckets on the basis of recovery expectations,

but it could be on or before 180 days from issue.

I) Interest Payable : To be placed in respective time

buckets

J) All overdue Liabilities : 1-14 days

For Inflows:

A) Cash : 1-14 days

B) Balance with RBI : 1-14 days

C) Balance with other banks : 1-14 days or 1-3 years as per the

bank requirement

D) Investments:

Generally respective maturity buckets. Mostly investment is done in

Equity, than it will be in 1-90 days & Mostly investment is done in

Government Securities, than it will be in over 5 years.

E) Cash Credit, Over Draft, Demand Loan : 1-3 years

F) Term Loan : Cash flows to be placed under

respective maturity buckets.

G) NPA : Sub Standard in 3-5 years and

Doubtful in over 5 years

H) Fixed assets : Over 5 years

I) Inter office Adjustment : 1-14 days

J) Leased Assets : Cash Flows under respective

maturity Buckets

K) Interest Receivable : Respective maturity buckets

L) Export Reliance from RBI : Respective Maturity buckets

39

On the basis of the statement of the structural liquidity following is the maturity buckets

of the certain assets and liabilities of IDBI BANK LTD. from 2006-08:

IDBI BANK LTD. (2006-07)

Maturity Pattern of Assets and Liabilities (Rs. in

Crore)

1-14

days

15-28

days

29days

-

3months

over

3month

-

6month

over

6month

- 1 year

over 1

year

- 3 yr

over

3year

- 5

years

over 5

years

Advance 3329.8 1154.7 3912.5 2383.1 4283.3 12905.5 8193.1 22745.8

Investment 69.1 696.7 770.1 485 803.3 4175.5 2844 15829.8

FCA 1242.8 98 759.3 435.4 2841.7 913.9 381 844.3

TA 4641.7 1949.4 5441.9 3304.5 7928.3 17994.9 11419.8 39419.9

Deposits 3976.8 1854.9 7686.9 5225.2 9973.8 12895.2 1185.3 303.3

Borrowing 621.5 966.1 365.5 3081.9 3741.5 11053.7 7076.5 14984.8

FCL 21.9 2.9 918.2 271 2474.3 3319.6 225 26.8

TL 4620.2 2823.5 8970.5 8578 16189.6 27268.5 8486.8 15314.8

FCA- Foreign Currency Assets; FCL – Foreign Currency Liabilities; TA: Total Assets; TL:

Total Liabilities

40

IDBI BANK LTD. (2007-08)

Maturity Pattern of Assets and Liabilities (Rs. in Crore)

1-14

days

15-28

days

29days

-

3months

over

3month

-

6month

over

6month

- 1 year

over 1

year

- 3 yr

over

3year

- 5

years

over 5

years

Advances 1699 1064.2 5968 7498.1 10274.1 19225.9 8801.1 23605.6

Investment 2747 179.3 167.7 219 1675.4 3834.1 3429.8 20550.7

F C A 752.1 144.2 1671.6 622 2741.7 980.1 283.8 640.4

TA 5198.9 1387.7 7808.3 8339.1 14691.2 24040 12514.7 44796.7

Deposits 4459 1786.8 8149.2 9199.2 27493.6 17679.8 3332.9 742.8

Borrowing 491.5 745.9 1629.8 3872.8 5961.1 9592.1 6941.1 9447.3

FCL 622.01 2.93 1113.61 401.67 3292.17 1409.66 26.09 14.23

TL 5572.5 2535.6 10892.6 13473.6 36746.9 28681.6 10300.13 10204.38

2.) Statement of short term i.e. up to 90 days dynamic liquidity:

To oversee liquidity aspects, it is necessary for banks to prepare a short term

liquidity statement besides a structural liquidity statement. The short term liquidity

statement should show both outflows and inflows, but be limited to a period of 90 days.

The underlying objective is to capture any negative mismatch over a short period of 90

days bucketed into the total three buckets of 1-14 days, 15-28 days and 29-90 days and

implement remedial action instantly,

41

RBI format of the statement is as per ANNEXURE III

ANNEXURE – III:

Name of the Bank:

Statement of Short Term Dynamic Liquidity as on

(Amt. in Crore of Rs.)

1-14

days

15-

28

days

29-90

days

A. Outflows

1. Net increase in loans and advances.

2. Net increase in Investment.

3.Inter-Bank Obligations

4. Off-Balance sheet items.

5.Others

TOTAL OUTFLOWS

B. Inflows

1. Net Cash Position

2. Net increase in deposits(less CRR)

3. Interest on Investments

4. Inter-Bank Claims

5. Off-Balance Sheet items

6. Others

TOTAL INFLOWS

C.MISMATCH(B-A)

D. Cumulative Mismatch

E. C as a % to Total Outflows

Features:

• This fortnightly statement covers outflows and inflows of assets and liabilities

for a period up to 90 days – hence, it is termed as “short-term”

• There are only 3 time buckets i.e. 1-14 days, 15-28 days and 29-90 days.

42

• Incremental portion of assets, liabilities and off-balance sheet items together

with “net cash position” is placed in the time buckets.

• Mismatch/Cumulative mismatch and mismatch as a percentage of the total

outflows is worked out to examine the liquidity position in a short term up to 90

days.

• This statement acts as the front – runner of a bank’s liquidity management.

Thus, Treasury’s Department role is very important for Assets and Liabilities

Management. Treasury Department has to look after all kind of risks. The risk like

credit risk, interest rate risk, foreign exchange risk, equity/commodity price risk,

liquidity risk and operational risks.

All such risk Treasury Department has to look after. Major risk for which Treasury

Department has to look after is interest rate risk, operational risk and market risks.

Treasury Department has made section for each risk. But Assets Liabilities

Committee (ALCO) looks after all such risks.

3.3)RBI GUIDELINES FOR ASSET - LIABILITY MANAGEMENT SYSTEM IN

BANKS :

Over the last few years the Indian financial markets have witnessed wide ranging

changes at fast pace. 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.

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 programme should be that

this programme will evolve into a strategic tool for bank management.

The ALM process rests on three pillars:

ALM information systems ALM organization

ALM process

These three pillars are explained below:

ALM Information systems

43

Information is the key to the ALM process. Considering the large network of

branches and the lack of an adequate system to collect information required for

ALM which analyses information on the basis of residual maturity and

behavioral pattern it will take time for banks in the present state to get the

requisite information. The problem of ALM needs to be addressed by following

an ABC approach i.e. analyzing the behavior of asset and liability products in the

top branches accounting for significant business and then making rational

assumptions about the way in which assets and liabilities would behave in other

branches.

ALM organization

The Asset-Liability Committee (ALCO) consisting of the bank's senior

management including CEO should be responsible for ensuring adherence to the

limits set by the Board as well as for deciding the business strategy of the bank

(on the assets and liabilities sides) in line with the bank's budget and decided

risk management objectives. The ALCO is a decision making unit responsible for

balance sheet planning from risk-return perspective including the strategic

management of interest rate and liquidity risks. Each bank will have to decide on

the role of its ALCO, its responsibility as also the decisions to be taken by it.

Towards this end, it will have to develop a view on future direction of interest

rate movements and decide on a funding mix between fixed v/s floating rate

funds, wholesale v/s retail deposits, money market v/s capital market funding,

domestic v/s foreign currency funding, etc.

ALM process

The scope of ALM function can be described as follows:

1. Liquidity risk management

2. Management of market risks

For ASSET AND LIABILITIES MANAGEMENT major risks are involved. Such risks are

explained below:

I) Market Risk:

44

Market Risk may be defined as the possibility of loss to bank caused by the

changes in the market variables. It is the risk that the value of on-/off-balance sheet

positions will be adversely affected by movements in equity and interest rate markets,

currency exchange rates and commodity prices. Market risk is the risk to the bank’s

earnings and capital due to changes in the market level of interest rates or prices of

securities, foreign exchange and equities, as well as the volatilities, of those prices.

Market Risk Management provides a comprehensive and dynamic frame work

for measuring and monitoring. Bank should track the impact of pre-payment of loans &

premature closure of deposits so as to realistically estimate the cash flow profile. Due to

increase/ decrease in Inflation, changes in Government Policies, changes in RBI Policies,

etc. there is direct changes in the assets and liabilities value.

II) Interest Rate Risk:

Changes in interest rate affect earnings, value of assets, liability off-balance sheet

items and cash flow. Hence, the objective of interest rate risk management is to

maintain earnings, improve the capability, ability to absorb potential loss and to

ensures the adequacy of the compensation received for the risk taken and affects risk

return trade-off. Management of interest rate risk aims at capturing the risks arising

from the maturity and re-pricing mismatches and is measured both from the earnings

and economic value perspective. This is measured by measuring the changes in the Net

Interest Income (NII) equivalent to the difference between total interest income and

total interest expense. The difference between the average duration for bank assets and

the average duration for bank liabilities is known as the duration gap which assesses

the bank’s exposure to interest rate risk.

The Asset Liability Committee (ALCO) of a bank uses the information contained

in the duration gap analysis to guide and frame strategies. By reducing the size of the

duration gap, banks can minimize the interest rate risk. When banks have more earning

assets than paying liabilities, net interest position risk arises in case market interest

rates adjust downwards, or vice versa. For finding such net interest position risk there

are different techniques such as :

• The traditional Maturity Gap Analysis to measure the interest rate sensitivity,

• Duration Gap Analysis to measure interest rate sensitivity of capital

• Simulation and

45

• Value at Risk for measurement of interest rate risk. The approach towards

measurement and hedging interest rate risk varies with segmentation of bank’s

balance sheet.

III) OPERATIONAL RISK

Always banks live with the risks arising out of human error, financial fraud and

natural disasters. The recent happenings such as WTC tragedy, Barings debacle etc. has

high lighted the potential losses on account of operational risk Exponential growth in

the use of technology & inter-linkages are the two primary changes that contributed to

such risks. Operational risk is defined as any risk that is not as market or credit risk, is

the risk of loss arising from failed internal processes, people and systems or from

external events.

And yet the root causes of all the financial scams and losses are the result of

operational risk.

Operational risk in bank involves:

a) Clearing: Clearing like Inward Cheque Verification, Outward Cheque

Verification, Maintaining regular communication with other banks, etc.

b) Cash: Handling walk in customers cash transactions for deposit &

withdrawal, managing excess & deficit cash with regular contact with

various banks, follow up of ATM cash account and funding cash for the

same, Tally of teller account & vault account.

c) Petty Cash: Handling various bank related bills and tally of petty cash

account, vendor payments, etc.

d) Transfer of funds.

Other risks are there but these are some major risk in the management. Other risks are

explained in the ALCO/Treasury Department has to handle all such kind of risk and

maintain the liquidity of the bank, profit of the bank, wealth of the shareholders,

deposits of the customer in the banks, investment made in the market, etc.

46

CHAPTER IV

DATA COLLECTION,

ANALYSIS and

INTERPRETATION

47

DATA COLLECTION, ANALYSIS and INTERPRETATION

On the basis of the above information, the data for analysis and interpretation is

collected from the ANNUAL REPORT OF IDBI BANK LTD. from 2006-08 to correlate the

role of the ALCO & Treasury Department in Assets and Liabilities Management.

The data collected from the Annual Report is Maturity Pattern of Certain Assets and

Liabilities.

The analysis of such data is done by using the concept of GAP ANALYSIS and EARNING

AT RISK. The Gap Analysis and Earning at Risk are the techniques for the INTEREST

RATE RISK.

But, before analysis, let clear the concept for Interest Rate Risk.

Interest Rate Risk:

Interest Rate Risk may be defined as the probability of loss on account of movement in

interest rates, having an effect on the value of assets, liabilities, Net Interest Income

(NII) and Net Interest Margin (NIM) over a period of time.

In interest rate risk, the techniques like gap analysis, duration analysis, simulation and

value at risk are used.

The detail explanation of the duration analysis, simulation and value at risk is in

Due to Interest Rate Risk the impact is on: I) Reduction or enhancement in revenue of

bank,

II) Effect on the market value of equity.

What is Net Interest Income (NII)?

� Net Interest Income is the difference between the interest income and

interest expenditure. This shows the strength of the bank in ‘spread’

management.

What is Net Interest Margin (NIM)?

� Net Interest Margin means interest income – interest expenses divided by

total assets.

48

What is a “Gap” Analysis?

� A tool used to judge a bank’s earnings exposure to interest rate

movements is called a gap report. A bank’s gap over a given time period is

the difference between the value of its assets that mature or reprice during

that period and the value of its liabilities that mature or reprice during that

period. If value of assets is more than the value of liabilities, than banks net

interest income is assets sensitive and if value of assets is less than the value

of liabilities, than banks net interest income is liabilities sensitive.

In short, the difference between the value of assets and value of liabilities

is positive than it is known as assets sensitive and if it is negative than it is

known as liabilities sensitive.

If bank has assets sensitive, than increase in interest rate will increase the

net interest income of the bank and if bank has liabilities sensitive, than

decrease in interest rate will increase the net interest income of the bank.

What is Earning At Risk (EAR)?

� Earning implies the net revenue from the interest component in a bank or

financial institution, when the performance is evaluated on an annual

basis. It is a function of interest rate ‘spread’ between interest receipts

and interest payment. Earning At Risk is necessary for the bank to know.

If interest rate changes by 1% or more than how much the value of the

assets or liabilities will change. It means if value of assets or liabilities gets

shock of interest rate than how much change will be there in there value.

Earning At Risk is considered only up to 1 year

49

Computation of EAR:

The computation of EAR involves the following steps:

Step I: Classification of interest sensitive assets and liabilities in each time bucket up to

next 12 months.

Step II: Calculation of the product by multiplying the assets or liabilities by the average

remaining maturity in months

Step III: Summing up the total of Products

Step IV: Working out the net product by dividing the total products by 12.

Step V: Computing the rise or fall in income and expenses based on 1% shock.

Thus, from the above information the analysis is done of the Maturity Pattern of the

Certain Assets and Liabilities of 2006-07 and 2007-08.

For analysis following techniques are used:

50

A) Gap Analysis:

IDBI BANK LTD. (2006-07)

Maturity Pattern of Assets and Liabilities (Rs. in Crore)

1-14

days

15-28

days

29days

-

3months

over

3month

-

6month

over

6month

- 1 year

over 1

year

- 3 yr

over

3year

- 5

years

over 5

years

Advances 3329.81 1154.7 3912.49 2383.09 4283.3 12905.5 8193.11 22745.8

Investmen

t

69.08 696.7 770.05 485.95 803.27 4175.49 2844.96 15829.8

FCA 1242.83 98.01 759.32 435.41 2841.6 913.87 381.69 844.25

TA 4641.72 1949.4 5441.86 3304.45 7928.2 17994.8 11419.7 39419.8

Deposits 3976.79 1854.5 7686.85 5225.17 9973.7 12895.1 1185.3 303.28

Borrowing 621.5 966.11 365.47 3081.87 3741.4 11053.7 7076.53 14984.8

FCL 21.91 2.85 918.15 271.95 2474.2 3319.6 225 26.78

TL 4620.2 2823.5 8970.47 8578.99 16189.6 27268.4 8486.83 15314.5

GAP

(A– B)

21.52 -874.14 -3528.61 -5274.54 -8261.32 -9273.57 2932.93 24105.01

Cumulati-

ve Gap

21.52 -852.62 -4381.23 -9655.77 -17917.1 -27190.6 -24257.7 -152.72

51

IDBI BANK LTD. (2007-08)

Maturity Pattern of Assets and Liabilities (Rs. in

Crore)

1-14

days

15-28

days

29days

-

3months

over

3month

-

6month

over

6month

- 1 year

over 1

year

- 3 yr

over

3year

- 5

years

over 5

years

Advances 1699.89 1064.24 5968.97 7498.08 10274.07 19225.9 8801.12 23605.62

Investment 2747 179.25 167.71 219 1675.44 3834.04 3429.79 20550.7

FCA 752.05 144.22 1671.62 622.01 2741.71 980.09 283.83 640.43

TA 5198.94 1387.71 7808.3 8339.09 14691.2 24040.3 12514.74 44796.75

Deposits 4459.04 1786.81 8149.2 9199.17 27493.6 17679.8 3332.94 742.83

Borrowing 491.54 745.9 1629.79 3872.8 5961.17 9592.07 6941.1 9447.32

FCL 622.01 2.93 1113.61 401.67 3292.17 1409.66 26.09 14.23

TL 5572.5 2535.64 10892.6 13473.6 36746.9 28681.6 10300.13 10204.38

GAP

(A– B)

-373.65 -1147.93 -3084.3 -5134.55 -22055.7 -4641.53 2214.61 34592.4

Cumulati-

ve Gap

-373.65 -1521.58 -4605.88 -9740.43 -31796.1 -36437.6 -34223 369.34

Interpretation:

1. As Gap of the Maturity Pattern of the IDBI BANK LTD. 2006-07 is in negative i.e.-

152.72Cr. This means that if interest rate increases than the net interest income

will decrease and vice versa. Where as the gap of the maturity pattern of IDBI

BANK LTD. 2007-08 is in positive i.e.369.34Cr. This means that if interest rate

increases than the net interest income will increase. Negative sensitive means

Liabilities Sensitive, it means in year 2006-07 bank’s liabilities were more than

the assets. But same in year 2007-08 it is positive sensitive means assets

sensitive, it means in year 2007-08 bank’s assets are more than liabilities. If we

observe in both of the Maturity Pattern, it is found that bank has created long

term assets with short term liabilities. It means bank will earn huge profit in long

run but minor or major changes in market will not effect to the long run assets.

2. In year 2006-07, the position of the bank’s maturity pattern was liability

sensitive, it means value of liabilities is more than the value of assets. This is

52

because, initially IDBI Bank Ltd’s Balance sheet was covering high advances as it

care role with low deposits but high borrowings. And this year 2007-08, IDBI

Bank Ltd’s, balance sheet mix up with the United Western Bank’s Balance Sheet,

whose Balance sheet contains high deposits but low utilization of advances. The

merger between these two banks’ created perfect cross combination of Assets to

Assets and Liabilities to Liabilities, and result is asset sensitive in this year.

3. Earning At Risk:

IDBI BANK LTD. (2006-07)

Liabilities Maturities Amount Average

Remaining

Maturity(i

n months)

Product Net Product

(Total Product/12)

1-28 days 7443.74 12 89324.88

29 days-3months 8970.47 10 89704.7

3-6 months 8578.99 8 68631.92

6 months-1 year 16189.57 4 64758.28

Total 41182.77 312419.78 312419.78/ 12=26034.98

Assets Maturities

1-28 days 6591.12 12 79093.44

29 days-3months 5441.86 10 54418.6

3-6 months 3304.45 8 26435.6

6 months-1 year 7928.25 4 31713

Total 23265.68 191660.64 191660.64/ 12 =15971.72

EAR 26034.98-15971.72 =10063.26

53

IDBI BANK LTD. (2007-08)

Liabilities Maturities Amount Average

Remaining

Maturity

(in

months)

Product Net Product

(Total Product/12)

1-28 days 8108.23 12 97298.76

29 days-3months 10892.6 10 108926

3-6 months 13473.64 8 107789.12

6 months-1 year 36746.9 4 146987.6

Total 69221.37 461001.48 461001.48/12 =38416.79

Assets Maturities

1-28 days 6586.65 12 79039.8

29 days-3months 7808.3 10 78083

3-6 months 8339.09 8 66712.72

6 months-1 year 14691.22 4 58764.88

Total 37425.26 282600.4 282600.4/12 =23550.03

EAR 38416.79-23550.03=14866.76

54

Interpretation:

In year 2006-07, if interest rate increase or decrease by 1% in the value of the

liabilities i.e. Rs.41182.77 than there will be increase or decrease in the expenses of Rs.

26034.98 and if interest rate increase or decrease by 1% in the value of the assets

i.e.Rs.23265.68 than there will be increase or decrease in the income by Rs.15971.72. If

there is shock of 1% in both the value of assets and liabilities than there will be increase

or decrease of Rs.10063.26 (i.e. Earning At Risk).

In year 2007-08, if interest rate increase or decrease by 1% in the value of the

liabilities i.e. Rs. 69221.37 than there will be increase or decrease in the expenses of Rs.

38416.79 and if interest rate increase or decrease by 1% in the value of the assets i.e.

37425.26 Rs. than there will be increase or decrease in the income by Rs.23550.03. If

there is shock of 1% in both the value of assets and liabilities than there will be increase

or decrease of Rs.14866.76 (i.e. Earning At Risk).

55

CHAPTER V

FINDINGS & SUGGESTION

56

FINDINGS & SUGGESTION

Liquidity and profitability are two vital aspects of a corporate business life. No

bank can survive if it has no liquidity. A bank may exist without making profits but it

cannot survive without liquidity. A bank not making profit may be treated as sick but,

one not having liquidity may meet its death over a period. Assets & Liabilities

Management, thus, has become a basic and broad measure of judging and performance

of a business firm. In the management of assets and liabilities two features must be kept

in mind:

a. Short life span

b. Switch transformation into other assets forms.

Same way comparing the assets and liabilities of IDBI Bank Ltd, last year (2006-07) and

current year (2007-08), Bank has made certain changes, keeping in mind the market

situation, increasing in rate of inflation, changes in policies of RBI, crash in sensex &

nifty, etc.

Following are some graphs of the Advances, Investment, Foreign Currency Assets, and

Deposits, Borrowings and Foreign Currency Liabilities of last year (2006-07) and

current year (2007-08).

57

58

59

60

61

SUGGESTION:

1.) Study should be carried out in the field of customer profile rating models

based on specific investment portfolio of banks for example loan to a steel

industry will have different repayment dynamics than that of a

pharmaceutical firm and many more.

2.) Bank has to pay more attention on qualitative study of assets based

income than that of quantitative study.

3.) Few topics on the side of efficiency of Fee based income should be carried

out because it can act as a cushion for small as well as big losses to banks

balance sheet.

4.) Customer satisfaction index is to studied at branch level as it is the only

measurement to standarise the service exposure for the cutomers.

5.) Bank should concentrate on the total time taken on one customer for

attending. Bank should maintain average time for attending customers, so

that many customers are handled.

62

CHAPTER VI

Literature Review &

BIBILIOGRAPHY

63

Literature Review

Some concept related topic is discussed as follows:

A) Retail Banking:

Retail banking is a banking service that is geared primarily toward individual

consumers. Retail banking is usually made available by commercial banks, as well as

smaller community banks. Unlike wholesale banking, retail banking focuses strictly

on consumer markets. Retail banking entities provide a wide range of personal

banking services, including offering savings and current accounts, bill paying

services, as well as debit and credit cards. Through retail banking, consumers may

also obtain mortgages and personal loans. Although retail banking is, for the most

part, mass-market driven, many retail banking products may also extend to small

and medium sized businesses. Today much of retail banking is streamlined

electronically via Automated Teller Machines (ATMs), or through virtual retail

banking known as online banking.

B) ASSET LIABILITY MANAGEMENT(ALM):

What is ALM?

ALM is a comprehensive and dynamic framework for measuring,

monitoring and managing the market risk of a bank. It is the management of

structure of balance sheet (liabilities and assets) in such a way that the net

earning from interest is maximized within the overall risk-preference (present

and future) of the institutions.

Scope of ALM:

The ALM functions extend to liquidly risk management, management of

market risk, trading risk management, funding and capital planning and profit

planning and growth projection.

Residual maturity:

Residual maturity is the time period which a particular asset or liability

will still take to mature i.e. become due for payment (once at a time, say in case

of a term deposit or in installments, say in case of term loan).

64

Maturity buckets:

Maturity buckets are different time intervals (8 for the time being, namely

1-14 days, 15-28, 29-90, 91-180, 181-365 days, 1-3 years, 3-5 and above 5

years), in which the value of a particular asset or liability is placed depending

upon its residual maturity.

Mismatch position:

When in a particular maturity bucket, the amount of maturing liabilities

or assets does not match, such position is called a mismatch position, which

creates liquidity surplus or liquidity crunch position and depending upon the

interest rate movement, such situation may turnout to be risky for the bank. The

mismatches for cash flows for 1-14 days and 15-28 days’ buckets are to be kept

to the minimum (not to exceed 20% each of cash outflows for those buckets).

Role of ALCO:

Asset-Liability Committee (ALCO) is the top most committee to oversee

implementation of ALM system, to be headed by CMD or ED. ALCO would

consider product pricing for deposits and advances, the desired maturity profile

of the incremental assets and liabilities in addition to monitoring the risk levels

of the bank. It will have to articulate current interest rates view of the bank and

base its decisions for future business strategy on this view.

Benefits of ALM:

It is a tool that enables bank managements to take business decisions in a

more informed framework with an eye on the risks that bank is exposed to. It is

an integrated approach to financial management, requiring simultaneous

decisions about the types of amounts of financial assets and liabilities - both mix

and volume - with the complexities of the financial markets in which the

institution operates.

C) Liquidity Risk:

Bank Deposits generally have a much shorter contractual maturity than

loans and liquidity management needs to provide a cushion to cover anticipated

deposit withdrawals. Liquidity is the ability to efficiently accommodate deposit

as also reduction in liabilities and to fund the loan growth and possible funding

of the off-balance sheet claims. The cash flows are placed in different time

65

buckets based on future likely behavior of assets, liabilities and off-balance sheet

items.

The Asset Liability Management (ALM) is a part of the overall risk management

system in the banks. It implies examination of all the assets and liabilities

simultaneously on a continuous basis with a view to ensuring a proper balance

between funds mobilization and their deployment with respect to their a)

maturity profiles, b) cost, c) yield, d) risk exposure, etc. It includes product pricing for

deposits as well as advances, and the desired maturity profile of assets and liabilities.

CREDIT RISK :

Credit Risk is the potential that a bank borrower/counter party fails to meet the

obligations on agreed terms. There is always scope for the borrower to default from his

commitments for one or the other reason resulting in crystallization of credit risk to the

bank. Credit risk is inherent to the business of lending funds to the operations linked

closely to market risk variables. The objective of credit risk management is to minimize

the risk and maximize bank’s risk adjusted rate of return by assuming and maintaining

credit exposure within the acceptable parameters. At the transaction level, credit

ratings are useful measures of evaluating credit risk. Portfolio analysis help in

identifying concentration of credit risk, default/migration statistics, recovery data, etc.

Basic Tool of Credit Risk Management is Risk Rating Model.

Risks are of three types:

� High Risk,

� Medium Risk and

� Low risk.

For each type of risk, rating is required. As observed by RBI, Credit Risk is the

major component of risk management system and this should receive special attention

of the Top Management of the bank. The risk-rating model should capture various types

of risks such as Industry/Business Risk, Financial Risk and Management Risk,

associated with credit.

VaR (Value at Risk):

Value at Risk is “the expected loss from an adverse market movement with a

specified probability over a period of time”. VaR is defined as an estimate of potential

loss in a position or asset/liability or portfolios of assets/liabilities over a given holding

period at a given level of certainty.

66

VaR measures risk. Risk is defined as the probability of the unexpected

happening – the probability of suffering a loss. VaR is an estimate of the loss likely to

suffer, not the actual loss. It measures potential loss, not potential gain. VaR will change

if the holding period of the position changes. Closely related to VaR is the concept of

Earnings At Risk (EAR) – the expected maximum fall in earnings over a given period.

“Value at Risk: Earning at Risk / Risk Free Rate.”

The VaR is the maximum loss at a given tolerance level. VaR is a useful tool for

measuring and aggregating market and liquidity risks. It is defined as estimate of

potential loss in a position or asset or portfolio of assets over a given holding period at a

given level of certainty. VaR tries to answer the question “How much can we lose

tomorrow?” This concept became popular in mid -1990’s when potential loss arise out

of adverse movement in market variables such as interest rates, exchange rates, equity

prices and commodity prices.

D) Duration Gap Analysis:

Duration may be defined as “duration the weighted average time(measured in

years) to receive all cash flows from financial instrument. The duration gap is the

difference between the durations of a bank’s assets and liabilities. It is a measure of

interest rate sensitivity that helps to explain how changes in interest rates affect the

market value of bank’s assets and liabilities and in turn its net worth(NW). The net

worth is the difference between assets and liabilities. It follows that changes in the

market value of assets and liabilities will change the value of net worth.

Net Worth = Asset – Liabilities

^Net Worth = ^Asset - ^Liabilities (^change in value)

If the duration gap is positive i.e. the duration of assets exceeds the duration of

liabilities then increases in interest rates will reduce the value of net worth, and

decreases in interest rates will increase the value of the net worth. Conversely, if the

duration gap is negative, with the duration of assets less than the duration of liabilities,

rising interest rates will increase the value of net worth, whereas falling interest rates

will lead to reduction in it. For example, if interest rates were expected to increase,

management would want to shift from a positive to a negative gap position. It could do

this by reducing the duration of assets and/or increasing the duration of liabilities. The

expectation of falling interest rates would, of course, produce the opposite type of

portfolio management adjustments.

67

Thus, from the above information following is the short summary:

Duration Gap Changes in interest rates Change in Net worth

Positive Increase Decrease

Positive Decrease Increase

Negative Increase Increase

Negative Decrease Decrease

Zero Increase No Change

Zero Decrease No Change

68

BIBILIOGRAPHY

Reference Book:

• Treasury Risk Management by S. K. Bagchi

• RBI Journals from Oct-06 to Jan-07.

Magazines & Dailies:

• Business Today

• Business Standard

• Annual Reports of IDBI BANK LTD. from 2006-08.

Web Sites:

• www.idbibank.com

• www2.idbibank.com (intranet)

• www.rbi.org.in

• www.nabard.org

• www.rediff.com

Search Engine:

• www.google.com