INTRODUCTIONAsset Liability Management (ALM) is a strategic approach of managing the balance sheetdynamics in such a way that the net earnings are maximized. This approach is concerned withmanagement of net interest margin to ensure that its level and riskiness are compatible with therisk return objectives of the . If one has to define Asset and Liability management without going into detail about itsneed and utility, it can be defined as simply “management of money” which carries value andcan change its shape very quickly and has an ability to come back to its original shape with orwithout an additional growth. The art of proper management of healthy money is ASSET ANDLIABILITY MANAGEMENT (ALM). The Liberalization measures initiated in the country resulted in revolutionary changes inthe ing sector. There was a shift in the policy approach of s from the traditionally administeredmarket regime to a free market driven regime. This has put pressure on the earning capacity ofco-operative s, which forced them to foray into new operational areas thereby exposingthemselves to new risks. As major part of funds at the disposal of s come from outside sources, the managementare concerned about RISK arising out of shrinkage in the value of asset, and managing such risksbecame critically important to them. Although co-operative s are able to mobilize deposits, majorportions of it are high cost fixed deposits. Maturities of these fixed deposits were not properlymatched with the maturities of assets created out of them. The tool called ASSET ANDLIABILITY MANAGEMENT provides a better solution for this. ASSET LIABILITY MANAGEMENT (ALM) is a portfolio management of assets andliability of an organization. This is a method of matching various assets with liabilities on thebasis of expected rates of return and expected maturity patter
In the context of s, ALM is defined as “a process of adjusting s liability to meetloan demands, liquidity needs and safety requirements”. This will result in optimum value of the, at the same time reducing the risks faced by them and managing the different types of risks bykeeping it within acceptable levels. OBJECTIVES OF THE STUDY o To study the concept of ASSET & LIABLITY MANAGEMENT in HDFC o To study process of CASH INFIOWS and OUTFLOWS in HDFC o To study RISK MANAGEMENT under HDFC o To study RESERVES CYCLE of ALM under HDFC o To study FUNCTIONS AND OBJECTIVES of ALM committee.NEED OF THE STUDY: The need of the study is to concentrates on the growth and performance of HDFC and tocalculate the growth and performance by using asset and liability management. And to know themanagement of non performing assets. To know financial position of HDFC To analyze existing situation of HDFC To improve the performance of HDFC To analyze competition between HDFC with other cooperative s.
SCOPE OF THE STUDY: In this study the analysis based on ratios to know asset and liabilities management uder HDFCAnd to analyse the growth and performace of HDFC by using the calculations under asset and liability management based on ratio. Ratio analysis Comperartive statement Common size balance sheet. METHODOLOGY OF THE STUDYThe study of ALM Management is based on two factors. 1. Primary data collection. 2. Secondary data collectionPRIMARY DATA COLLECTION:The sources of primary data were The chief manager – ALM cell Department Sr. manager financing & Accounting System manager- ALM cellGathering the information from other managers and other officials of the
SECONDARY DATA COLLECTION: Collected from books regarding ing, journal, and management containing relevantinformation about ALM and Other main sources were Annual report of the HDFC Published report of the RBI guidelines for ALM. LIMITATION OF THE STUDY: 1. This subject is based on past data of HDFC 2. The analysis is based on structural liquidity statement and gap analysis. 3. The study is mainly based on secondary data.
OVERVIEW OF THE INDUSTRY HDFC is Indias premier housing finance company and enjoys an impeccable track recordin India as well as in international markets. Since its inception in 1977, the Corporation hasmaintained a consistent and healthy growth in its operations to remain the market leader inmortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC hasdeveloped significant expertise in retail mortgage loans to different market segments and alsohas a large corporate client base for its housing related credit facilities. With its experience in thefinancial markets, a strong market reputation, large shareholder base and unique consumerfranchise, HDFC was ideally positioned to promote a bank in the Indian environment.As on 31st December, 2009 the authorized share capital of the Bank is Rs. 550 crore. The paid-up capital as on said date is Rs. 455,23,65,640/- (45,52,36,564 equity shares of Rs. 10/- each).The HDFC Group holds 23.87 % of the Banks equity and about 16.94 % of the equity is held bythe ADS Depository (in respect of the banks American Depository Shares (ADS) Issue). 27.46% of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has about 4,58,683shareholders.The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchangeof India Limited. The Banks American Depository Shares (ADS) are listed on the New YorkStock Exchange (NYSE) under the symbol HDB and the Banks Global Depository Receipts(GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002.Mr. Jagdish Capoor took over as the banks Chairman in July 2001. Prior to this, Mr. Capoor wasDeputy Governor of the RBI MANAGEMENTThe Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years, andbefore joining HDFC Bank in 1994 was heading Citibanks operations in Malaysia.The Banks Board of Directors is composed of eminent individuals with a wealth of experiencein public policy, administration, industry and commercial banking. Senior executivesrepresenting HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad head variousbusinesses and functions and report to the Managing Director. Given the professional expertiseof the management team and the overall focus on recruiting and retaining the best talent in theindustry, the bank believes that its people are a significant competitive strength.BOARD OF DIRECTORSMr. Jagdish Capoor, ChairmanMr. Keki MistryMrs. Renu KarnadMr. Arvind PandeREGISTERED OFFICEHDFC Bank House,Senapati Bapat Marg,Lower Parel,Website: www.hdfcbank.comHDFC Bank offers a wide range of commercial and transactional banking services and treasuryproducts to wholesale and retail customers. The bank has three key business segmentsWholesale Banking ServicesThe Banks target market ranges from large, blue-chip manufacturing companies in the Indiancorporate to small & mid-sized corporates and agri-based businesses. For these customers, theBank provides a wide range of commercial and transactional banking services, includingworking capital finance, trade services, transactional services, cash management, etc. The bank isalso a leading provider of structured solutions, which combine cash management services withvendor and distributor finance for facilitating superior supply chain management for its corporatecustomers. Based on its superior product delivery / service levels and strong customerorientation, the Bank has made significant inroads into the banking consortia of a number ofleading Indian corporates including multinationals, companies from the domestic businesshouses and prime public sector companies. It is recognised as a leading provider of cash
management and transactional banking solutions to corporate customers, mutual funds, stockexchange members and banks.Retail Banking ServicesThe objective of the Retail Bank is to provide its target market customers a full range of financialproducts and banking services, giving the customer a one-stop window for all his/her bankingrequirements. The products are backed by world-class service and delivered to customersthrough the growing branch network, as well as through alternative delivery channels likeATMs, Phone Banking, NetBanking and Mobile Banking.The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and theInvestment Advisory Services programs have been designed keeping in mind needs of customerswho seek distinct financial solutions, information and advice on variousinvestment avenues. The Bank also has a wide array of retail loan products including AutoLoans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It isalso a leading provider of Depository Participant (DP) services for retail customers, providingcustomers the facility to hold their investments in electronic form.HDFC Bank was the first bank in India to launch an International Debit Card in association withVISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The Bank launchedits credit card business in late 2001. By March 2009, the bank had a total card base (debit andcredit cards) of over 13 million. The Bank is also one of the leading players in the “merchantacquiring” business with over 70,000 Point-of-sale (POS) terminals for debit / credit cardsacceptance at merchant establishments. The Bank is well positioned as a leader in various netbased B2C opportunities including a wide range of internet banking services for Fixed Deposits,Loans, Bill Payments, etc.TreasuryWithin this business, the bank has three main product areas - Foreign Exchange and Derivatives,Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the
financial markets in India, corporates need more sophisticated risk management information,advice and product structures. These and fine pricing on various treasury products are providedthrough the banks Treasury team. To comply with statutory reserve requirements, the bank isrequired to hold 25% of its deposits in government securities. The Treasury business isresponsible for managing the returns and market risk on this investment portfolio