A SYNOPSIS ON

“ASSETS AND LIABILITIES MANAGEMENT”

AT
“ICICI BANK LIMITED”
BY
E JHANSI
(HALL TICKET NO: 2129-21-672-026)
Synopsis for project to be submitted for the award
of the degree of
MASTER OF BUSINESS ADMINISTRATION
OSMANIA UNIVERSITY
2021-2023

AURORA’PG COLLEGE, NAMPALLY

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INTRODUCTION:
Asset liability Management (ALM) is a strategic approach of managing the balance sheet
dynamics in such a way that the net earnings are maximized. This approach is concerned with
management of net interest margin to ensure that its level and riskiness are compatible with
the risk return objectives of the ICICIBANK LTD.

If one has to define Asset and Liability management without going into detail about its
need and utility, it can be defined as simply “management of money” which carries value and
can change its shape very quickly and has an ability to come back to its original shape with or
without an additional growth. The art of proper management of healthy money is ASSET
AND LIABILITY MANAGEMENT (ALM).-

The Liberalization measures initiated in the country resulted in revolutionary changes in the
sector. There was a shift in the policy approach of from the traditionally administered market
regime to a free market driven regime. This has put pressure on the earning capacity of co-
operative, which forced them to foray into new operational areas thereby exposing
themselves to new risks.

As major part of funds at the disposal of come from outside sources, the management is
concerned about risk arising out of shrinkage in the value of asset, and managing such risks
became critically important to them. Although co-operative are able to mobilize deposits,
major portions of it are high cost fixed deposits. Maturities of these fixed deposits were not
properly matched with the maturities of assets created out of them.

ASSET LIABILITY MANAGEMENT is a portfolio management of assets and liability of an

organization. This is a method of matching various assets with liabilities on the basis of
expected rates of return and expected maturity patter.

In the context of ALM is defined as “a process of adjusting liability to meet loan demands,
liquidity needs and safety requirements”. This will result in optimum value of
At the same time reducing the risks faced by them and managing the different types of risks
by keeping it within acceptable levels.

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THEORETICAL REVIEW
In the common direction, there exhibited to credit and enterprise interest perils in context of
the benefit criminal duty trade. With the headway in the Indian money related markets over
the latest years and making mix of domestic markets and with external markets the dangers
associated with operations have grow to be convoluted, a ways attaining, requiring stragic
agency. Are thru and by way of operating in an acceptably deregulated situation and are
required to determine their own, leverage expenses on stores and improve in each domestic
and abroad money related buildings on a dynamic basis. The strengthen prices on pastimes in
authorities and more than a few securities moreover are at gift promote related. Genuine
opposition for corporation mission regarding every the property and liabilities, all things
viewed with developing insecurity inside the domestic side interest fees, has delivered strain
on the corporation spare a best incredible amongst spreads, efficiency and lengthy haul
reasonableness. Impudent liquidity agency can placed benefits and popularity at grand
hazard. These weights call for advanced and intensive measures and no longer truly adahoc
movement. The manipulate of necessities to construct their wander options as for a dynamic
and fused hazard control tool and strategy, pushed via corporate framework. Are uncovered
to a couple of simple threats in route in their enterprise attempt FICO appraisal hazard,
redirection charge and operational chance alongside these lines crucial than show
knowledgeable shot manage systems that sport design with the troubles related to hobby fee,
forex and liquidity dangers.

Need to alter to the ones perils basedly with the aid of sparkling their chance manipulate and
greedy greater combination Asset-Liability control (ALM) practices than has been done so
far. ALM amongst numerous limits, is in like way involved with peril manipulate and offers a
total and dynamic structure for measuring, checking and dealing with liquidity mortgage
price, far flung alternate and esteem and product fee chance of a that wishes to be immovably
joined with the wander technique. It consists of assement of various types of risks altering the
gain real blue duty portfolio progressively with a reason to manipulate threats.

The simple consideration regarding the ALM limit is probably to execute the likelihood
manipulate put together, viz., and overseeing wander consequent to reviewing the threats
involved.

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In like manner, the dealing with the unfold and risk, the ALM trademark is extra effectively
discovered as an included approach which calls for simultaneous alternatives about
asset/valid responsibility mix and adulthood structure.

RISK MANAGEMENT IN ALM

Risk business enterprise is a dynamic framework, which needs unfaltering discernment and
thought. The chance of threat manipulate is a striking financing figure out that the most
primary farthest point returns are associated to the minimal relaxed undertakings. There may
additionally be no unmarried reply for all situations, choices ought to be exchanged at brief
word, that is persistently used to assume defenselessness, makes every likelihood and
problems for sizeable business and people in each and every walk spherical lifestyles.

Risk now after which is purposefully dismembered and supervised, specific instances threat
is simply disregarded, perhaps out of nonattendance of know-how of its property. If setback
with apprehend to hazard is sure to occur, it might also be contemplate for earlier and seen as
to right, perceived rate. Associations and persons might also additionally likewise mission
and preserve away from threat of trouble as abundance as can be permitted or lower its
terrible results.

A couple of combos of risks that have an effect on human beings and undertakings had been
delivered, collectively with processes to gage the diploma of risk. The technique used to
purposely manipulate peril notoriety is known as RISK MANAGEMENT. Despite whether
or not or now not the prefer is with a commercial enterprise undertaking or a individual
condition, the similar standard advances can be used to methodicallly dissect and address
chance.
STEPS IN RISK MANAGEMENT:
1. Risk identification
2. Risk evaluation
3. Risk management technique
4. Risk measurement
5. Risk review decisions

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 Integrated or enterprise risk management is an emerging view that recognizes the
importance of risk, regardless of its source, in affecting a firm ability to realize its strategic
objectives. The detailed risk management process is as follows;

Risk identification:

The first step in the risk management process is to identify relevant exposures to risk.
This step is important not only for traditional risk management, which focuses on uncertainty
of risks, but also for enterprise risk management, where much of the focus is on identifying
the firm’s exposures from a variety of sources, including operational, financial, and strategic
activities.

Risk evaluation:
For each source of risk that is identified, an evaluation should be performed. At this
stage, uncertainty of risks can be categorized as to how often associated losses are likely to
occur. In addition to this evaluation of loss frequency, an analysis of the size, or severity, of
the loss is helpful. Consideration should be given both to the most probable size of any losses
that may occur and to the maximum possible losses that might happen.

Risk management techniques:

The results of the analyses in second step are used as the basis for decisions regarding
ways to handle existing risks. In some situations, the best plan may be to do nothing. In other
cases, sophisticated ways to finance potential losses may be arranged. The available
techniques for managing risks are GAP Analysis, VAR Analysis, Heinrich Domino theory
etc., with consideration of when each technique is appropriate.

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REVIEW OF LITERATURE
ARTICLES
ARTICLE: 1
TITLE :Strategic Management for Co-operatives
AUTHOR: Subash
YEAR: 2003
PUBLISHER: Subash, T.Strategic Management for Co-operatives, Co-operative
Perspective, 37 ( 4), March 2003, p 1-5.
ABSTRACT:
Subash (2003)" in his article "Strategic Management for Co-operatives" highlights the need
for co-operatives to cope with the changes Occurring in the economy and suggests that an
effective and judicious Management of physical and human sources available with the co-
operatives. For this, strategic planning is necessarily important for co-operatives. It helps
the determination of overall objectives, policies and strategies to achieve these Objectives.

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ARTICLE: 2
TITLE Performance of co-operative banks
AUTHOR: Maasali
YEAR: 2004
PUBLISHER: .Maasali, S. S., Performance of Co-operative banks: A study of Co-operative
Urban banks in Belgaum, Indian Co-operative review, July 2004, p. 66
ABSTRACT
Maasali (2004) in his study "Performance of co-operative banks - A Study of Co-operative
Urban banks in Belgaum, by examining the nine urban Co-operative banks in Belgaum
district of Karnataka state observed that UCB's Have to compete with local credit co-
operatives for getting deposits and Nationalized banks and private banks giving loans. Non-
interest incomes were Quite negligible and suffer from heavy non-performing assets,
employee
Performance was only average.

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ARTICLE: 3
TITLE :Can the Ordinance Recover NPAs
AUTHOR: KausickSaha
YEAR: 2003
PUBLISHER: Kausick, Saha, Can the Ordinance Recover NPAs?, Management Review",
IIMB, Bangalore, 15 (l), March 2003, p. 19-27
ABSTRACT
KausickSaha (2003)in his article, "Can the Ordinance Recover
NPAs? observed that lack of project appraisal, political favour and incorrect Projection of
pre demand in the industrial sector together with recession in the last few years have resulted
in the default of many loan accounts resulting in non -performing assets (NPAs). As on
March 3lSt, 2001, the gross NPAs of the scheduled commercial banks was Rs 63,883 crore
and their net NPAs stood at Rs 32,468 crore.

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ARTICLE:4
TITLE: Implementing Asset Liability Management
AUTHOR: Dharmarajan
YEAR: 2004
PUBLISHER: Dharmarajan, S., Implementing Asset-Liability Management (ALM) System
in Co-operative Banks, Vinimaya, September 2004, p.2 1-27.
ABSTRACT:
Dharmarajan (2004) in his article, "Implementing Asset Liability
Management (ALM) in Co-operative Banks", observed that though
Introduction of ALM system in co-operative banks is not compulsory, the
System enables them to have a highly professional hinds management practice. This may be
useh1 to meet the information requirements of the regulatory body in the near future and to
ensure their financial discipline.

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ARTICLE: 5
TITLE: Advantage Customer
AUTHOR: Shivaprasad
YEAR: 2003
PUBLISHER :Shivaprasad, V.V.S., Advantage Customer, Vinimaya, XXIII (4b), Jan-
March 2003, p.33.
ABSTRACT:
Shivaprasad (2003) in his article "Advantage Customer" observed that
the introduction of prudential norms of income recognition, asset classification and
provisioning resulted in the growing menace of non-performing assets. Banks are competing
with each other and are trying to make their product more and more attractive with several
offers. "Here is a bank offering free of cost insurance coverage along with their home loan
product.

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ARTICLE:6
TITLE: The Development and application of demand deposit costing model
AUTHOR: Weight George dale
YEAR:1970
PUBLISHER: Weight, George Dale, The Development and Applications of Demand
Deposit Costing Model, (1 970)
ABSTRACT:
Weight George Dale (1970)', in his thesis "The Development and
Applications of Demand Deposit Costing Model", developed a model of
Demand deposit service costs for small banks. The model, utilizing the deposit Ratio
(Average Balance per account) as the output variable is subjected to Regression analysis for
the purpose of forecasting specific cost relationship and Determining the presence of
economies of scale

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ARTICLE: 7
TITLE: The funds management in co-operative banks
AUTHOR: Pancras
YEAR :1978
PUBLISHER :Pancras, The funds management in co-operative banks", Indian Co-operative
Review, 15 (4), July 1978
ABSTRACT:
Pancras (1978)', studied the funds management in co-operative banks
and opined that co-operative banks in remote areas are forced to keep more cash /liquid
assets due to their distant location from apex banks. He also stated that profitability in co-
operative banks - matter of efficient management of funds - acquisition and its use. By
efficient control of cost associated with funds management, the profitability of banks may be
improved.

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ARTICLE: 8
TITLE: Deposit Mobilization by Apex CO operative banks in India
AUTHOR: Goyal
YEAR: 1979
PUBLISHER: Goyal, M.K, Deposit Mobilisation by Apex CO operative Banks in India,
Indian Co-operative Review, XVII( l), October 1979. pp. 13- 17. 6
ABSTRACT:
Goyal(1979)~ conducted a study on "Deposit Mobilization by Apex CO
operative Banks in India" and found that they mobilised deposits from both individuals and
institutions and the process was found satisfactory during the period from 1971 to 1977. The
savings and fixed deposits recorded a steady growth and growth in deposits was more than
the growth registered in owned funds.

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STATEMENT OF PROBLEM
Asset and liability management is a new technique to build a framework for banking
activities to perform better and to take best decisions. Asset and liabilities management
become essential tools to evaluate the risk facing by the bank in maintaining asset and
liability to ensure profitability of the business. Assessing the quality of assets in banking
sector play a vital role in progress and development of performance of banking sectors,
which may make a study of ALM is essential and significant.

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NATURE FOR STUDY
Nature of study is a study on asset liability management system. The Research design
adopted is analytical research design. Data collection used is secondary data. The Source of
data is five years balance sheet, profit and loss account. The Statistical tools used are
comparative statement, ratio analysis, mean, standard deviation, coefficient of variation.

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NEED FOR THE STUDY:
1. The need of the study is to concentrate on the growth and performance by using asset
and liability management and to know the management of nonperforming assets
2. .To know financial position and to analyze existing situation which helps to improve
the performance of company.
3. The prime importance of the study is to analyze the maintenance of the asset and
liability it helps to compete with the other cooperatives.

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OBJECTIVES OF THE STUDY:
1. To analyze the interest risk and liquidity risk of ICICI BANK LIMITED.

2. To study the concept of asset liability management and the process of cash inflow and
outflow .
3. To analyze financial risk arises due to the mismatch between asset and liability .
4. To analyze the structural liquidity rate.
5. To Study the gap analysis of ICICI BANK LIMITED.

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SCOPE OF THE STUDY:
In this study the analysis based on ratios to know asset and liabilities management and to
analyze the growth and performance by using the calculations under asset and liability
management based on ratio of the company. It covers both a prudential and component and
an optimization role, with in the limits of compliance .

The data is obtained from the ICICI BANK LIMITED for the purpose of Assets and
liability. The information is gathered from different channels for a period of 45 days.
For the present study, the data pertaining to financial year 2018-2022 was collected.

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RESEARCH METHODOLOGY:
The study of ALM Management is based on two factors.
1. Primary data collection.
2. Secondary data collection
PRIMARY DATA COLLECTION:
The sources of primary data were:
1. The chief manager– ALM cell
2. Department Sr. manager financing & Accounting
3. System manager- ALM cell

Gathering the information from other managers and other officials of the ICICI BANK LTD
SECONDARYDATACOLLECTION:
Collected from books concerning journal, and control with info that is related about ALM
along with other major sources were
a) Annual report of the ICICI BANK LTD
b) Published statement of the ICICI BANK LTD
c) RBI guidelines for ALM

TOOLS AND TECNIQUES:

1. Ratio analysis
2. Trend analysis
3. Comparative analysis

PERIOD OF THE STUDY:

The study duration was 2018-2019 to 2021-2022 during which we collected data, the
statistical analysis and publication took time.

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LIMITATION OF THE STUDY:
1. This subject is based on past data of ICICI BANK LTD
2. The analysis is based on structural liquidity statement and gap analysis.
3. The study is mainly based on secondary data.
4. The study period of 45 days as prescribed by university
5. The study is limited up to the date and information provided by ICICI BANK LTD
and its annual reports

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 PURPOSE OUT COMES

The purpose of ALM is not necessarily to eliminate or even minimize risk. The level of risk
will vary with the return requirement and entity’s objectives. Financial objectives and risk
tolerances are generally determined by senior management of an entity and are reviewed
from time to time. All sources of risk are identified for all assets and liabilities. Risks are
broken down into their component pieces and the underlying causes of each component are
assessed. Relationships of various risks to each other and/or to external factors are also
identified.
Risk exposure can be quantified 1) relative to changes in the component pieces, 2) as a
maximum expected loss for a given confidence interval in a given set of scenarios, or 3) by
the distribution of outcomes for a given set of simulated scenarios for the component piece
over time.
Regular measurement and monitoring of the risk exposure is required. Operating within a
dynamic environment, as the entity’s risk tolerances and financial objectives change, the
existing ALM strategies may no longer be appropriate. Hence, these strategies need to be
periodically reviewed and modified. A formal, documented communication process is
particularly important in this step.

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INDUSTRY PROFILE
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while enriching
investors. Government restrictions on financial activities by banks vary over time and
location. Banks are important players in financial markets and offer services such as
investment funds and loans. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as the United
States banks are prohibited from owning non-financial companies. In Japan, banks are
usually the nexus of a cross-share holding entity known as the keiretsu. In France,
bancassurance is prevalent, as most banks offer insurance services (and now real estate
services) to their clients.
Introduction
India’s banking sector is constantly growing. Since the turn of the century, there has been a
noticeable upsurge in transactions through ATMs, and also internet and mobile banking.
Following the passing of the Banking Laws (Amendment) Bill by the Indian Parliament in
2016, the landscape of the banking industry began to change. The bill allows the Reserve
Bank of India (RBI) to make final guidelines on issuing new licenses, which could lead to a
bigger number of banks in the country. Some banks have already received licences from the
government, and the RBI's new norms will provide incentives to banks to spot bad loans and
take requisite action to keep rogue borrowers in check.
Over the next decade, the banking sector is projected to create up to two million new jobs,
driven by the efforts of the RBI and the Government of India to integrate financial services
into rural areas. Also, the traditional way of operations will slowly give way to modern
technology.
Market size
Total banking assets in India touched US$ 1.8 trillion in FY17 and are anticipated to cross
US$ 28.5 trillion in FY25.
Bank deposits have grown at a compound annual growth rate (CAGR) of 21.2 per cent over
FY08–17. Total deposits in FY17 were US$ 1,274.3 billion.
Total banking sector credit is anticipated to grow at a CAGR of 20.1 per cent (in terms of
INR) to reach US$ 2.4 trillion by 2021.

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COMPANY PROFILE
ICICI Bank is a leading private sector bank in India. The Bank’s consolidated total assets
stood at Rs. 14.76 trillion at September 30, 2020. ICICI Bank currently has a network of
5,288 branches and 13,834 ATMs across India.
History
ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian
businesses. Until the late 1980s, ICICI primarily focused its activities on project finance,
providing long-term funds to a variety of industrial projects. With the liberalization of the
financial sector in India in the 1990s, ICICI transformed its business from a development
financial institution offering only project finance to a diversified financial services provider
that, along with its subsidiaries and other group companies, offered a wide variety of
products and services. As India’s economy became more market-oriented and integrated with
the world economy, ICICI capitalized on the new opportunities to provide a wider range of
financial products and services to a broader spectrum of clients. ICICI Bank was
incorporated in 1994 as a part of the ICICI group. In 1999, ICICI became the first Indian
company and the first bank or financial institution from non-Japan Asia to be listed on the
New York Stock Exchange.
The issue of universal banking, which in the Indian context meant conversion of long-term
lending institutions such as ICICI into commercial banks, had been discussed at length in the
late 1990s. Conversion into a bank offered ICICI the ability to accept low-cost demand
deposits and offer a wider range of products and services, and greater opportunities for
earning non-fund based income in the form of banking fees and commissions. After
consideration of various corporate structuring alternatives in the context of the emerging
competitive scenario in the Indian banking industry, and the move towards universal
banking, the managements of ICICI and ICICI Bank formed the view that the merger of
ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would
create the optimal legal structure for ICICI group's universal banking strategy. The merger
would enhance value for ICICI shareholders through the merged entity's access to low-cost
deposits, greater opportunities for earning fee-based income and the ability to participate in
the payments system and provide transaction-banking services. The merger would enhance
value for ICICI Bank shareholders through a large capital base and scale of operations,

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seamless access to ICICI's strong corporate relationships built up over five decades, entry
into new business segments, higher market share in various business segments, particularly
fee-based services, and access to the vast talent pool of ICICI and its subsidiaries.
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of
ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was
approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of
Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and
the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's
financing and banking operations, both wholesale and retail, were integrated in a single
entity.
ICICI Bank is a large private sector bank in India offering a diversified portfolio of financial
products and services to retail, SME and corporate customers. The Bank has an extensive
network of branches and ATMs. It is at the forefront of leveraging technology and offering
services through digital channels like mobile and internet banking.
VISION AND MISSION
VISION
To be the trusted financial services provider of choice for our customers, thereby creating
sustainable value for our stakeholders.
MISSION
To grow our risk-calibrated core operating profit by:
 Delivering products and services that create value for customers.
 Bringing together all our capabilities to seamlessly meet customer needs.
 Conducting our business within well-defined risk tolerance levels.

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 BIBILIOGRAPHY
BOOKS
1. Dr.Manjula Jain, Dr. Monica Singh (1998) “Assets Liability in Indian Banks:
Issues and Implication”.
2. Manish Kumar and Ghanshyam Chand Yadav (2001) “Liquidity risk management
in banks: A conceptual Framework.”
3. Choudhary (2007) Bank Asset and Liability Management: Strategy, Trading
Analysis.
4. Brick J.R (2012) Asset-Liability Management: Theory, Practice, and the Role of
Judgment.

NEWS PAPERS
 The Economic Times
 The New Indian Express
 Business World

JOURNALS
1. VAN DEVENDER, IMAI AND MESELER, 2004 - "Asset and liability management"
2. Katherina Simons, 2017 - "Interest rate derivatives and asset liabilities management by
commercial banks."
3. Evans Tee, 1991 - "Asset Liability Management and the Profitability of Listed Banks in
Ghana", Probus publishing company

WEB SITES
1. www.heritagefoods.com
2. www.slideshare.com
3. www.scribd.org
4. www.ibef.org

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