asset liabilities manatgement leo labs 2014

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*%$

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I(&%r'&%) M'r5%&*(

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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


35/72

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


36/72

• 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


37/72

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


38/72

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


39/72

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;


40/72

Resou!ces:

000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000

8


41/72

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


42/72

DA"A AAL)!I!

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I"ERPRE"A"IO

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43/72

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

/+


44/72

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


45/72

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

//


46/72

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


47/72

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


48/72

"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


49/72

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

/;


50/72

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

/


51/72

"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


52/72

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-


53/72

-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


54/72

"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


55/72

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/


56/72

&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


57/72

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


58/72

/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


59/72

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;


60/72

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


61/72

"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,


62/72

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


65/72

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


68/72

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


69/72

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;


70/72

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/


71/72

(-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%

asset liabilities manatgement leo labs 2014

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