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8/16/2019 Asset Liabilities Manatgement Leo Labs 2014
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A
PROJECT REPORT
ON
ASSETS LIABILITIES
AT
LEO LABS PVT. LTD.
Project submitted in partial fulfillment for the award of the Degree
Of
MASTER OF BUSINESS ADMINISTRATION
By
Mr. JAKKULA KUMARA SWAMY
H.NO: 14071!70"4
DAVID MEMORIAL I!"I"#"E O$ MAA%EME"
&Affiliated to O#'()DERA*AD
&+,-+.+,-/'
,
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at the same time reducing the ris>s faced b4 them and managing the different t4pes of ris>s
b4 >eeping it within acceptable le5els0
NEED OF THE STUDY:
"he need of the stud4 is to concentrates on the growth and performance of Leo Labs and to
calculate the growth and performance b4 using asset and liabilit4 management to >now the
management of nonperforming assets0
•"o >now financial position of Leo Labs0
• "o anal4=e enow asset and liabilities management under Leo
Labs and to anal4=e the growth and performance of Leo Labs b4 using the calculations under
asset and liabilit4 management based on ratio0
• Ratio anal4sis
• 2omparati5e statement
•
2ommon si=e balance sheet0
OBJECTIVES OF THE STUDY
8
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"o stud4 the concept of A!!E" : LIA*LI") MAA%EME" in Leo Labs
"o stud4 process of 2A!( I$IO6! and O#"$LO6! in Leo Labs
"o stud4 RI!C MAA%EME" under Leo Labs
"o stud4 RE!ERVE! 2)2LE of ALM under Leo Labs
"o stud4 $#2"IO! AD O*E2"IVE! of ALM committee0
METHODOLO/Y OF THE STUDY
"he stud4 of ALM M'('%-%(& is based on two factors0
-0 Primar4 data collection0
+0 !econdar4 data collection
PRIMARY DATA COLLECTION:
"he sources of primar4 data were
"he chief manager ALM cell
Department !r0 manager financing : Accounting
!4stem manager. ALM cell
%athering the information from other managers and other officials of the
SECONDARY DATA COLLECTION:
/
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2ollected from boo>s regarding? journal? and management containing rele5ant
information about ALM and Other main sources were
Annual report of the L%2 L'+$
Published report of the
RBI guidelines for ALM.
LIMITATION OF THE STUDY:
-0 "his subject is based on past data of L%2 L'+$
+0 "he anal4sis is based on structural liuidit4 statement and gap anal4sis0
80 "he stud4 is mainl4 based on secondar4 data0
3
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REVIEW OF LITERATURE
ASSET LIABILITY MANA/EMENT ALM SYSTEM:
7
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I(&r2)3&*2(:
In the normal course? the s are eet ris>s in 5iew of the asset liabilit4
transformation0 6ith the liberali=ation in the
Indian financial mar>ets o5er the last few 4ears and growing integration of domestic mar>ets
and with eets the ris>s associated with s operations ha5e become comple
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In addition? the managing the spread and ris>iness? the ALM function is more appropriatel4
5iewed as an integrated approach which reuires simultaneous decisions about assetFliabilit4
mi< and maturit4 structure0
RISK MANA/EMENT IN ALM
Ris> management is a d4namic process? which needs constant focus and attention0 "he idea
of ris> management is a well.>nown in5estment principle that the largest potential returns are
associated with the ris>iest 5entures0 "here can be no single prescription for all times?
decisions ha5e to be re5ersed at short notice0 Ris>? which is often used to mean uncertaint4?
creates both opportunities and problems for business and indi5iduals in nearl4 e5er4 wal> of
life0
Ris> sometimes is consciousl4 anal4=ed and managedG other times ris> is simpl4 ignored?
perhaps out of lac> of >nowledge of its conseuences0 If loss regarding ris> is certain to
occur? it ma4 be planned for in ad5ance and treated as to definite? >nown e of loss as much as possible or reduce its negati5e
conseuences0
!e5eral t4pes of ris>s that affect indi5iduals and businesses were introduced? together with
wa4s to measure the amount of ris>0 "he process used to s4stematicall4 manage ris> enown as RISK MANA/EMENT. 6hether the concern is with a business or an
indi5idual situation? the same general steps can be used to s4stematicall4 anal4=e and deal
with ris>0
STEPS IN RISK MANA/EMENT:
;
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Ris> identification
Ris> e5aluation
Ris> management techniue
Ris> measurement
Ris> re5iew decisions
Integrated or enterprise ris> management is an emerging 5iew that recogni=es the importance
of ris>? regardless of its source? in affecting a firms abilit4 to reali=e its strategic objecti5es0
"he detailed ris> management process is as followsG
R*$5 *)%(&*6*'&*2(:
"he first step in the ris> management process is to identify relevant exposures to risk. "his
step is important not onl4 for traditional ris> management? which focuses on uncertaint4 of
ris>s? but also for enterprise ris> management? where much of the focus is on identif4ing the
firmHs e that is identified? an e5aluation should be performed0 At this stage?
uncertaint4 of ris>s can be categori=ed as to how often associated losses are li>el4 to occur0 In
addition to this e5aluation of loss freuenc4? an anal4sis of the si=e? or se5erit4? of the loss is
helpful0 2onsideration should be gi5en both to the most probable si=e of an4 losses that ma4
occur and to the ma
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"he results of the anal4ses in second step are used as the basis for decisions regarding wa4s
to handle es0 In some situations? the best plan ma4 be to do nothing0 In other cases?
sophisticated wa4s to finance potential losses ma4 be arranged0 "he a5ailable techniues for
managing ris>s are %AP Anal4sis? VAR Anal4sis? (einrich Domino theor4 etc0? with
consideration of when each techniue is appropriate0
R*$5 -%'$3r%-%(&:
Once ris> sources ha5e been identified it is often helpful to measure the e that
e e5aluation? in some situations it ma4 be possible to measure
the degree of ris> in a meaningful wa40 In other cases? especiall4 those in5ol5ing indi5iduals
computation of the degree of ris> ma4 not 4ield helpful information0
R*$5 r%*% )%*$*2($:
$ollowing a decision about the optimal methods for handling identified ris>s? the business or
indi5idual must implement the techniues selected0 (owe5er? ris> management should be an
ongoing process in which prior decisions are re5iewed regularl40 !ometimes new ris>
eets Ris>s or "he 2apital Mar>ets Ris>s0
-,
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TOTAL FINANCIAL SERVICES FIRMS RISK.
"otal Ris>
&Responsibilit4 of 2EO'
*usiness Ris> $inancial Ris>
Product Mar>et Ris> 2apital Mar>et Ris>
&Responsibilit4 of the &Responsibilit4 of the
2hief Operating Officer' 2hief $inancial Officer'
2redit Interest rate
!trategic Liuidit4
Regulator4 currenc4
Operating !ettlement
(uman resources *asis
Legal
--
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I.PRODUCT MARKET RISK:
"his ris> decision relate to the operating revenues and expenses of the form that impact
the operating position of the profit and loss statements which include crisis? mar>eting?
operating s4stems? labor cost? technolog4? channels of distributions at strategic focus0 Product
Ris>s relate to 5ariations in the operating cash flows of the firm? which effect 2apital Mar>et?
reuired Rates Of ReturnG0
&-' 2REDI" RI!C
&+' !"RA"E%I2 RI!C
&8' 2OMMODI") RI!C
&/' OPERA"IVE RI!C
&3' (#MA RE!O#R2E! RI!C
&7' LE%AL RI!C
Ris> in Product Mar>et relate to the operational and strategic aspects of managing operating
re5enues and eet Ris> in a or other financial intermediar4 is the erosion
of 5alue due to simple default or non.pa4ment b4 the borrower0 2redit ris> has been around
for centuries and is thought b4 man4 to be the dominant financial ser5ices toda40 s
intermediate the ris> appetite of lenders and essential ris> ness of borrowers0 s manage this
ris> b4 G A ma>ing intelligent lending decisions so that e of borrowers is both
accuratel4 assessed and pricedG B Di5ersif4ing across borrowers so that credit losses are not
concentrated in timeG C purchasing third part4 guarantees so that default ris> is entirel4 or
partiall4 shifted awa4 from lenders0
0 STRATE/IC RISK:
-+
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"his is the ris> that entire lines of business ma4 succumb to competition or obsolescence0 In
the language of strategic planner? commercial paper is a substitute product for large corporate
loans0 !trategic ris> occurs when a is not read4 or able to compete in a newl4 de5eloping line
of business0 Earl4 entrants enjo4ed a uniue ad5antage o5er newer entrants0 "he seemingl4
conser5ati5e act of waiting for the mar>et to de5elop posed a ris> in itself0 *usiness ris>
accrues from jumping into lines of business but also from sta4ing out too long0
". COMMODITY RISK:
2ommodit4 prices affect s and other lenders in comple< and often unpredictable wa4s0 "he
macro effect of energ4 price increases on inflation also contributed to a rise in interest rates?
which ad5ersel4 affected the 5alue of man4 fi
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"his is the ris> that the legal s4stem will eet Ris> decision relate to the financing and financial support of Product
Mar>et acti5ities0 "he result of product mar>et decisions must be compared to the reuired
rate of return that results from capital mar>et decision to determine if management is creating
5alue0 2apital mar>et decisions affect the ris> tolerance of product mar>et decisions related to
5ariations in 5alue associated with different financial instruments and reuired rate of return
in the econom40
-0 LIJ#IDI") RI!C
+0 I"ERE!" RA"E RI!C
80 2#RRE2) RI!C
/0 !E""LEME" RI!C
30 *A!I! RI!C
-/
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1. LI=UIDITY RISK:
$or eet ris> is that of
inadequate liquidity to meet financial obligations0 "he ob5ious form is an inabilit4 to pa4
desired withdrawals0 Depositors react desperatel4 to the mere prospect of this situation0
"he4 can dri5e a financial intermediar4 to collapse b4 withdrawing funds at a rate that
e on the mone4 des> uoting rates to institutions
that shop for the highest return0 "o chec> liuidit4 ris>? firms must >eep the maturit4 profile
of the liabilities compatible with that of the assets0 "his balance must be close enough that a
reasonable shift in interest rates across the 4ield cur5e does not threaten the safet4 and
soundness of the entire firm0
. INTEREST RATE RISK:
In e
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"he ris> of e among currencies
instead of basis ris> among interest rates on different securities0 *alance sheets comprised of
numerous separate currencies contain large camouflaged ris>s through financial reporting
s4stems that do not reuire assets to be mar>ed to mar>et0 E affects both the
Product Mar>ets and "he 2apital Mar>ets0 6a4s to contain currenc4 ris> ha5e de5eloped in
toda4Hs deri5ati5e mar>et through the use of swaps and forward contracts0 "hus? this ris> is
manageable onl4 after the most sophisticated and modern ris> management techniue is
emplo4ed
4. SETTLEMENT RISK:
!ettlement Ris> is a particular form of default risk ? which in5ol5es the s competitors0
Amounts settle obligations ha5ing to do with mone4 transfer? chec> clearing? loan
disbursement and repa4ment? and all other inter. transfers within the worldwide monetar4
s4stem0 A single pa4ment is made at the end of the da4 instead of multiple pa4ments for
indi5idual transactions0
is a 5ariation on the interest rate ris> theme? 4et it creates ris>s that are less eas4 to
obser5e and understand0 "o guard against interest rate ris>? somewhat non comparable
securities ma4 be used as a hedge0 (owe5er? the success of this hedging depends on a stead4
and predictable relationship between the two no identical securities0 *asis can negate the
hedge partiall4 or entirel4? which 5astl4 increases the 2apital Mar>et Ris> e
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COMPANY PROFILE
-9
Company Profile
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Leo Labs IT Solutions Pvt. Ltd. has built a reputation of deli5ering software and
business management solutions that pro5ide measurable results0 It has been recogni=ed as one
of the fastest growing companies in (4derabad? India0
Leo Labs growth can be attributed to the compan4Ks focus on ualit4? consistenc4? and long.
term 5ision0 6hile man4 !oftware companies chased the mar>et to find re5enue in the latest
fads? Leo Labs I" !olutions remained focused on deli5ering pro5en business solutions to its
clients
#tili=ing our project management methodolog4 that has produced esteemed results for ourclients? we are strategicall4 establishing new offices in mar>ets that offer opportunit40 "his
methodolog4? combined with the e
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MISSION
"o be globall4 recogni=ed as a pro5ider of a trusted? reliable resource to ualit4 Information
"echnolog4 &I"' solutions0
"o build worldwide partnerships for success0
"o gi5e the clients a competiti5e edge0
"o enhance the operational efficienc4 and financial ad5antage to clients0
SOLUTIONS
B3$*(%$$ S&r'&%y
E>B3$*(%$$?W%+ S%r*%$
E(&%r;r*$% A;;,*'&*2(
I(&%r'&*2(
I(&%r'&%) M'r5%&*(
I& S&r'&%y D%%,2;-%(&Pr2%$$ D%%,2;-%(&
BUSINESS STRATE/Y:
BUSINESS CONSULTIN/
"he greatest accomplishments begin with an architect plan0 6e belie5e that Leo Labs I"
!olutions is the ad5isor that the compan4 needs most as 4ou begin to conceptuali=e the
business road map0
Our business consulting team is the cohesi5e mortar that unites our 5arious disciplines0 *4
focusing on compan4Ks strategic objecti5es? we are able to design? de5elop? and implement
the solutions that will produce measurable change across the enterprise0 As the foundation of
Leo Labs I" !olutions? this business.centric philosoph4 permeates our 5arious discipline
-
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leaders0 6hether a de5eloper or a designer? the goal of producing custom business solutions
is paramount0
DEFININ/ DIRECTIONS
Our abilit4 to offer guidance throughout the highest le5els of leadership is culti5ated b4 our
abilit4 to architect and e
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business s4stems and processes to customers? suppliers? and emplo4ees+/ hours a da4? 9
da4s a wee>0
E>+3$*(%$$:
E.*usiness can help companies meet toda4Ks business challenges head.on0 6hether itKs
increasing re5enue or decreasing costs? reaching new customers or better ser5ing eeholders0
Important reasons to become an e.business include the following1
• Increase re5enue
• Decrease costs
• Impro5e emplo4ee efficienc4
• Eet reach
• !trengthen business relationships
• Impro5e customer satisfaction
At Leo Labs I" !olutions? we >now that the success of our compan4 depends on our abilit4 to
pro5ide world.class? e.business solutions with real business 5alue to our clients0 6e
understand the business impact of e.business0 Our e
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!uppl4 chain managementstreamlines end.to.end processes associated with the flow of
products0
E(&%r;r*$% A;;,*'&*2( I(&%r'&*2(
Leo Labs I" !olutions de5elopment team is designed to partner with our clients to address
man4 business critical issues and objecti5es0 Leo Labs I" !olutions >nows how to use state.
of.the.art technologies to pro5ide targeted? world.class integration solutions that address
uniue business needs0
THE NEED
Are the companies getting the most out of the 6eb and core business.s4stem
implementations Are these applications connected throughout the organi=ation Does the
compan4 uestion whether or not the integration between applications is able to support the
compan4 changing business process needs Do 4our business associates ha5e access to
accurate? rele5ant? and timel4 information for critical decision.ma>ing
6ith e5er.increasing pressure to be as efficient as possible? Enterprise Application Integration
is becoming 5ital to organi=ations of e5er4 si=e0 EAI is used to interconnect eeep disparate elements
of the enterprise interconnected0
THE SOLUTION
SAP.."his solution pro5ides end.to.end functionalit4 for business anal4tics? financials?
human capital management? operations? and corporate ser5ices .. and allows 4ou to upgrade
to the full range of !AP solutions0
E(&%r;r*$% R%$23r% P,'((*( @ERP..!eamless ERP Implementations and #pgrades?
Efficient !upport and Juic>er Return on In5estment &ROI' on their Enterprise Applications is
++
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what e5er4 organi=ation dreams of0
Leo Labs ERP team has o5er 3, highl4 ualified 2onsultants? offering a uniue blend of
business 5ertical >nowledge and technical e
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leading industr4 5endors0 As a result? our consultants are well 5ersed in the latest trends? tools
and technologies best suited for the particular business and technical challenges0
THE ADVANTA/E
Leo Labs I" !olutions focus is on deli5ering solutions that will be effecti5e in the uniue
en5ironment0 Our eing intelligent mar>eting decisions that pro5ide maeting utili=es a 5ariet4 of media and channels0 It emplo4s designers that
understand these mediums and can translate their designs into effecti5e communications0 Leo
+/
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Labs designers ha5e the ee ad5antage of the technolog4 and talent that is a5ailable to dri5e consumer
demand? sales? and the message of the organi=ation0
IT S&r'&%y D%%,2;-%(&
O5er the past few 4ears the role of technolog4 in business has become a critical success
factor0 Man4 organi=ations le5erage information technolog4 to help them deli5er their
products and ser5ices0 *ut few organi=ations trul4 reali=e the business benefits that can be
achie5ed from an effecti5e technolog4 strateg40 "he rapid pace of change in technolog4
pro5ides companies with new? cost.effecti5e mechanisms to communicate with their
customers? suppliers? emplo4ees? and >e4 business partners0 Properl4 harnessed? technolog4
initiati5es can enrich customer relationships? shorten suppl4 chains? and streamline a number
of internal processes so that a true return on in5estment is reali=ed0 "he first step is to create
alignment and consensus within the organi=ation and build an action plan around those
initiati5es that will deli5er the highest return0
STRATE/IC PLANNIN/ SOLUTIONS
+3
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Leo Labs I" !olutions !trategic solutions le5erage a pro5en methodolog4 to help our clients
fundamentall4 align and le5erage technolog4 in order to achie5e enterprise business
objecti5es0 6e de5ise these strategies b4 eeholders to the business s4stems and
processes within the organi=ation0
!trategic Planning !er5ice $eatures
• Aligns technolog4 infrastructure and initiati5es with high.priorit4 business processes
and organi=ational objecti5es
• $ocuses on the needs of the >e4 sta>eholders &customers? suppliers? emplo4ees' and
not on the limitations of technolog40
• Pro5ides ualitati5e and uantitati5e measures of the success of the strateg4 or
business continuit4 plan0
• 2reates alignment? consensus? and accountabilit4 for the prioriti=ed initiati5es among
eet trends demand0 !trategic planning
ma4 be necessar4 in the following situations1
• 6hen a competiti5e ad5antage is needed to demonstrate ualit4 of ser5ice
• 6hen the organi=ation see>s to e
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Pr2%$$ D%%,2;-%(&
Leo Labs *usiness Process Impro5ement solutions are designed to help the compan4 to
streamline the processes that are critical to managing business0
Organi=ations need to optimi=e the business process? but seldom do0 "hatHs where Leo Labs
*usiness Process Impro5ement solutions come in0
#sing our pro5en methodolog4 and toolsets? we deli5er >e4 business results in a timel4
fashion0 6e help to achie5e impro5ed customer ser5ice? cost reductions? and capacit4ee4 performance metrics out of alignment with the competitors Are the
customers reducing their lead times And do the compan4 emplo4ees continuall4 es0 "hese are the uestions that man4
organi=ations are faced with on a dail4 basis0 "he realit4 is that most organi=ations could be
handling these processes much more efficientl4? pro5iding significant business 5alue and
competiti5e ad5antage0
THE SOLUTION
Leo Labs I" !olutions *usiness Process Impro5ement solutions are designed to position the
organi=ation to ta>e ad5antage of the opportunities and uic>l4 address the challenges0 Our
solutions are able to seamlessl4 cross the department and operational boundaries within the
organi=ation0 Our focus is to ensure that participants within a process are all wor>ing off the
same 5ision and dri5ing toward the same goals0 Leo Labs I" !olutions *usiness Process
Impro5ement solutions are customi=ed to 4our specific needs0 In addition to deli5ering the
customer business metrics? we le5erage our eedwith0
+9
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OUR E#PERIENCE
Leo Labs I" !olutions *usiness Process Impro5ement team has deli5ered solutions across a
wide range of industries0 Our consultants are 5ersed in the latest trends? tools? and
technologies being deplo4ed as part of these solutions0 (a5ing participated in numerous
*usiness Process Impro5ement engagements0 Our consultants are well euipped to architect
and deplo4 the solution most suited for 4our particular business0 Our solutions are aided b4
our strong focus on economic and financial anal4sis0
THE ADVANTA/E
Leo Labs I" !olutions has an entire practice dedicated to deli5ering *usiness Process
Impro5ement solutions0 Our focus is on deli5ering solutions that will be effecti5e in the
uniue en5ironment0 6e belie5e that our 5endor focus on economic and financial anal4sis is
a >e4 differentiator from our competition0 Man4 Organi=ations has in5ested a lot of time?
effort? and financial resources into the applications and information s4stems that run 4our
business0 Leo Labs I" !olutions *usiness Process Impro5ement solutions are designed to
minimi=e those in5estments b4 identif4ing and simplif4ing the processes that support the
compan4? gi5ing the organi=ation a strong competiti5e ad5antage0
S%r*%$:
Pr2)3& D%%,2;-%(&1
Leo Labs I" !olutions P5t0 Ltd0 fosters rapid? framewor> and component.based de5elopment
approach to build mission critical? off.the.shelf products and applications0 6e ha5e
de5eloped products and solutions on leading technologies with a strong orientation toward
standards.dri5en architecture0
+;
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Our process dri5en approach forms the foundation for engaging with customers? to build high
ualit4? cost.effecti5e products and applications0 O5er and abo5e? we la4 our thrust in
understanding customer needs to de5ise optimum design and de5elopment strategies that
would enable them to mar>et their product uic>l40
Leo Labs I" !olutions has the concept of $ramewor> and N2omponent *ased De5elopmentN
for product F application de5elopment and reusabilit4 and pro5ides cost.effecti5e ser5ices to
our customers for outsourced product de5elopment0
PRODUCT MAINTAINANCE AND SUPPORT
Leo Labs I" !olutions offers maintenance and support ser5ices to the customers as part of its
ser5ice offering0 Leo Labs has a clearl4 laid down methodolog4 for such maintenance
engagements0 O5er the 4ears we ha5e gained substantial e
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Receiving the issue: "he onsite technical support team recei5es the issue from client either
through an4 of the following media li>e e.mail? telephone? mobile phone or instant messenger
ser5ices0 A tic>et number generated would help the offsite team identif4 each issue0
Study and Analysis: Once the problem "ic>et issue is recei5ed? the Onsite technical team
ma>es a careful stud4 of the issue and anal4=es its comple estimation is made and it is placed before the
client through an offsite support Manager0 *ased on the estimated time and priorit4? the issue
is then scheduled to be resol5ed either b4 the onsite team or b4 the offshore team0
Scheduling: Identif4 the best suitable team member&s' for sol5ing the issue and assign the
tas>s to that particular resource&s'0
Solution: "he assigned team member&s' pro5ides the solution as specified in the gi5en tas>
document in a scheduled time adhering to the ualit4 standards? he also pro5ides a standard
document describing the wor> done0
Testing: "est the changed code as per the Maintenance Manual0 #pdate the documentation as
reuired
Log Maintenance: Logs will be maintained for future use b4 the offsite as well as offshore
team for all the support issues that ha5e come up0
A;;,*'&*2( D%%,2;-%(&
6ith increasing demands? enterprises worldwide are finding it difficult to implement? and
support new applications? while at the same time? maintaining and upgrading their e
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where the4 fail? and how the4 can be impro5ed through our custom applications solutions0
O3r S%r*%$ *( &8%$% 'r%'$ 'r% 623$%) 2(:
• Application De5elopment . "his includes web based? clientFser5er application
de5elopment and enhancements to legac4 applications0
• Migration and 2ustomi=ation . "his includes 5ersion #pgrade !er5ices? Database
migration? Re.engineering? $unctionalit4 upgrades and Porting0
•
Implementation !upport . Routine Maintenance and $unctional Enhancements0
• De5elopment and "esting . 2omponent De5elopment and #nit "esting? !4stem and
Integration testing
A;;,*'&*2( M'*(&%('(%
Leo Labs I" !olutions pro5ides comprehensi5e software application maintenance ser5ices for
medium to large enterprises0 !er5ices range from underta>ing maintenance of e
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I(&%r'&*2(
Leo Labs I" !olutions has rich eeep pace with toda4Ks economic en5ironment? organi=ations need to focus on their core
competence0
"he easiest wa4 of doing this is to partner with a ser5ice pro5ider li>e Leo Labs Interactions?
who understands the compan4 business and sol5es non.core? 4et critical business processes0
Leo Labs Interactions interest lies in a long.term partnership addressing all aspects of the
outsourcing reuirements from clients0 Leo Labs Interactions gi5es the 5er4 best in bringing
cost efficienc4 with ualit4 processes? round.the.cloc> operations? state.of.the.art
infrastructure and a committed people force0
It offers Industr4.specific ser5ices to customers0 $or instance? in the Insurance and (ealthcare
sector? it addresses 2laims Processing? Polic4 Issuance? Premium Accounting? etc0 It also
offers $ront Office ser5ices li>e 2ontact 2enters for 2ustomer !er5ice0 It pro5ides Product
!upport : "echnical (elp Des> ser5ices as well as *ac>.Office Processes in the areas of
Accounting? (R and other "ransaction Intensi5e acti5ities0
B3$*(%$$ Pr2%$$ O3&$23r*(
*usiness Process Outsourcing &*PO' has changed the wa4 the world does business? and this
trend is onl4 li>el4 to accelerate0 *PO is uic>l4 emerging as a >e4 enabler of all high
performing organi=ations0 More and more businesses and go5ernmental leaders.cross
industr4? organi=ational si=e and geograph4 are turning to *PO to help them ele5ate their
organi=ations performance0
8+
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"hrough the right mi< of business process impro5ement? labor arbitrage and technolog4
enhancements? *PO is aimed at reducing cost? increasing ser5ice le5els and thus impro5ing
the enterprise 5alue of the business processes0 *lending ualified wor>force and faster
adoption of well.defined business processes leads to higher producti5it4 gains without
compromising on ualit40
"he a5ailabilit4 of cost effecti5e s>illed resources . that is well educated and able to con5erse
in English? well.de5eloped communication infrastructure and software sector as well as an
appropriate time difference with other countries? help in ma>ing India a fa5orite destination
for the *PO industr40
RD O3&$23r*(
"he stor4 of Research and De5elopment Outsourcing in I" in India dates bac> to -;3.;7
when "e securit4 and chip design ser5ices0
After I" ser5ices &I"!' and I".enabled ser5ices &I"E!'? a new opportunit4 for Indian
companies is the arena of related product and technolog4 ser5ices for independent software
5endors &I!Vs'0
"he factors dri5ing the increasing momentum of R:D off.shoring F outsourcing industr4 are1
• A5ailabilit4 of highl4
• s>illed manpower
• 2ost.effecti5eness
• Proets
• *enefit of follow.the.sun schedules
• Information securit4 solutions
88
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Organi=ations worldwide ha5e begun focusing on outsourcing acti5ities to ease the pressures
of financial performance? ualit4? producti5it4 and time.to.mar>et0 "o increase the
competiti5eness of their businesses? organi=ations ha5e been la4ing greater emphasis on
R:D Outsourcing to le5erage internal resources and capabilities with e
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• Mobile
• Application !er5ers
• Database
• Cnowledge
O3r V',3% Pr2;2$*&*2(
• Leo labs !trategic Partnership with the client would help the client le5erage our
"echnolog4 labs and De5elopment facilities? uic>l4 build resource pools consisting
of focused R : D teams for new initiati5es in specific technologies
• Our dedicated "echnolog4 labs for the clientKs R:D di5ision acts as Virtual Ee
profitable connections with their customers0 6hether 4ou need messaging or answering
ser5ice? inbound call center ser5ices? outbound call center ser5ices? email support and online
chat? we can help out to ma>e the most of e5er4 contact
83
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I(+23() T%,%$%r*%$
Our call handling and inbound telemar>eting ser5ices for business.to.business and business.
to.consumer campaigns will help dri5e customer acuisition? increase customer retention?
impro5e sales and rapidl4 eets0 Our inbound supports include1
(elp Des>1 +/ (ours FDa4? 873 Da4s F)ear
"echnical !upport Reuests $or Maintenance !upport
Reuests $or Maintenance !upport
Inbound "elemar>eting F #p.!elling : 2ross.!elling
Reuests for !amples
Order !tatus1 2ustomers can chec> on the status of their order at an4 time
Dealer Locate1 2allers are gi5en information on the store or dealer nearest to them0
"ic>eting !ales
!ubscriptions
$undraising
Ad5ertising 2o.Op 2laim Processing
Rebate Processing
Insurance 2laims Processing
Product Recall Management
2ustomi=ed Interacti5e Voice !er5ices
O5erflow? Off.(our And 6ee>end 2all (andling
$a< on Demand1 An access channel for those customers who need documented answers or
written confirmation
O3&+23() T%,%$%r*%$
Our tele.professionals help out to turn the compan4 prospects into customers? and then our
customers into ad5ocates0 6e focus on building a relationship that lasts b4 using a
personali=ed approach that pro5ides the 5alue addition necessar4 to maintain and grow 4our
87
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client base0 Our outbound capabilities include1
"elemar>eting and !ales1 6e use predicti5e dialing to connect to customers0 Our tele.sales
techniues also include1
Reacti5ation1 Approaching 4our Keeting is b4 far the most efficient wa4 to secure
repeat bu4ers
Aftermar>et !ales1 2ontacting new customers and securing additional sales? e5en when other
products are seemingl4 unrelated0
Clients:
B !ou" is aleading player in
the global energymarket and is a
dynamic growing
business withoperations in 20
countries over five
continents.
#netel is part of theCentrica Group, which
also operates under theBritish Gas, Scottish
Gas and yno brands in
the !" . #netel is the!" $s largest integrated
communications service
provider
$iasat %B$s satellite&'(&platform covers )*
countries in +uropeand reaches more
than *0 million
viewers.
So%t Se!vice iscommitted toinnovation
designed to
provide the clientswith significant
gains in the uality
Sca!let in%osystems isan #ffshore#utsourcing -eb
evelopment Company
and +&commerceSoftware evelopment
firm offering '
LogicSo%t&a!e'Inc.is speciali/ed in thedevelopment of
custom software
applications andoffshore software
outsourcing services.
89
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of their systems. #utsourcing.
Richard Daley
Silicon $alley is aleading Global '
owerhouse based
in ndia focused indeveloping online
web applications.
(uli) Systems is anoffshore software
development company
from Belarus, offeringan unbeatable
combination of customsoftware development
solutions, systemsreengineering, software
testing and 1% services.
Richa!d *aleyAssociates 3%4provides software
development, webdevelopment,
software training andsoftware consulting to
its clients.
Also%tSolutions'Inc aglobal ' Services
firm speciali/ing inend&to&end
Solutions androduct
evelopment
Sta!So%t*evelo"ment Labs isone of the fastest
growing softwareoutsourcing service
providers in 3ussia and+astern +urope.
Agita! was foundedin 5une 2002 and isworking on test
automation researchand development
since )66*.
$ested*evelo"mentInc. (4is a
leading globaloutsourcing
provider ofoffshore software
developmentservices.
Eu!ostudio -ebSolutions is an offshore
web design and
development companybased in 7ovosibirsk,
3ussia. -e offer ourscustomers a full range
of ' services.
8;
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Resou!ces:
000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
8
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Stylus Inc was launchedout of a 2 bedroom house in
)666 && probably the reasonwhy our employees, clients
and vendors feel at homewhen they visit us in our
current 8 storey officetoday.
In+o!us Group ofCompanies have 29:;
operations and have areach to the Global
offshore outsourcingarketplace through their
offshore softwaredevelopment centers
across 7orth %merica,
%sia&acific, +! and ow does it work?
Bina!y Semantics rivenby the vision to providecustomer centric and cost
effective solutions toorgani/ations, we have
grown into a company withwide range of serviceofferings to meet all your
outsourcing needs andconcerns.
C!anbe!!y #ffshore web design anddevelopment company in elhi ndiafor web design, website
development, e&commerce website,corporate website design, website
maintenance and flash based webdesign services.
e,in%inity solutions is
leading provider ofinformation technology
service to business and
government world widefounded in 2008 infinity has
the e:perience businessoperations.
ate&ay TechnoLabs is
a Software #utsourcing @#ffshore Software Services
Company speciali/ing in
the business of providingservices to its clients
globally.
*evelo"e!s.net 7ow you have a
solution. 'rack&tA Standard. ts theperfect solution for tracking and
managing of your ' assets and end&
users help reuests. t helpsincrease the level of ' support.
/,
http://www.stylusinc.com/Common/AboutUs/index.phphttp://www.inkorus.com/http://www.brainpulse.com/http://www.codelance.com/http://www.binarysemantics.com/http://www.cranberryindia.com/http://www.einfy.com/http://www.gatewaytechnolabs.com/http://www.developers.net/all_content/Focus/Networkinghttp://www.it-outsourcing-guide.info/http://www.inkorus.com/http://www.brainpulse.com/http://www.codelance.com/http://www.binarysemantics.com/http://www.cranberryindia.com/http://www.einfy.com/http://www.gatewaytechnolabs.com/http://www.developers.net/all_content/Focus/Networkinghttp://www.genisyl.com/http://www.it-outsourcing-guide.info/http://www.synapse.in/http://www.stylusinc.com/Common/AboutUs/index.php
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DA"A AAL)!I!
:
I"ERPRE"A"IO
/-
http://www.netcreativemind.com/custom-web-site-design.html/http://www.etnl.net/http://www.consystentinfo.com/http://www.midassoft.biz/http://www.conceptinfoway.net/http://www.docsmartz.net/http://computers.ncomn.com/dir/http://www.tatvasoft.com/
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RISK MANA/EMENT SYSTEM:
Assuming and managing ris> is the essence of business decision.ma>ing0 In5esting in a new
technolog4? hiring a new emplo4ee? or launching a mar>eting campaign is all decisions with
uncertain outcomes0 As a result all the major management decisions of how much ris> to ta>e
and how to manage the ris>0
"he implementation of ris> management 5aries from business to business? from one
management st4le to another and from one time to another0 Ris> management in the financial
ser5ices industr4 is different from others0 2ircumstances? Institutions and Managements are
different0 On the other hand? an in5estment decision is no recent histor4 of legal and political
stabilit4? insights into the potential ha=ards and opportunities0
Man4 ris>s are managed uantitati5el40 Ris> e management can be integrated into a ris> management s4stem0 !uch a s4stem can be
utili=ed to manage the trading position of a small.speciali=ed di5ision or an entire financial
institution0 "he modules of the s4stem can be implemented with different degrees of accurac4
and sophistication0
/+
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RISK MANA/EMENT SYSTEM
D4namics of ris> factors
2ash flows Arbitrage
%enerator Pricing Model
Price and Ris>
Profile Of 2ontingent 2laims
D4namic Ris>
"arget
"rading Rules Optimi=er Ris> Profile
/8
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Arbitrage pricing models range from simple euations to large scale numericall4
sophisticated algorithms0 2ash flow generators also 5ar4 from a single formula to a
simulator that accounts for the dependence of cash flows on the histor4 of the ris>
factors0
$inancial engineers are continuousl4 incorporating ad5ances in econometric
techniues? asset pricing models? simulation techniues and optimi=ation algorithms
to produce better ris> management s4stems0
Important ingredient of the ris> management approach is the treatment of ris> factors
and securities as an integrated portfolio0 Anal4=ing the correlation among the real?
financial and strategic assets of an organi=ation leads to clear understanding of ris>
e factors? which translate to correlation among
the 5alues of securities0 Identif4ing the correlation among the basic ris> factors leads
to more effecti5e ris> management0
CONCLUSION
"he burden of the Ris> and its 2osts are both manageable and transferable0 $inancial ser5ice
firms? in the addition to managing their own ris>? also sell financial ris> management to
others0 "he4 sell their ser5ices b4 bearing customers financial ris>s through the products the4
pro5ide0 A financial firm can offer a fi of interest rate
mo5ements transferred from the borrower to the 0 $inancial inno5ations ha5e been concerned
with risk reduction then an4 other subject0 6ith the possibilit4 of managing ris> near =ero?
the challenge becomes not how much ris> can be remo5ed0
$inancial ser5ices in5ol5e the process of intermediation between those who ha5e financial
resources and those who need them? either as a principal or as an agent0 "hus? 5alue brea>s
into se5eral distinct functions? and it includes the intermediation of the following 1
Maturit4 Preference mismatch? Default? 2urrenc4 Preference mis.match? !i=e of transaction
and Mar>et access and information0
//
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RISK MANA/EMENT IN L%2 L'+$ IT S2,3&*2($ P&. L&)
"he s were reuired b4 the to introduce effecti5e ris> management s4stems to co5er 2redit
ris>? mar>et ris> and Operations ris> on priorit40
N'r'$*-8'- 2--*&&%% II ad5ised s to address mar>et ris> in a structured manner b4
adopting A$$%& '() L*'+*,*&y M'('%-%(& practices with effect from April -st -;0
Asset and liabilit4 management &ALM' is @the Art and !cience of choosing the best mi< of
assets for the firmHs asset portfolio and the best mi< of liabilities for the firmHs liabilit4
portfolioB0 It is particularl4 critical for $inancial Institutions0
$or a long time it was ta>en for granted that the liabilit4 portfolio of financial firms was
be4ond the control of the firm and so management concentrated its efforts on choosing the
asset mi
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ALM INFORMATION:
ALM is a ris> management tool through which Mar>et ris> associated with business areidentified? measured and monitored to maintain profits b4 restructuring Assets and Liabilities0
"he ALM framewor> needs to be built on sound methodolog4 with necessar4 information
s4stem as bac> up0 "hus the information is >e4 element to the ALM process0
"here are 5arious methods pre5alent worldwide for measuring ris>s0 "hese range from the
simple %ap statement to e
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"he Asset Liabilit4 Management 2ommittee &I2I2I' consisting of the s senior management?
including 2EOF2MD should be responsible for ensuring adherence to the limits set b4 the
*oard of Directors as well as for deciding the business strateg4 of the &on the assets and
liabilities sides' in line with the s budget and decided ris> management objecti5e0
"he ALM support group consisting of operation staff should be responsible for anal4=ing?
monitoring and reporting the ris> profiles to the I2I2I0 "he staff should also prepare forecasts
&simulations' showing the effects of 5arious possible changes in mar>et condition related to
the balance sheet and recommend the action needed to adhere to s internal limits?
"he I2I2I is a decision.ma>ing unit responsible for balance sheet planning from a ris>.return
perspecti5e including the strategic management of interest rate and liuidit4 ris>s0 Each has
to decide on the role of its I2I2I? its responsibilit4 as also the decision to be ta>en b4 it0 "he
business and ris> management strateg4 of the should ensure that the operates within the
limits F parameters set b4 the *oard0 "he business issues that an I2I2I would consider? inter
alia? will include product pricing for deposits and ad5ances? desired maturit4 profile and mi<
of the incremental Assets and Liabilities? etc0 in addition to monitoring the ris> le5els of the ?
the I2I2I should re5iew the results of and progress in implementation of the decisions made
in the pre5ious meetings0 "he I2I2I would also articulate the current interest rate 5iew of the
and base its decisions for future business strateg4 on this 5iew0 In respect of this funding
polic4? for instance? its responsibilit4 would be to decide on source and mi< of liabilities or
sale of assets0 "owards this end? it will ha5e to de5elop a 5iew on future direction of interest
rate mo5ements and decide on funding miet funding? domestic 5s0 foreign currenc4
funding etc0 Indi5idual s will ha5e to decide the freuenc4 for holding their I2I2I meetings0
/9
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TYPICAL BUSINESS
• Re5iewing of the impact of the regulator4 changes on the industr40
• O5erseeing the budgetar4 processG
• Re5iewing the interest rate outloo> for pricing of assets and liabilities &Loans and
Deposits'
• Deciding on the introduction of an4 new loan F deposit product and their impact on
interest rate F eet ris>sG
• Re5iewing the asset and liabilit4 portfolios and the ris> limits and thereb4? assessing
the capital adeuac4G
• Deciding on the desired maturit4 profile of incremental assets and liabilities and
thereb4 assessing the liuidit4 ris>G and
• Re5iewing the 5ariances in actual and projected performances with regard to et
Interest Margin&IM'? spreads and other balance sheet ratios0
COMPOSITION OF L%2 L'+$ IT S2,3&*2($ P&. L&)
"he si=e & number of members' of Leo Labs I" !olutions P5t0 Ltd would depend on the si=e
of each institution? business mi< and organi=ational compleet d4namics? the 2EOFMD or the %M should
head the committee0 "he chiefs of In5estment? 2redit? Resources Management or Planning?
$unds Management F "reasur4 &domestic'? etc0? can be members of the committee0 In
addition? the head of the computer &technolog4' Di5ision should also be an in5itee for
building up of MI! and related computeri=ation0 !ome s ma4 e5en ha5e !ub.2ommittee and
!upport %roups0
/;
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ALM OR/ANIATION consists of following categories1
ALM *OARD
Leo Labs I" !olutions P5t0 Ltd
ALM 2ELL
2OMMI""EE O$ DIRE2
ALM BOARD
"he *oard of management should ha5e o5erall responsibilit4 for management of ris>
and should decide the ris> management polic4 of the and set limits for liuidit4 and
interest rate ris>s0
L%2 L'+$ IT S2,3&*2($ P&. L&)It has constituted an Asset. Liabilit4 committee &Leo Labs I" !olutions P5t0 Ltd'0 "he
committee ma4 consist of the following members0
i' %eneral Manager F in (ead of 2ommittee
ii' %eneral Manager &Loans : Ad5ances' Member
iii' %eneral Manager &2MI : AD' Member
i5' A%M F (ead of the ALM 2ell Member
/
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"he Leo Labs I" !olutions P5t0 Ltd is a decision ma>ing unit responsible for ensuring
adherence to the limits set b4 board as well as for balance sheet planning from ris> return
perspecti5e including the strategic management of interest rate and liuidit4 ris>s? in line with
the s budget and decided ris> management objecti5es0
"he *usiness issues that an Leo Labs I" !olutions P5t0 Ltd would consider interalia, will
include fi
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ALM PROCESS:
"he scope of ALM function can be described as follows1
-0 Liuidit4 Ris> Management
+0 Interest Rate Ris> Management
80 2urrenc4 Ris> Management
/0 !ettlement Ris> Management
30 *asis Ris> Management
"he RBI guidelines mainl4 address Liuidit4 Ris> Management and Interest Rate Ris>
Management0
"he following are the concepts discussed for anal4sis ofHs Asset.Liabilit4 Management under
abo5e mentioned ris>s0
Liuidit4 Ris>
Maturit4 profiles
Interest rate ris>
%ap anal4sis
3-
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-0 L*93*)*&y R*$5 M'('%-%(& :
Measuring and managing liuidit4 needs are 5ital acti5ities of the s0 *4 assuring a s abilit4 to
meet its liabilit4 as the4 become due? liuidit4 management can reduce the probabilit4 of anad5erse situation de5elopment0 "he importance of liuidit4 transcends indi5idual institutions?
as liuidit4 shortfall in one institution can ha5e repercussions on the entire s4stem0
Liuidit4 ris> management refers to the ris> of maturing liabilit4 not finding enough
maturing assets to meet these liabilities0 It is the potential inabilit4 to meet the liabilit4 as
the4 became due0 "his ris> arises because borrows funds for different maturities in the form
of deposits? mar>et operations etc0 and loc> them into assets of different maturities0
Liuidit4 %ap also arises due to unpredictabilit4 of deposit withdrawals? changes in loan
demands0 (ence measuring and managing liuidit4 needs are 5ital for effecti5e and 5iable
operations
Liuidit4 measurement is uite a difficult tas> and usuall4 the stoc> or cash flow
approaches are used for its measurement0 "he stoc> approach used certain liuidit4
ratios0 "he liuidit4 ratios are the ideal indicators of liuidit4 of s operating in
de5eloped financial mar>ets? the ratio do not re5eal the real liuidit4 profile of s
which are operating generall4 in a fairl4 illiuid mar>et0 "he assets? which are
commonl4 considered as liuid li>e %o5ernment securities? ha5e limited liuidit4
when the mar>et and pla4ers are in one direction0 "hus anal4sis of liuidit4 in5ol5es
trac>ing of cash flow mismatches0
"he statement of structural liuidit4 ma4 be prepared b4 placing all cash inflows and
outflows in the maturit4 ladder according to the e
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"he position of Assets and Liabilities are classified according to the maturit4 patterns a
maturing liabilit4 will be a cash outflow while a maturing asset will be a cash inflows0 "he
measuring of the future cash flows of s is done in different time buc>ets0
"he time buc>ets? gi5en the statutor4 Reser5e c4cle of -/ da4s ma4 be distributed as under1
-0 - to -/ da4s
+0 -3 to +; da4s
80 + da4s and upto 8 months
/0 O5er 8 months and upto 7 months
30 O5er 7 months and upto - 4ear
70 O5er - 4ear and upto 8 4ears
90 O5er 8 4ears and upto 3 4ears
;0 O5er 3 4ears0
38
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MATURITY PROFILE LI=UIDITY
HEAD OF ACCOUNTS
A0O#"$LO6!
C,'$$*6*'&*2( *(&2 &*-% +35%&$
-02apital? Reser5es and !urplus O5er 3 4ears buc>et0
+0Demand Deposits &2urrent :
!a5ings Deposits'
Demand Deposits ma4 be classified
into 5olatile and core portions? +3
of deposits are generall4 withdraw
able on demand0 "his portion ma4 be
treated as 5olatile0 6hile 5olatile
portion ma4 be placed in the first time
buc>et i0e0? -.-/ da4s? the core portion
ma4 be placed in -.+ 4ears? buc>et0
80 "erm Deposits Respecti5e maturit4 buc>ets0
/0 *orrowings Respecti5e maturit4 buc>ets0
30 Other liabilities and pro5isions
&i' *ills Pa4able
&ii' Inter.office Adjustment
&iii' Pro5isions for APs
a' sub.standard
b' doubtful and Loss
&i5' pro5isions for depreciation
in In5estments
&i' -.-/ da4s buc>et
&ii' Items not representing cash
pa4able ma4 be placed in o5er 3
4ears buc>et
&iii'
a' +.3 4ears buc>et0
b' O5er 3 4ears buc>et
0
&i5' O5er 3 4ears buc>et0
3/
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&5' pro5isions for APs in
in5estment
&5i' pro5isions for other purposes
&5' a' +.3 4ears buc>et0
b' O5er 3 4ears buc>et
&5i' Respecti5e buc>ets depending on
the purpose0
33
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B. INFLOWS
-0 2ash -.-/ da4s buc>et0
+0 *alance with other s &i' 2urrent Account
&ii' Mone4 at call and short otice?
"erm Deposits and other
Placements
&i' on.withdraw able portion on
account of stipulations of
minimum balances ma4 be
shown
Less than -.-/ da4s buc>et0
&ii' Respecti5e maturit4 buc>ets0
80 In5estments
&i' Appro5ed securities
&ii' 2orporate
Debentures and
bonds? 2Ds and 2Ps?
redeemable
preference shares?
units of Mutual
$unds &close ended'0
Etc0
&iii' !hare F #nits of Mutual
$unds
&open ended'
&iii' In5estment in
subsidiaries F
oint Ventures0
&i' Respecti5e maturit4 buc>ets
eet &doubtful and loss'0
&iii' O5er 3 4ears buc>et0
&i5' O5er 3 4ears buc>et0
37
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/0 Ad5ances &performing F standard'
&i' *ills Purchased and
Discounted
&including bills under
D#P'
&iii' 2ash 2redit F O5erdraft
&including "OD' and
Demand Loan component of
6or>ing 2apital0
&iii' "erm Loans
&i' Respecti5e Maturit4 buc>ets0
&ii' s should underta>e a st4ud
of beha5ioral and seasonal
pattern of a ailments based on
outstanding and the core and
5olatile portion should be
identified0 6hile the 5olatile
portion could be shown in the
respecti5e maturit4 buc>et0 "he
core portion ma4 be shown under
-.+ 4ears buc>et0
&iii' Interim cash flows ma4 be
shown under respecti5e maturit4
buc>ets0
30 PAs
b0 !ub.standard
c0 Doubtful and Loss
&I' +.3 4ears buc>et0
&ii' O5er 3 4ears buc>et0
70 $iet0
90 Other.office Adjustment
&i' Inter.office Adjustment
&ii' Others
&i' As per trend anal4sis?
Intangible items or items
not representing cash
recei5ables ma4 be shown
in o5er 3 4ears buc>et0
&i' Respecti5e maturit4 buc>ets0
Intangible assets and assets
T%r-$ 3$%):
39
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CD$: 2ertificate of Deposits0
CP$: 2ommercial Papers0
DTL PROFILE: Demand and "ime Liabilities0
I(&%r 266*% ')G3$&-%(&:
O3&6,2$: et 2redit *alances
I(6,2$: et Debt *alances
O&8%r L*'+*,*&*%$: 2ash pa4ables? Income recei5ed in ad5ance? Loan Loss and
Depreciation in In5estments0
O&8%r '$$%&$: 2ash Recei5able? Intangible Assets and Leased Assets0
. I(&%r%$& R'&% R*$5:
Interest Rate Ris> refers to the ris> of changes in interest rates subseuent to the creation of
the assets and liabilities at fi where changes in the mar>et interest
rates might ad5ersel4 affect a financial conditions0
"he changes in interest rates affect s in large wa40 "he immediate impact of change in interest
rates is on earnings b4 changing its et Interest Income &NII. A long term impact of
changing interest rates is on Hs Mar>et Value of Euit4 MVE or net worth as the economic
3;
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5alue of Hs assets? liabilities and off.balance sheet positions get affected due to 5ariation in
mar>et interest rates0
"he ris> from the earnings perspecti5e can be measured as changes in the et Interest Income
&II' OR et Interest Margin &IM'0
"here are man4 anal4tical techniues for measurement and management of interest rate ris>0
In MI! of ALM? slow pace of computeri=ation in s and the absence of total deregulation? the
traditional %AP AAL)!I! is considered as a suitable method to measure the interest rate
ris>0
D'&' I(&%r;r%&'&*2(
/'; A(',y$*$:
"he %ap or mismatch ris> can be measured b4 calculating "aps over different time !uckets
as at a given date. %ap anal4sis measures mismatches between rate sensiti5e liabilities and
rate sensiti5e assets including off.balance sheet position0
An asset or liabilit4 is normall4 classified as rate sensiti5e if1
If there is a cash flow within the time inter5al0
"he interest rate resets or reprises contractuall4 during the inter5al0
R*I changes the interest rates i0e0? on sa5ing deposits? e
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"he %ap is the difference between Rate !ensiti5e Assets &R!A' and Rate sensiti5e Liabilities
&R!A' for each time buc>et0
"he ;2$*&*% /AP indicates that RSA$ are more than RSL$ RSARSL.
"he (%'&*% /AP indicates that RSA$ are more than RSAL$ RSARSL.
7,
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T'+,% 1: C2-;'r'&*% B','(% S8%%& '$ 2( "1$& M'r8 010 >011
P'r&*3,'r$ 010 I( 000 011 *( 000
I(r%'$% ?
D%r%'$% >
*( R$
P%r%(&'%
A$$%&$
C3rr%(& A$$%&$ :>
2losing stoc> +3+8/- 8,,--3 37777 +0+
!undr4 Debtors 8;99-;8 /;/,7-+ 7,9+ +/09
2ash : *an> balances 8/;8/;; 997+3+-, /+9;39++ -++0;
Deposits -,;+9-37 -//7988 87/+399 8807/
Prepaid e
!ecured loans -9//388 ++8+,98+ +397+,38 -80,
#nsecured loans -88//87 ++8+,98+ +,8;9+37 -,3/03
Deferred re5enue -+,,9,,, 978;,,, &/87,,,' &8708'
%rants +8+/-8/+ 7937 /879+;739 -;+03
T2&', L*'+*,*&*%$ !7
7-
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T'+,% : C2-;'r'&*% B','(% S8%%& '$ 2( "1$& M'r8 011>01
P'r&*3,'r$ 011 I( 000 01 *( 000
I(r%'$% ?
D%r%'$% > *( R$
P%r%(&'%
A$$%&$
C3rr%(& A$$%&$ :>
2losing stoc> 8,,--3 8;,7-, ;,/3 +;0;
!undr4 Debtors /;/,7-+ 8778/988 8-9/,/+9 7370;
2ash : *an> balances 997+3+-, /;8-3/8; &+8,99+' &8909'
Deposits -//7988 -838/3,7 &83++9' &70/'
Prepaid e
L*'+*,*&*%$ C';*&',
L*'+*,*&*%$
2urrent Liabilities +/7;87 +,799/-3 &++78-+3+-' &-07+'
Other liabilities +78--383 8-33,3, &+8-37/;3' &;;0,'
T2&', C3rr%(& L*'+*,*&*%$ 7""01471 ""4!< 44!00! 1.7
!ecured loans ++8+,98+ -;;,8/+ &88++9,3,' &-/0;;'
#nsecured loans ++8+,98+ --73/+7, &-,77-8-8+' &/909'
Deferred re5enue 978;,,, 978;,,, , ,
%rants 7937 78/,;+;8 &/-;;9-7,' &70-'
T2&', L*'+*,*&*%$ 140""47+
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T'+,% ": C2-;'r'&*% B','(% S8%%& '$ 2( "1$& M'r8 01>01"
P'r&*3,'r$ 01 I( 000 01" *( 000
I(r%'$% ?
D%r%'$% >
*( R$
P%r%(&'%
A$$%&$
C3rr%(& A$$%&$ :>
2losing stoc> 8;,7-, 8;,7-, , ,
!undr4 Debtors 8778/988 /++//778 &8+/-,+79' &;;0/'
2ash : *an> balances /;8-3/8; -+7//-;-, 9;-+789+ -7-09
Deposits -838/3,7 -7399 8/7-+98 +303
Prepaid e
!hare 2apital 897-+;,+ 897-+;,+ , ,
Profit carried to balance sheet ;--99+7-9 +999/;;9 &3889998,' 7309
T2&', L*'+*,*&*%$ C';*&', 11
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T'+,% 4: C2-;'r'&*% B','(% S8%%& '$ 2( "1$& M'r8 01" >014
P'r&*3,'r$ 01" I( 000 014*( 000
I(r%'$% ?
D%r%'$% >
*( R$
P%r%(&'%
A$$%&$
C3rr%(& A$$%&$ :>
2losing stoc> 8;,7-, 8;,7-, , ,
!undr4 Debtors /++//778 -//+-7/,/ -,-9-9/- +/-08;
2ash : *an> balances -+7//-;-, ;-,737 &//383+-/' &830++'
Deposits -7399 -7;/7; +7;, ,0,-
Prepaid e
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Profit carried to balance sheet +999/;;9 7+387389; 3;-39,/- +-38
T2&', L*'+*,*&*%$ C';*&', 1"174014
P'r&*3,'r$ 2010-2011
2011-2012
2012-2013
2013-2014
%
A$$%&$
2urrent Assets 1.
2losing stoc> +0+ +;0; , ,
!undr4 Debtors +/09 7370; &;;0/' +/-08;
2ash : *an> balances -++0; &8909' -7-09 &830++'
Deposits 8807/ &70/' +303 ,0,-
Prepaid e
2apital wor>s in progress -3703 &+903' &/0/' &90;;'
Miscellaneous e
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Deferred re5enue &8708' , &-07' &;,0;;'
%rants -;+03 &70-' &808' 8;03
T2&', L*'+*,*&*%$ 107.7 "0.7 4.1 1.41
!hare 2apital , , , ,
Profit carried to balance sheet &-,,' -,, 7309 +-38
T2&', L*'+*,*&*%$ C';*&', !1.1" .7 7. "!.1<
I(&%r;r%&'&*2(:>
"he abo5e tables present the comparati5e balance sheets of the compan4 for the period
+,-, +,-- to +,-8.+,-/0 During the 4ear +,-, +,-- total current assets is Rs00
-,+38-3 eing substantial profits after pro5iding for the proposed0 6hen total liabilities and capital
are concerned during the 4ear +,,;.+,,? the4 were Rs0-/,88+/+3/0
77
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In 4ear +,-,.+,-- it has decreased to Rs0 9+-+9,7? during the 4ear +,--.-+ it has
increased to Rs0-,-+979-770 ele the mar>et ris>s0 Its objecti5e is to stabili=e and
impro5e et interest Income &NII0
+0 Implementation of ALM as a Ris> Management tool is done using maturit4 profiles and
%AP anal4sis0
80 ALM presents a disciplined decision ma>ing framewor> for s while at the same time
guarding the ris> le5els0
/0 In +,-+.-8? it has increased to Rs0 97397++79and in +,-+.-8 it has decreased
to9/77-3;0
30 In +,--.-+ fi
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S3%$&*2($
-0 "he should strengthen its management information s4stem &MI!' and computer
processing capabilities for accurate measurement of liuidit4 and interest rate
Ris>s in their ing *oo>s0
-0 In the short term the et interest income or et interest margins &IM' creates
economic 5alue of the which in5ol5es up gradation of es0
80 Leo Labs I" !olutions P5t0 Ltd reuires efficient human and technological
infrastructure which will future lead to smooth integration of the ris> management
process with effecti5e s business strategies0
CONCLUSION
"he burden of the Ris> and its 2osts are both manageable and transferable0 $inancial ser5ice
firms? in the addition to managing their own ris>? also sell financial ris> management to
others0 "he4 sell their ser5ices b4 bearing customers financial ris>s through the products the4
pro5ide0 A financial firm can offer a fi of interest rate
7;
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mo5ements transferred from the borrower to the0 $inancial inno5ations ha5e been concerned
with risk reduction than an4 other subject0 6ith the possibilit4 of managing ris> near =ero?
the challenge becomes not how much ris> can be remo5ed0
$inancial ser5ices in5ol5e the process of intermediation between those who ha5e financial
resources and those who need them? either as a principal or as an agent0 "hus? 5alue brea>s
into se5eral distinct functions? and it includes the intermediation of the following1
Maturit4 Preference mismatch? Default? 2urrenc4 Preference mis.match? !i=e of transaction
and Mar>et access and information0
BIBILIO/RAPHY
T*&,% 26 &8% B225$ A3&82r
-0 Ris> management %usta5son ho4t
+0 Management Research maga=ine P0M0Dileep Cumar
80 India financial s4stem M0)0 Chan
4. Web sites
. L%2 L'+$ IT S2,3&*2($ P&. L&).2r
www0assecmanagement0com
7
http://www.assecmanagement.com/http://www.assecmanagement.com/
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(-ESTI#AIRE
ARE YOU EMPLOYED?
)E! O
If )E!? onl4 then proceed
YOUR MONTHLY INCOME?
a'Q/> b'/>.;> c';>.-+> d'-+>.-7> e'Other&!pecif4'
DO YOU PY !"#S?
)E! O
WHICH IS THE BEST FORM OF INVESTMENTS?
&RAC "(EM'
a' $ISED A!!E"!
b' *AC DEPO!I"!
c' E6ELLER)
d' !E2#RI"IE!? i0e0 *onds? M$s
e' !(ARE!
f' I!#RA2E
9,
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WHAT DO YOU INTENT TO /AIN FROM INVESTMENTS
a' !AVI% : RE"#R!
b' !E2#RI")
c' "AS *EI$I"!
ARE YOU PLANNIN/ FOR NEW INVESTMENTS
PLAI% O" PLAI%
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