Risk Management and Asset Liability Management for State financial

Description

Due to various competitive factors, the share capital of several State Financial Corporations (SFCs) has eroded over the last few years. The state-level financial institutions that have played a key role in financing of small and medium enterprises in their respective states, are now facing the challenge of restructuring themselves so that they are able to create a niche for themselves in the face of growing competition from commercial banks and other state-level institutions. The Book is aimed at framing and suggesting the techniques for introduction of risk management in SFCs. The Book is an attempt to assess the significance of risk management in general and the Asset Liability Management in particular with reference to SFCs. Various types of risks associated with SFCs, specifically liquidity risk, credit risk and interest rate risk along with ALM requirements were examined in detail. The Book deals with an in-depth analysis of the relevance, scope, problems and prospects of ALM as a technique for enhancing the profitability and safety of assets in SFCs. Asset Liability Management (ALM) is a tool that enables SFCs for achieving the appropriate mix of liabilities and assets in terms of maturity and price so as to optimize the returns. In this Book, the relevant literature on asset-liability management (ALM) is reviewed and different ALM approaches are discussed that may be of interest to the State Financial Corporations in India for the purpose of credit risk modeling. The Book describes the general idea behind ALM, its pros and cons, risk measures and strategies, as well as some applications. The Book brings out the features of various models, more particularly the most appropriate and simple models best suited for SFCs, including Maturity Gap Model, Duration Gap Model and Credit Scoring Model for small loans.