A

PROJECT REPORT
ON

“ASSETS LIABILITIES MANAGEMENT”

A PROJECT report submitted in partial fulfilment of requirements of degree

(BBA) course of Osmania University during year 2022-2025

By

MAHEYA FATIMA HT NO : 115322684008

UNDER THE GUIDANCE OF

VIKAS KUMAR VAISHNAV SIR
LECTURE IN BACHELORS IN COMMERCE DEPARTMENT

DEPARTMENT OF BACHELOR OF COMMERCE

PIONEER DEGREE COLLEGE

(AFFILIATED TO OSMANIA UNIVERSITY)

J.N ROAD ABIDS, HYDERABAD
2022-2025
 PIONEER DEGREE COLLEGE
J.N ROAD ABIDS,HYDERABAD
HYDERABAD.01
(Affiliated to Osmania University)

MOHAMMED WAJAHAT ULLAH KHAN

Principal /Manager

CERTIFICATE

This is to certify that MAHEYA FATIMA is bonafide students of the college, bearing HT,
No, 115322684008, i have worked on the project report titled “ASSETS LIABILITIES
MANAGEMENT” under the guidance and supervision of VIKAS KUMAR VAISHNAV
SIR Lecture In Bachelors In COMMERCE Department on this college.

HEAD OF THE DEPARTMENT OF COMPUTER APPLICATION PRINCIPAL

Project guide External Examiner

 PIONEER DEGREE COLLEGE
J.N ROAD ABIDS, HYDERABAD
HYDERABAD.01
(Affiliated to Osmania University)

MOHAMMED WAJAHAT ULLAH KHAN

Principal /Manager

CERTIFICATE

I hereby declare that the project report entitled ““ASSETS LIABILITIES

MANAGEMENT”" carried under guidance of VIKAS KUMAR VAISHNAV SIR,
Assistant professor is submitted in partial fulfillment of the requirement for award of the
degree DEPARTMENT OF BACHELORS IN COMMERCE. This is
bonafide work carried out by me and the results embodied in this project reproduced/copied
from any source. The results embodied in this project report have not been submitted to any
other University or institute.

HEAD OF THE DEPARTMENT OF COMMERCE PRINCIPAL

 DECLARATION

I hear by that the project titled “ASSETS LIABILITIES MANAGEMENT” has been prepared
by me during the academic year 2022-2025 under valuable guidance of VIKAS KUMAR
VAISHNAV SIR Lecturer in bachelors, PIONEER DEGREE COLLEGE.

I also declared that the project is done in the partial fulfillment of the requirement for award of
bachelors of degree from Osmania University, has been a result of own effort and personal
Initiative

It as been not submitted to any other institution or University for the award of any degree or
diploma

Date:
Place : Hyderabad

MAHEYA FATIMA HT NO : 115322684008

 ACKNOWLEDGMENT

It give me us immense pleasure to mention the name of those people who made our Dissertation report
possible. We would like to thanks VIKAS KUMAR VAISHNAV SIR (project guide) lecturer in
BACHELOR IN COMMERCE for his guidance throughout the project. Without her continuous help.
Suggestion and encouragement it would not have been possible for us to complete the project
efficiently.

I sincerely thank MOHAMMED WAJAHAT ULLAH KHAN principal and correspondent of the
PIONEER DEGREE COLLEGE, for giving opportunity to take up this research.

I am grateful to the respondents who had give their valuable time to respond to questionnaire.

I also express my deep gratitude to my parents, family & friends, without their encouragement and
support, this project would not have been possible.

Date:
Place : Hyderabad

MAHEYA FATIMA HT NO : 115322684008

 1. 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
HDFC.

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. The tool called ASSET AND LIABILITY MANAGEMENT provides a better
solution for this.

ASSET LIABILITY MANAGEMENT (ALM) 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 the, at the same time reducing the
risks faced by them and managing the different types of risks by keeping it within acceptable levels.
OBJECTIVES OF THE STUDY

 To study the concept of ASSET & LIABLITY MANAGEMENT in HDFC

 To study process of CASH INFIOWS and OUTFLOWS in HDFC

 To study RISK MANAGEMENT under HDFC

 To study RESERVES CYCLE of ALM under HDFC

 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 to calculate the
growth and performance by using asset and liability management. And to know the management 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.
SCOPE OF THE STUDY:

In this study the analysis based on ratios to know asset and liabilities management under HDFC and to
analyze the growth and performance of HDFC by using the calculations under asset and liability
management based on ratio.
 Ratio analysis
 Comparative statement
 Common size balance sheet.
METHODOLOGY OF THE STUDY
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

 The chief manager – ALM cell

 Department Sr. manager financing & Accounting

 System manager- ALM cell

Gathering the information from other managers and other officials of the HDFC

SECONDARY DATA COLLECTION:

Collected from books regarding, journal, and management containing relevant information about ALM
and Other main sources were

 Annual report of the HDFC

 Published report of the HDFC
 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.

4. This subject is based on past data of HDFC

5. The analysis is based on structural liquidity statement and gap analysis.

6. The study is mainly based on secondary data.

7. Assets include certain differed charges that are not resources but that are recognized

and measured in conformitivity with generally accepted accounting principles.

 2. REVIEW OF LITERATURE

ASSET LIABILITY MANAGEMENT (ALM) SYSTEM:

INTRODUCTION:

In the normal course, there exposed to credit and market risks in view of the asset liability
transformation. With the liberalization in the Indian financial markets over the last few years and growing
integration of domestic markets and with external markets the risks associated with operations have become
complex, large, requiring stragic management. Are now operating in a fairly deregulated environment and
are required to determine on their own, interest rates on deposits and advance in both domestic and foreign
currencies on a dynamic basis. The interest rates on investments in government and other securities are also
now market related. Intense competition for business involving both the assets and liabilities, together with
increasing volatility in the domestic interest rates, has brought pressure on the management maintain a good
balance among spreads, profitability and long-term viability. Impudent liquidity management can put
earnings and reputation at great risk. These pressures call for structured and comprehensive measures and
not just adahoc action. The management of has to base their business decisions on a dynamic and integrated
risk management system and process, driven by corporate strategy. Are exposed to several major risks in
course of their business-credit risk, interest rate and operational risk therefore important than introduce
effective risk management systems that address the issues related to interest rate, currency and liquidity
risks.

Need to address these risks in a structured manner by upgrading their risk management and adopting
more comprehensive Asset-Liability management (ALM) practices than has been done hitherto. ALM
among other functions, is also concerned with risk management and provides a comprehensive and dynamic
framework for measuring, monitoring and managing liquidity interest rate, foreign exchange and equity and
commodity price risk of a that needs to be closely integrated with the business strategy. It involves
assement of various types of risks altering the asset liability portfolio in a dynamic way in order to manage
risks.

The initial focus of the ALM function would be to enforce the risk management discipline, viz., and
managing business after assessing the risks involved.
In addition, the managing the spread and riskiness, the ALM function is more appropriately viewed
as an integrated approach which requires simultaneous decisions about asset/liability mix and maturity
structure.
RISK MANAGEMENT IN ALM:

Risk management is a dynamic process, which needs constant focus and attention. The idea of risk
management is a well-known investment principle that the largest potential returns are associated with the
riskiest ventures. There can be no single prescription for all times, decisions have to be reversed at short
notice, which is often used to mean uncertainty, creates both opportunities and problems for business and
individuals in nearly every walk of life.

Risk sometimes is consciously analyzed and managed, other times risk is simply ignored, perhaps
out of lack of knowledge of its consequences. If loss regarding risk is certain to occur, it may be planned for
in advance and treated as to definite, known expense. Businesses and individuals may try to avoid risk of
loss as much as possible or reduce its negative consequences.

Several types of risks that affect individuals and businesses were introduced, together with ways to
measure the amount of risk. The process used to systematically manage risk exposure is known as RISK
MANAGEMENT. Whether the concern is with a business or an individual situation, the same general steps
can be used to systematically analyze and deal with risk.

STEPS IN RISK MANAGEMENT:

 Risk identification
 Risk evaluation
 Risk management technique
 Risk measurement
 Risk review decisions
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.

RISK MEASUREMENT:
Once risk sources have been identified it is often helpful to measure the extent of the risk that exists.
As part of the overall risk evaluation, in some situations it may be possible to measure the degree of risk in a
meaningful way. In other cases, especially those involving individuals computation of the degree of risk
may not yield helpful information.

RISK REVIEW DECISIONS:

Following a decision about the optimal methods for handling identified risks, the business or
individual must implement the techniques selected. However, risk management should be an ongoing
process in which prior decisions are reviewed regularly. Sometimes new risk exposures arise or significant
changes in expected loss frequency or severity occur. The dynamic nature of many risks requires a continual
scrutiny of past analysis and decisions.

DIMENSIONS OF RISK

Specifically two broad categories of risk are the basis for classifying financial services risk.

(1) Product market Risk.

(2) Capital market Risk.

Economists have long classified management problems as relating to either The Product Markets
Risks or The Capital Markets Risks.
 TOTAL FINANCIAL SERVICES FIRMS RISK.

Total Risk
(Responsibility of CEO)

Business Risk Financial Risk

Product Market Risk Capital Market Risk

(Responsibility of the (Responsibility of the

Chief Operating Officer) Chief Financial Officer)

Credit Interest rate

Strategic Liquidity
Regulatory Currency
Operating Settlement
Human resources Basis
Legal
 (I).PRODUCT MARKET RISK:

This risk 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, marketing, operating systems, labor cost,
technology, channels of distributions at strategic focus. Product Risks relate to variations in the operating
cash flows of the firm, which affect Capital Market, required Rates of Return.

(1) CREDIT RISK

(2) STRATEGIC RISK

(3) COMMODITY RISK

(4) OPERATIVE RISK

(5) HUMAN RESOURCES RISK

(6) LEGAL RISK

Risk in Product Market relate to the operational and strategic aspects of managing operating
revenues and expenses. The above types of Product Risks are explained as follows.

1. CREDIT RISK:

The most basic of all Product Market Risk in a or other financial intermediary is the erosion of value
due to simple default or non-payment by the borrower. Credit risk has been around for centuries and is
thought by many to be the dominant financial services today. Intermediate the risk appetite of lenders and
essential riskiness of borrowers. Manage this risk by,

(A) Making intelligent lending decisions so that expected risk of borrowers is both accurately assessed and
priced;
(B) Diversifying across borrowers so that credit losses are not concentrated in time; (C) purchasing third
party guarantees so that default risk is entirely or partially shifted away from lenders.
(2). STRATEGIC RISK:

This is the risk that entire lines of business may succumb to competition or obsolescence. In the
language of strategic planner, commercial paper is a substitute product for large corporate loans. Strategic
risk occurs when is not ready or able to compete in a newly developing line of business. Early entrants
enjoyed a unique advantage over newer entrants. The seemingly conservative act of waiting for the market
to develop posed a risk in itself. Business risk accrues from jumping into lines of business but also from
staying out too long.

(3). COMMODITY RISK:

Commodity prices affect and other lenders in complex and often unpredictable ways. The macro
effect of energy price increases on inflation also contributed to a rise in interest rates, which adversely
affected the value of many fixed rate financial assets. The subsequent crash in oil prices sent the process in
reverse with nearly equally devastating effects.

(4). OPERATING RISK:

Machine-based system offer essential competitive advantage in reducing costs and improving
quality while expanding service and speed. No element of management process has more potential for
surprise than systems malfunctions. Complex, machine-based systems produce what is known as the “black
box effect”. The inner working of system can become opaque to their users. Because developers do not use
the system and users often have not constitutes a significant Product Market Risk. No financial service firm
can small management challenge in the modern financial services company.

(5). HUMAN RESOURCES RISK:

Few risks are more complex and difficult to measure than those of personnel policy; they are
Recruitment, Training, Motivation and Retention. Risk to the value of the Non-Financial Assets as
represented by the work force represents a much more subtle of risk. Concurrent with the loss of key
personal is the risk of inadequate or misplaced motivation among management personal. This human
redundancy is conceptually equivalent to safety redundancy in operating systems. It is not inexpensive, but
it may well be cheaper than the risk of loss. The risk and rewards of increased attention to the human
resources dimension of management are immense.
(6). LEGAL RISK:

This is the risk that the legal system will expropriate value from the shareholders of financial
services firms. The legal landscape today is full of risks that were simply unimaginable even a few years
ago. More over these risks are very hard to anticipate because they are often unrelated to prior events which
are difficult and impossible to designate but the management of a financial services firm today must have
these risks at least in view. They can cost millions.

(II). CAPITAL MARKET RISK:

In the Capital Market Risk decision relate to the financing and financial support of Product Market
activities. The result of product market decisions must be compared to the required rate of return that results
from capital market decision to determine if management is creating value. Capital market decisions affect
the risk tolerance of product market decisions related to variations in value associated with different
financial instruments and required rate of return in the economy.

1. LIQUIDITY RISK

2. INTEREST RATE RISK

3. CURRENCY RISK

4. SETTLEMENT RISK

5. BASIS RISK

1. LIQUIDITY RISK:

For experienced financial services professionals, the foremost capital market risk is that of inadequate
liquidity to meet financial obligations. The obvious form is an inability to pay desired withdrawals.
Depositors react desperately to the mere prospect of this situation.

They can drive a financial intermediary to collapse by withdrawing funds at a rate that exceeds its
capacity to pay. For most of this century, individual depositors who lost faith inability to repay them caused
failures from liquidity. Funds are deposited primarily as a financial of rate. Such funds are called
“purchased money” or “headset funds” as they are frequently bought by employees who work on the
money desk quoting rates to institutions that shop for the highest return. To check liquidity risk, firms must
keep the maturity profile of the liabilities compatible with that of the assets. This balance must be close
enough that a reasonable shift in interest rates across the yield curve does not threaten the safety and
soundness of the entire firm.

2. INTEREST RATE RISK:

In extreme conditions, Interest Rate fluctuations can create a liquidity crisis. The fluctuation in the
prices of financial assets due to changes in interest rates can be large enough to make default risk a major
threat to a financial services firm’s viability. There’s a function of both the magnitude of change in the rate
and the maturity of the asset. This inadequacy of assessment and consequent mispricing of assets, combined
with an accounting system that did not record unrecognized gains and losses in asset values, created a
financial crisis. Risk based capital rules pertaining to have done little to mitigate the interest rate risk
management problem. The decision to pass it off; however is not without large cost, so the cost benefit
tradeoff becomes complex.

3. CURRENCY RISK:
The risk of exchange rate volatility can be described as a form of basis risk among currencies instead of
basis risk among interest rates on different securities. Balance sheets comprised of numerous separate
currencies contain large camouflaged risks through financial reporting systems that do not require assets to
be marked to market. Exchange rate risk affects both the Product Markets and The Capital Markets. Ways to
contain currency risk have developed in today’s derivative market through the use of swaps and forward
contracts. Thus, this risk is manageable only after the most sophisticated and modern risk management
technique is employed

4. SETTLEMENT RISK:

Settlement Risk is a particular form of default risk, which involves the competitors. Amounts settle
obligations having to do with money transfer, check clearing, loan disbursement and repayment, and all
other inter- transfers within the worldwide monetary system. A single payment is made at the end of the day
instead of multiple payments for individual transactions.

5. BASIS RISK :

Basis risk is a variation on the interest rate risk theme, yet it creates risks that are less easy to
observe and understand. To guard against interest rate risk, somewhat non comparable securities may be
used as a hedge. However, the success of this hedging depends on a steady and predictable relationship
between the two no identical securities. Basis can negate the hedge partially or entirely, which vastly
increases the Capital Market Risk exposure of the firm.
3. INDUSTRY PROFILE

BANKING IN INDIA:

Banking in India originated in the last decades of the 18th century. The oldest bank in existence in India is
the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the
largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India,
which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to
commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and
given broader powers, In 1969 the government nationalized the 14 largest commercial banks, the
government nationalized the six next largest in 1980.

Currently India has 96 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the
Government of India holding a stake), 31 private banks (these do not have government stake, they may be
publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over
53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public
sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks
holding 18.2% and 6.5% respectively.

EARLY HISTORY

Banking in India originated in the last decades of the 18th century. The first banks were The General Bank
of India which started in 1786, and the Bank of Hindustan, both of which are now defunct. The oldest bank
in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806,
which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the
other two being the Bank of Bombay and the Bank of Madras, all three of which were established under
charters from the British East India Company. For many years the Presidency banks acted as Quasi-central
banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which,
upon India's independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a consequence of
the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still functioning today, is the
oldest Joint Stock bank in India. It was not the first though. That honor belongs to the Bank of Upper India,
which was established in 1863, and which survived until 1913, when it failed, with some of its assets and
liabilities being transferred to the Alliance Bank of Simla.

When the American Civil War stopped the supply of cotton to Lancashire from the Confederate States,
promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures,
most of the banks opened in India during that period failed. The depositors lost money and lost interest in
keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans
for next several decades until the beginning of the 20th century.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoired' Escompte de
Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches in Madras and
Pondicherry, then a French colony, followed. HSBC established itself in Bengal in 1869. Calcutta was the
most active trading port in India, mainly due to the trade of the British Empire, and so became a banking
center.

The Bank of Bengal, which later became the State Bank of India.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad,
It was failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895, which has
survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability.
Around five decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure
had improved. Indians had established small banks, most of which served particular ethnic and religious
communities.

The presidency banks dominated banking in India but there were also some exchange banks and a number
of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange
banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were
generally undercapitalized and lacked the experience and maturity to compete with the presidency and
exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are
behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into
separate and cumbersome compartments."
The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi movement.
The Swadeshi movement inspired local businessmen and political figures to found banks of and for the
Indian community. A number of banks established then have survived to the present such as Bank of India,
Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.

The fervor of Swedishi movement lead to establishing of many private banks in Dakshina Kannada and
Udupi district which were unified earlier and known by the name South Canara ( South Kanara )
district. Four nationalized banks started in this district and also a leading private sector bank. Hence
undivided Dakshina Kannada district is known as "Cradle of Indian Banking".
COMPANY PROFILE:
 The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private
sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated
in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC
Bank commenced operations as a Scheduled Commercial Bank in January 1995.
HDFC is India's premier housing finance company and enjoys an impeccable track record in India as
well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and
healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio
covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage
loans to different market segments and also has a large corporate client base for its housing related credit
facilities. With its experience in the financial markets, a strong market reputation, large shareholder base
and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer
franchises across distinct businesses so as to be the preferred provider of banking services for target retail
and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's
risk appetite. The bank is committed to maintain the highest level of ethical standards, professional
integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on
four core values - Operational Excellence, Customer Focus, Product Leadership and People.

CAPITAL STRUCTURE:
As on 31st October, 2023 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 Bank's equity and about 16.94 % of the equity is held by the ADS Depository
(in respect of the bank's American Depository Shares (ADS) Issue). 27.46 % of the equity is held by
Foreign Institutional Investors (FIIs) and the Bank has about 4,58,683 shareholders.
The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange of
India Limited. The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange
(NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts (GDRs) are listed on
Luxembourg Stock Exchange under ISIN No US40415F2002.
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of 1,725
branches spread in 771 cities across India. All branches are linked on an online real-time basis. Customers
in over 500 locations are also serviced through Telephone Banking. The Bank's expansion plans take into
account the need to have a presence in all major industrial and commercial centre s where its corporate
customers are located as well as the need to build a strong retail customer base for both deposits and loan
products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the
centre s where the NSE/BSE have a strong and active member base.
The Bank also has 4,000 networked ATMs across these cities. Moreover, HDFC Bank's ATM
network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro,
Plus/Cirrus and American Express Credit/Charge cardholders.
Mr. Jagadish Capoor took over as the bank's Chairman in July 2023. Prior to this, Mr. Capoor was a Deputy
Governor of the Reserve Bank of India.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years, and
before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public
policy, administration, industry and commercial banking. Senior executives representing HDFC are also on
the Board.
Senior banking professionals with substantial experience in India and abroad head various
businesses and functions and report to the Managing Director. Given the professional expertise of the
management team and the overall focus on recruiting and retaining the best talent in the industry, the bank
believes that its people are a significant competitive strength.
HDFC Bank operates in a highly automated environment in terms of information technology and
communication systems. All the bank's branches have online connectivity, which enables the bank to offer
speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers
through the branch network and Automated Teller Machines (ATMs).

The Bank has made substantial efforts and investments in acquiring the best technology available
internationally, to build the infrastructure for a world class bank. The Bank's business is supported by
scalable and robust systems which ensure that our clients always get the finest services we offer.

The Bank has prioritized its engagement in technology and the internet as one of its key goals and
has already made significant progress in web-enabling its core businesses. In each of its businesses, the
Bank has succeeded in leveraging its market position, expertise and technology to create a competitive
advantage and build market share.

HDFC Bank offers a wide range of commercial and transactional banking services and treasury
products to wholesale and retail customers. The bank has three key business segments:

CREDIT RATING
The Bank has its deposit programs rated by two rating agencies - Credit Analysis & Research
Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit programme has been
rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best
quality, carrying negligible investment risk". CARE has also rated the bank's Certificate of Deposit (CD)
programme "PR 1+" which represents "superior capacity for repayment of short term promissory
obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "AAA ( ind )"
rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates
"highest credit quality" where "protection factors are very high"
The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch
Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and
CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch
Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable".
CARE has also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond
issues. CRISIL has assigned the rating "AAA / Stable" for the Bank's Perpetual Debt programme and Upper
Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by
the rating agency for those instruments?

CORPORATE GOVERNANCE RATING:

The bank was one of the first four companies, which subjected itself to a Corporate Governance and Value
Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited
(CRISIL). The rating provides an independent assessment of an entity's current performance and an
expectation on its "balanced value creation and corporate governance practices" in future. The bank has
been assigned a 'CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to
wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.

On May 23, 2010, the amalgamation of Centurion Bank of Punjab with HDFC Bank was formally
approved by Reserve Bank of India to complete the statutory and regulatory approval process. As per the
scheme of amalgamation, shareholders of CBoP received 1 share of HDFC Bank for every 29 shares of
CBoP.

The merged entity will have a strong deposit base of around Rs. 1,22,000 crore and net advances of
around Rs. 89,000 crore. The balance sheet size of the combined entity would be over Rs. 1,63,000 crore.
The amalgamation added significant value to HDFC Bank in terms of increased branch network, geographic
reach, and customer base, and a bigger pool of skilled manpower.

In a milestone transaction in the Indian banking industry, Times Bank Limited (another new private
sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd.,
effective February 26, 2000. This was the first merger of two private banks in the New Generation Private
Sector Banks. As per the scheme of amalgamation approved by the shareholders of both banks and the
Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares
of Times Bank.

HDFC Bank Ltd. (BSE: 500180, NYSE: HDB) is a commercial bank of India, incorporated in
August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was
promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in
1977) of India. HDFC Bank has 1,412 branches and over 3,295 ATMs, in 528 cities in India, and all
branches of the bank are linked on an online real-time basis. As of September 30, 2022 the bank had total
assets of INR 1006.82 billion. For the fiscal year 2022-10, the bank has reported net profit of Rs.2,244.9
crore, up 41% from the previous fiscal. Total annual earnings of the bank increased by 58% reaching at
Rs.19, 622.8 crore in 2022-10.

BUSINESS FOCUS

HDFC Bank deals with three key business segments – Wholesale Banking Services, Retail Banking
Services, and Treasury. It has entered the banking consortia of over 50 corporate for providing working
capital finance, trade services, corporate finance and merchant banking. It is also providing sophisticated
product structures in area of foreign exchange and derivatives, money markets and debt trading and equity
research.

WHOLESALE BANKING SERVICES:

The Bank's target m inroads into the banking consortia of a number of leading Indian corporate including
multinationals, companies from the domestic business houses and prime public sector companies. It is
recognized as a leading provider of cash management and transactional banking solutions to corporate
customers, mutual funds, stock exchange members and banks.

RETAIL BANKING SERVICES:

The objective of the Retail Bank is to provide its target market customers a full range of financial products
and banking services, giving the customer a one-stop window for all his/her banking requirements. The
products are backed by world-class service and delivered to customers through the growing branch network,
as well as through alternative delivery channels like ATM, Phone Banking, Net Banking and Mobile
Banking.
HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA
(VISA Electron) and issues the Master card Maestro debit card as well. The Bank launched its credit card
business in late 2023. By March 2023, the bank had a total card base (debit and credit cards) of over 13
million. The Bank is also one of the leading players in the “merchant acquiring” business with over 70,000
Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is
well positioned as a leader in various net based B2C opportunities including a wide range of internet
banking services for Fixed Deposits, Loans, Bill Payments, etc.

TREASURY:

Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local
Currency Money Market & Debt Securities, and Equities. These services are provided through the bank's
Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its
deposits in government securities. The Treasury business is responsible for managing the returns and market
risk on this investment portfolio.

DISTRIBUTION NETWORK:

HDFC Bank is headquartered in Mumbai. The Bank has a network of 1,725 branches spread in 771 cities
across India. All branches are linked on an online real-time basis. Customers in over 500 locations are also
serviced through Telephone Banking. The Bank has a presence in all major industrial and commercial
centres across the country. Being a clearing/settlement bank to various leading stock exchanges, the Bank
has branches in the centre where the NSE/BSE has a strong and active member base.

The Bank also has 3,898 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can
be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and
American Express Credit/Charge cardholders.

Housing Development Finance Corporation Limited or HDFC (BSE: 500010), founded 1977 by Ravi
Maurya and Hasmukhbhai Parekh, is an Indian NBFC, focusing on home mortgages. HDFC's
distribution network spans 243 outlets that include 49 offices of HDFC's distribution company, HDFC Sales
Private Limited. In addition, HDFC covers over 90 locations through its outreach programmes. HDFC's
marketing efforts continue to be concentrated on developing a stronger distribution network. Home loans
are also Sharcket through HDFC Sales, HDFC Bank Limited and other third party Direct Selling Agents
(DSA).
To cater to non-resident Indians, HDFC has an office in London and Dubai and service associates in
Kuwait, Oman, Qatar, Sharjah, Abu Dhabi, Al Khobar, Jeddah and Riyadh in Saudi Arabia.

AWARDS:

2023

Euro money Private 1) Best Local Bank in India (second year in a row) 2) Best Private
Banking and Banking Services overall (moved up from No. 2 last year)
Wealth Management
Poll 2023

Financial Insights Innovation in Branch Operations - Server Consolidation Project

Innovation Awards
2023

Global Finance Best Trade Finance Provider in India for 2023

Award

2 Banking 1) Best Risk Management Initiative and 2) Best Use of Business

Technology Awards Intelligence.
2022

SPJIMR Marketing 2nd Prize

Impact Awards
(SMIA) 2023

Business Today Best Listed in top 10 Best Employers in the country

Employer Survey

2022

Business India Mr. Aditya Puri MD, HDFC Bank

Businessman of the
Year Award for
2022.

Business world Most Tech-savvy Bank

Best Bank Awards
2022
Outlook Money Best Bank
NDTV Profit
Awards 2022

Forbes Asia Feb. 50 Companies in Asia Pacific

GQ India's Man of the Mr. Aditya Puri, MD, HDFC Bank

Year (Business)

UTI MF-CNBC Best Performing Bank

TV18 Financial
Advisor Awards
2022

Wall Street Journal Our Bank among India's 10 Most Admired Companies
survey of Asia's
Best 200 Rated 3rd Best in terms of Financial Reputation
Companies 2022

Business Standard Best Mr. Aditya Puri, MD, HDFC Bank

Banker Award

Fe Best Bank - Best Innovator of the year award for our MD Mr.
Awards 2022 Aditya Puri
- Second Best Private Bank In India.
- Best in Strength and Soundness Award.

Euro money Best Bank in India

Awards 2022

Economic Times Most Trusted Brand - Runner Up

Brand Equity &
Nielsen Research
annual survey 2022

Asia Money 2022 Best Domestic Bank in India

Awards

IBA Banking Technology Best IT Governance Award - Runner up

Awards 2022
 Global Finance Award Best Trade Finance Bank in India for 2022

IDRBT Banking Best IT Governance and Value Delivery

Technology Excellence
Award 2022

Finance Asia Mr.Aditya Puri - India's Best CEO

magazine's annual
poll of Investors Our Bank is 3rd in 'Best managed Company' category
and Analysts 2022

Asian Banker Excellence Asian Banker Best Retail Bank in India Award 2022
in Retail Financial
Services

Mission:
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined to accomplish
the vision of becoming a world-class Indian bank.

Our business philosophy is based on four core values - Customer Focus, Operational Excellence, Product
Leadership and People. We believe that the ultimate identity and success of our bank will reside in the
exceptional quality of our people and their extraordinary efforts. For this reason, we are committed to
hiring, developing, motivating and retaining the best people in the industry

RISK MANAGEMENT SYSTEM:

Assuming and managing risk is the essence of business decision-making. Investing in a new
technology, hiring a new employee, or launching a marketing campaign is all decisions with uncertain
outcomes. As a result all the major management decisions of how much risk to take and how to manage the
risk.

The implementation of risk management varies from business to business, from one management
style to another and from one time to another. Risk management in the financial services industry is
different from others. Circumstances, Institutions and Managements are different. On the other hand, an
investment decision is no recent history of legal and political stability, insights into the potential hazards
and opportunities.
 Many risks are managed quantitatively. Risk exposure is measured by some numerical index. Risk
cost tradeoff many tools are described by numerical valuation formulas.

Risk management can be integrated into a risk management system. Such a system can be utilized
to manage the trading position of a small-specialized division or an entire financial institution. The modules
of the system can be implemented with different degrees of accuracy and sophistication.
 RISK MANAGEMENT SYSTEM
Dynamics of risk factors

Cash flows Arbitrage

Generator Pricing Model

Price and Risk

Profile Of Contingent Claims

Dynamic Risk Target

Trading Rules Optimizer Risk Profile

1.2 RISK MANAGEMENT SYSTEM

Arbitrage pricing models range from simple equations to large scale numerically sophisticated
algorithms. Cash flow generators also vary from a single formula to a simulator that accounts for the
dependence of cash flows on the history of the risk factors.

Financial engineers are continuously incorporating advances in econometric techniques, asset

pricing models, simulation techniques and optimization algorithms to produce better risk
management systems.
The important ingredient of the risk management approach is the treatment of risk factors and
securities as an integrated portfolio. Analyzing the correlation among the real, financial and strategic assets
of an organization leads to clear understanding of risk exposure. Special attention is paid to risk factors,
which translate to correlation among the values of securities. Identifying the correlation among the basic risk
factors leads to more effective risk management.

Maturity Preference mismatch, Default, Currency Preference mis-match, Size of transaction and
Market access and information.

RISK MANAGEMENT IN HDFC:

They were required by the to introduce effective risk management systems to cover Credit risk, market
risk and Operations risk on priority.

Narasimham committee II, advised to address market risk in a structured manner by adopting Asset
and Liability Management practices with effect from April 1st 1989.

Asset and liability management (ALM) is “the Art and Science of choosing the best mix of assets for
the firm’s asset portfolio and the best mix of liabilities for the firm’s liability portfolio”. It is particularly
critical for Financial Institutions.

For a long time it was taken for granted that the liability portfolio of financial firms was beyond the
control of the firm and so management concentrated its efforts on choosing the asset mix. Institutions
treasury department used the funds provided by deposits to structure an asset portfolio that was appropriate
for the given liability portfolio.

With the advent of Certificate of Deposits (CDs), had a tool by which to manipulate the mix of
liabilities that supported their Asset portfolios, which has been one of the active management of assets and
liabilities.

Asset and liability management program evolve into a strategic tool for management, the main
elements of the ALM system are:
  ALM INFORMATION.

 ALM ORGANISATION.

 ALM FUNCTION.

ALM INFORMATION:

ALM is a risk management tool through which Market risk associated with business are identified,
measured and monitored to maintain profits by restructuring Assets and Liabilities. The ALM framework
needs to be built on sound methodology with necessary information system as back up. Thus the
information is key element to the ALM process.

There are various methods prevalent worldwide for measuring risks. These range from the simple Gap
statement to extremely sophisticate and data intensive Risk adjusted profitability measurement (RAPM)
methods. The central element for the entire ALM exercise is the availability of adequate and accurate
information.

However, the existing systems in many Indian do not generate information in manner required for the
ALM. Collecting accurate data is the biggest challenge before the, particularly those having wide network
of branches, but lacking full-scale computerization.

Therefore the introduction of these information systems for risk measurement and monitoring has to be
addressed urgently.

The large network of branches and the lack of support system to collect information required for the
ALM which analysis information on the basis of residual maturity and behavioral pattern, it would take
time florin the present state to get the requisite information.
 ALM ORGANISATION:
Successful implementation of the risk management process requires strong commitment on the part of
senior management in the to integrate basic operations and strategic decision making with risk management.

The Board of Directors should have overall responsibility for management of risk and should decide
the risk management policy of the, setting limits for liquidity, interest rate, foreign exchange and equity /
price risk.

The Asset Liability Management Committee (HDFC) consisting of the senior management, including
CEO/CMD should be responsible for ensuring adherence to the limits set by the Board of Directors as well
as for deciding the business strategy of the (on the assets and liabilities sides) in line with the budget and
decided risk management objective.

The ALM support group consisting of operation staff should be responsible for analyzing, monitoring
and reporting the risk profiles to the HDFC. The staff should also prepare forecasts (simulations) showing
the effects of various possible changes in market condition related to the balance sheet and recommend the
action needed to adhere to internal limits,

The HDFC is a decision-making unit responsible for balance sheet planning from a risk-return
perspective including the strategic management of interest rate and liquidity risks. Each has to decide on the
role of its HDFC, its responsibility as also the decision to be taken by it. The business and risk management
strategy of the should ensure that the operates within the limits / parameters set by the Board. The business
issues that an HDFC would consider inter alia, will include product pricing for deposits and advances,
desired maturity profile and mix of the incremental Assets and Liabilities, etc. in addition to monitoring the
risk levels of the , the HDFC should review the results of and progress in implementation of the decisions
made in the previous meetings. The HDFC would also articulate the current interest rate view of the and
base its decisions for future business strategy on this view. In respect of this funding policy, for instance, its
responsibility would be to decide on source and mix of liabilities or sale of assets. Towards this end, it will
have to develop a view on future direction of interest rate movements and decide on funding mixes between
fixed vs. floating rate funds, wholesale vs. retail deposits, Money markets vs. Capital market funding,
domestic vs. foreign currency funding etc. Individual will have to decide the frequency for holding their
HDFC meetings.

TYPICAL BUSINESS OF HDFC:

 Reviewing of the impact of the regulatory changes on the industry.

  Overseeing the budgetary process;

 Reviewing the interest rate outlook for pricing of assets and liabilities(Loans and Deposits)

 Deciding on the introduction of any new loan / deposit product and their impact on interest rate /
exchange rate and other market risks;

 Reviewing the asset and liability portfolios and the risk limits and thereby, assessing the capital
adequacy;

 Deciding on the desired maturity profile of incremental assets and liabilities and thereby assessing the
liquidity risk;

 Reviewing the variances in actual and projected performances with regard to Net Interest Margin
(NIM), spreads and other balance sheet ratios.

COMPOSITION OF HDFC:
The size (number of members) of HDFC would depend on the size of each institution, business mix
and organizational complexity, to ensure commitment of the Top management and timely response to
market dynamics, the CEO/MD or the GM should head the committee. The chiefs of Investment, Credit,
Resources Management or Planning, Funds Management / Treasury (domestic), etc., can be members of the
committee. In addition, the head of the computer (technology) Division should also be an invitee for
building up of
MIS and related computerization some may even have Sub-Committee and Support Groups.

ALM ORGANIZATION consists of following categories:

 ALM BOARD
 HDFC
 ALM CELL
 COMMITTEE OF DIRECT

ALM BOARD
The Board of management should have overall responsibility for management of risk and should
decide the risk management policy of the and set limits for liquidity and interest rate risks.
HDFC
The has constituted an Asset- Liability committee (HDFC). The committee may consists of the following
members.

i) General Manager
ii) Head of Committee
ii) General Manager (Loans & Advances) Member
iii) General Manager (CMI & AD) Member
iv) AGM / Head of the ALM Cell Member

The HDFC is a decision making unit responsible for ensuring adherence to the limits set by board as
well as for balance sheet planning from risk return perspective including the strategic management of
interest rate and liquidity risks, in line with and decided risk management objectives.

The Business issues that an HDFC would consider interalia, will include fixation of interest rates for
both deposits and advances, desired maturity profile of the incremental assets and liabilities etc.

The HDFC would also articulate the current interest rate due of the and base its decisions for future
business strategy on this view. In respect of funding policy, for instance, its responsibility would be decided
on source and mix of liability.
Individual will have to decide the frequency for their HDFC meetings. However, it is advised that
HDFC should meet at least once in a fortnight. The HDFC should review results of and process in
implementation of the decisions made in the previous meetings

ALM CELL

The ALM desk / cell consisting of operating staff should be responsible for analyzing, monitoring
and reporting the profiles to the HDFC. The staff should also prepare forecasts (simulations) showing the
effects of various possible changes in market conditions related to the balance sheet and recommend the
action needed to adhere to internal limits.

COMMITTEE OF DIRECTORS

They should also constitute professional, management and supervisory committee, consisting of three
to four directors, which will oversee the implementation of the ALM system, and review it’s functioning
periodically.
ALM PROCESS

The scope of ALM function can be described as follows:

1. Liquidity Risk Management

2. Interest Rate Risk Management

3. Currency Risk Management

4. Settlement Risk Management

5. Basis Risk Management

The RBI guidelines mainly address Liquidity Risk Management and Interest Rate Risk Management.

The following are the concepts discussed for analysis of

Asset-Liability Management under above mentioned risks.

● Liquidity Risk

● Maturity profiles

● Interest rate risk

● Gap analysis

1. LIQUIDITY RISK MANAGEMENT:

Measuring and managing liquidity needs are vital activities of the s. By assuring a ability to meet its
liability as they become due, liquidity management can reduce the probability of an adverse situation
development. The importance of liquidity transcends individual institutions, as liquidity shortfall in one
institution can have repercussions on the entire system.

Liquidity risk management refers to the risk of maturing liability not finding enough maturing assets
to meet these liabilities. It is the potential inability to meet the liability as they became due. This risk arises
because borrows funds for different maturities in the form of deposits, market operations etc. and lock them
into assets of different maturities.

Liquidity Gap also arises due to unpredictability of deposit withdrawals, changes in loan demands.
Hence measuring and managing liquidity needs are vital for effective and viable operations of the.
 Liquidity measurement is quite a difficult task and usually the stock or cash flow approaches are
used for its measurement. The stock approach used certain liquidity ratios. The liquidity ratios are the ideal
indicators of liquidity of operating in developed financial markets, the ratio do not reveal the real liquidity
profile of which are operating generally in a fairly illiquid market. The assets, which are commonly
considered as liquid like Government securities, have limited liquidity when the market and players are in
one direction. Thus analysis of liquidity involves tracking of cash flow mismatches.

The statement of structural liquidity may be prepared by placing all cash inflows and outflows in the
maturity ladder according to the expected timing of cash flows.

The MATURITY PROFILE could be used for measuring the future cash flows in different time bands.

The position of Assets and Liabilities are classified according to the maturity patterns a maturing
liability will be a cash outflow while a maturing asset will be a cash inflows The measuring of the future
cash flows done in different time buckets.

The time buckets, given the statutory Reserve cycle of 14 days may be distributed as under:
1. 1 to 14 days
2. 15 to 28 days
3. 29 days and up to 3 months
4. Over 3 months and up to 6 months
5. Over 6 months and up to 1 year
6. Over 1 year and up to 3 years
7. Over 3 years and up to 5 years
8. Over 5 years.
 4. DATA ANAYLSIS AND INTERPRETATION

MATURITY PROFILE – LIQUIDITY

HEAD OF ACCOUNTS Classification into time buckets

A.OUTFLOWS
1.Capital, Reserves and Surplus Over 5 years bucket.

2.Demand Deposits (Current & Demand Deposits may be classified

Savings Deposits) into volatile and core portions, 25 % of
deposits are generally withdraw able
on demand. This portion may be
treated as volatile. While volatile
portion may be placed in the first time
bucket i.e., 1-14 days, the core portion
may be placed in 1-2 years, bucket.

3. Term Deposits Respective maturity buckets.

4. Borrowings Respective maturity buckets.

5. Other liabilities and provisions (i) 1-14 days bucket

(i) Bills Payable (ii) Items not representing cash
(ii) Inter-office Adjustment payable may be placed in over 5
years bucket
(iii) Provisions for NAPs (iii)
sub-standard a) 2-5 years bucket.
a) doubtful and Loss b) Over 5 years bucket
(iv) Provisions for depreciation (iv) Over 5 years bucket.
in Investments
(v) provisions for NAPs in (v) a) 2-5 years bucket.
investment b) Over 5 years bucket
(vi) provisions for other purposes (vi) Respective buckets depending
on the purpose.
B. INFLOWS

1. Cash 1-14 days bucket.

2. Balance with others
(i) Current Account (i) Non-withdraw able portion on
account of stipulations of
minimum balances may be shown
Less than 1-14 days bucket.
(ii) Money at call and short Notice, (ii) Respective maturity buckets.
Term Deposits and other
Placements
3. Investments
(i) Approved securities (i) Respective maturity buckets
(ii) Corporate Debentures and excluding the amount required to
bonds, CDs and CPs, be reinvested to maintain SLR
redeemable preference shares, (ii) Respective Maturity buckets.
units of Mutual Funds (close Investments classified as NPAs
ended). Etc. Should be shown under 2-5 years
(iii) Share / Units of Mutual bucket (sub-standard) or over 5
Funds years bucket (doubtful and loss).
(open ended) (iii) Over 5 years bucket.
(iii) Investment in subsidiaries /
Joint Ventures. (iv) Over 5 years bucket.

4. Advances (performing / standard) (i) Respective Maturity buckets.

(i) Bills Purchased and Discounted (ii) should undertake a study
(including bills under DUPN) Of behavioral and seasonal pattern of a
(iii) (ii) Cash Credit / Overdraft ailments based on outstanding and the
(including TOD) and Demand Loan core and volatile portion should be
component of Working Capital. identified. While the volatile portion
could be shown in the respective
maturity bucket. The core portion may
be shown under 1-2 years bucket.
(iii) Term Loans (iii) Interim cash flows may be
shown under respective maturity
 Buckets.

5. NPAs
b. Sub-standard (I) 2-5 years bucket.
c. Doubtful and Loss (ii) Over 5 years bucket.

6. Fixed Assets Over 5 years bucket.

7. Other-office Adjustment
(i) Inter-office Adjustment (i) As per trend analysis, Intangible items
or items not representing cash
(ii) receivables may be shown in over 5
years bucket.
Others (i) Respective maturity buckets.
Intangible assets and assets not
representing cash receivables may be
shown in over 5 years bucket.

TERMS USED:

CDs: Certificate of Deposits.

CPs: Commercial Papers.

DTL PROFILE: Demand and Time Liabilities.

INTER OFFICE ADJUSMENT:

Outflows: Net Credit Balances

Inflows: Net Debt Balances

OTHER LIABILITIES: Cash payables, Income received in advance, Loan Loss and
Depreciation in Investments.
OTHER ASSESTS: Cash Receivable, Intangible Assets and Leased Assets.
2. INTEREST RATE RISK:

Interest Rate Risk refers to the risk of changes in interest rates subsequent to the creation of the
assets and liabilities at fixed rates. The phased deregulations of interest rates and the operational flexibility
given to in pricing most of the assets and liabilities imply the need for in system to hedge the interest rate
risk. This is a risk where changes in the market interest rates might adversely affect financial conditions.

The changes in interest rates affecting large way. The immediate impact of change in interest rates
is on earnings by changing its Net Interest Income (NII). A long term impact of changing interest rates is on
Market Value of Equity (MVE) or net worth as the economic value of assets, liabilities and off-balance
sheet positions get affected due to variation in market interest rates.

The risk from the earnings perspective can be measured as changes in the Net Interest Income (NII)
OR Net Interest Margin (NIM).

There are many analytical techniques for measurement and management of interest rate risk. In MIS
of ALM, slow pace of computerization in and the absence of total deregulation, the traditional GAP
ANALYSIS are considered as a suitable method to measure the interest rate risk.

GAP ANALYSIS:

The Gap or mismatch risk can be measured by calculating Gaps over different time buckets as at a
given date. Gap analysis measures mismatches between rate sensitive liabilities and rate sensitive assets
including off-balance sheet position.

An asset or liability is normally classified as rate sensitive if:

 If there is a cash flow within the time interval.

 The interest rate resets or reprises contractually during the interval.

 RBI changes the interest rates i.e., on saving deposits, export credit, refinance, CRR balances and
so on, in case where interest rate are administered.

 It is contractually pre-payable or withdraw able before the stated maturities

The Gap is the difference between Rate Sensitive Assets (RSA) and Rate sensitive Liabilities
(RSA) for each time bucket.

The positive GAP indicates that RSAs are more than RSLs (RSA>RSL).

The negative GAP indicates that RSAs are more than RSALs (RSA<RSL).
2.2 TABLE
months up to 3 3 to 6 6 to 12 above 1 yr
inflows 69176.2 330487.3 157602.3 529926.8
outflows 131724.6 95515.39 133159.8 430353.8
GAP 62548.39 62467.14 -24442.5 -99573

The above analysis reveals the extent of mismatches and the nature of sensitivity of Assets and
Liabilities which are having high liquidity. In short term maturity bucket of the are having excess liquidity
and the liquidity crisis is arising only in long term maturity bucket. The can adequately plan their long
liquidity according to the buckets effect on profitability.

The can implement ALM policies for the better identification of the mismatch, risk and for the
implementation of various remedial measures.
GENERAL:

The classification of various components of assets and liabilities into different time buckets for
preparation of Gap reports (Liquidity and interest rate sensitivity) may be done as indicated in Appendices I
& II as a sort of bench mark. which are better equipped to reasonably estimate the behavioral pattern,
embedded options, rolls-in and rolls-out etc of various components of assets and liabilities on the basis of
past date. Empirical studies could classify them in the appropriate time buckets, subject to approval from the
HDFC / Board. A copy of the note approved by the ALOC / Board may be sent to the Department of
Supervision.

The present framework does not capture the impact of embedded options, i.e., the customers
exercising their options (premature closure of deposits and prepayment of loans and advances) on the
liquidity and interest rate risks profile of s. The magnitude of embedded option risk at times of volatility in
market interest rates is quite substantial should therefore evolve suitable mechanism, supported by empirical
studies and behavioral analysis to estimate the future behavior of assets; liabilities and off-balance sheet
items to changes in market variables and estimate the embedded options.

A scientifically evolved internal transfer pricing model by assigning values on the basis of current
market rates to funds provided and funds used is an imported component for elective implementation of
ALM systems. The transfer price mechanism can enhance the management of margin i.e., landings or credit
spread the funding or liability spread and mismatch spread. It also helps centralizing interest rate risk at one
place which facilitates effective control and management of interest rate risk. A well defined transfer pricing
system also provides a rational framework for pricing of assets and liabilities.
 2.3 TABLE STRUCTURAL LIQUIDITY STATEMENT AS ON 31-3-2023

Rs in lakhs
S.No Particulars Upto 3 months 3-6 months 6-12 months Above 1 year Total
A Liabilities:
1 Deposits
I. Current A/c 797.51 2392.51 3190.02
II. SB A/c 2326.15 6978.46 9304.61
III. Fixed Dep. 6527.21 14607.72 16270.13 117894.11 155299.17
Sub-Total 9650.87 14607.72 16270.13 127265.08 167793.8
2 Borrowings 49186.96 62102.79 65967.38 144680.44 321937.57
3 Paid-up Share Capital 19013.72 19013.72
4 Reserves and Surpluses 64270.99 64270.99
5 Other provisions 47222.42 47222.42
6 Balance P & L A/C 415.72 415.72
7 Other Liabilities 16210.24 829.28 1070.16 16703.4 34813.08
TOTAL (A) 75048.07 77539.79 83307.67 419571.77 655467.3
B. ASSETS:
1 Cash in Hand 734.22 734.22
2 Balances 1405.71 565.04 629.98 4931.5 7532.23
3 Advances:
Soft ware-LT 25804.99 5618.56 148457.6 179881.15
Soft ware-ST 17632.22 49643.25 63833.34 80567.43 211676.24
Bills purchased 329.64 329.64
Other Loans 574.44 653 10409.89 45096.54 56733.87
4 Current Assets / Investments 25668.8 15400 11200 60506.4 112775.2
5 Fixed Assets & other Assets 20234.38 672.05 9053.33 55954.99 85804.75
TOTAL (B) 92274.4 66933.34 100745.1 395514.46 655467.3
C Mismatches (B-A) 17226.33 -10606.45 17437.43 -24057.31
D C as % to A 22.95 -13.68 20.93 -5.73
 1.3 GRAPH:

Gap analysis

20000
15000
10000
5000
0
-5000 Upto 3 months 3-6 months 6-12 months Above 1 year
-10000
-15000
-20000
-25000
-30000

STRUCTURAL LIQUIDITY STATEMENT ANALYSIS 2023-13

(1) The total current liabilities for the three months are Rs. 75048.07 is less than the total assets for the 3
months are Rs.92274.4. Therefore the assets are more than the liabilities. So there is a positive gap of
Rs.17226.33.
(2) The total current liability for the 3-6 months is Rs.77539.79 is more than the total assets for the 3-6 months
are Rs.66933.34. Therefore the liabilities are more than the assets .This is a negative gap so the company
should take steps to ensure the liquidity position.
(3) The total current liabilities for the 6-12 months are Rs.83307.67. current assets are Rs.100745.1. current
liabilities less than the current assets so there is a positive gap of Rs.17437.43.
(4) The total current liabilities for the above 1 year amount 419571.77. Current assets amount Rs.395514.46.
Current Liability is more than the current assets. This is negative gap. So the company should take steps to
ensure the liquidity position.
 2.4 TABLE
Structural liquidity statement as on 31-3-2023

(Rs. In Lakhs)
S.no. Particulars Up to 3 months 3-6 months 6-12 months Above 1years Total

A LIABILITIES:
1 DEPOSITS
I) Current A/C 998.25 0 0 2994.76 3993.01
ii) Savings A/C 2351.63 0 0 7054.9 9406.53
iii) Term Deposits 3860.87 21958.14 29535.68 118010.02 173364.71
Sub-total 7210.75 21958.14 29535.68 128059.68 186764.25
2 Borrowing 33421.23 73972.32 65328.19 139630.18 312351.92
3 Other Liabilities 22274 1926.62 1689.58 160740.84 186631.04
TOTAL 'A' 62905.98 97857.08 96553.45 428430.7 685747.21
B ASSETS
1 Cash in hand & Balance 8614.44 0 0 411.04 9025.48
2 Advances
I) LT - operations 22602.8 0 0 222561.37 245164.17
ii) ST-operations 80033.7 43083.29 80265.3 5832.45 209214.74
iii) other loans including BP 1809.51 17582.02 2860.37 39613.13 61865.03
3 Investments 14775 6500 10850 61325.22 93450.22
4 Other Assets 15755.15 678.46 81.37 50512.59 67027.57
TOTAL 'B' 134976.16 67843.77 94057.04 379844.76 676721.73
C MISMATCHES (B-A) 72070.18 -30013.31 -2496.41 -48585.94
D C as % to A 128.26 -30.6 -2.59 -11.24
1.4 GRAPH:

Gap analysis

80000
60000
40000
20000
0
-20000 Upto 3 months 3-6 months 6-12 months Above 1 year
-40000
-60000

STRUCTURAL LIQUIDITY STATEMENT ANALYSIS ON 2022-12

(1) The total current liabilities for the 3 months are Rs.62905.98 is less than the total assets for the
3months are Rs.134976.16. Therefore the assets are more than the liabilities. So there is a positive gap of
Rs.72070.18
(2) The total current liabilities for the 3-6months are Rs.97857.08 is more than the total assets for 3-6
months are Rs.67843.77. This is a negative gap. So the company should take steps to ensure the liquidity
position.
(3) The total current liabilities for the 6-12 months are Rs.96553.45 is more than the total assets for the
3-6months are Rs.94057.04.This is a negative gap. So the company should take steps to ensure the liquidity
position .
(4) The total current liabilities for the above 1year amount Rs.428430.7. current asset amount
Rs.379844.76. current liability is more than the current asset. This negative gap. So the company should
take steps to ensure the liquidity position.
 2.5 TABLE
STRUCTURAL LIQUIDITY STATEMENT AS ON
31-3-2022
Rs. In lakhs
S.no Particulars Up to 3 months 3-6 months 6-12 months Above 1year Total
A Liabilities
1 Deposits
I) Current A/C 1337.91 4013.73 5351.64
ii) SB A/C 3051.33 9153.97 12205.3
iii)Fixed Dep. 33172.78 14614.27 47364.4 57006.47 152157.92
Sub-Total 37562.02 14614.27 47364.4 70174.17 169714.86
2 ST Borrowings 16493.88 15976.62 107647.03 82276.53 222394.06
3 LT Borrowings 42.8 1454.4 957.56 182624.56 185079.32
4 Paid-up Share Capital 19192.55 19192.55
5 Reserves 116703.38 116703.38
6 Other Reserves/Provisions 3246.47 3246.47
7 Balance P&L A/C 300.38 300.38
8 Interest Payable 5021.66 987.81 1623.37 21921.62 29554.46
9 Other Liabilities 10055.84 15.15 9.97 33487.16 44568.12
TOTAL'A' 69176.2 33048.25 157602.33 529926.82 790753.6
B Assets:
1 Cash in hand 954.44 954.44
2 Balances 9404.34 9404.34
3 Advances:
I) LT-operations 20383.8 4633.7 236705.36 261722.86
ii) ST-operations 34340 76352.64 126802.3 64850.36 302345.3
4 Bills purchased 20.6 20.6
5 Current Assets/Investments 48220 18442 835.31 76805.6 144302.91
6 Interest Receivable 18300.57 720.75 888.31 34583.98 54493.61
7 Other Assets 100.84 17409.5 17510.34
TOTAL'B' 131724.59 95515.39 133159.62 430354.8 790753.6
C MISMATCHES (B-A) 62548.39 62467.14 -24442.71 -99572.02
D C as % to A 90.42 189.02 -15.51 -18.79
1.5 GRAPH

Gap analysis

100000

50000

0
Upto 3 3-6 months 6-12 months Above 1 year
-50000 months
-100000

-150000

STRUCTURAL LIQUIDITY STATEMENT ANALYSIS ON 2010 -11

(1) The total current liabilities for the 3months are Rs.69176.2 is less than the total assets for the months are
Rs.131724.59.Therefore the assets are more than the liabilities. So there is a positive gap of Rs.62548.39

(2)The total current liabilities for the 3-6 months are Rs.33048.25 is less than the assets for the 3months are
Rs.95515.39. Therefore assets are more than the liabilities. So there is a positive gap of Rs.62467.14

(3)The total current liabilities for the 6-12 months are Rs.157602.33 is more than total assets for 6-12
months are Rs.133159.62. Therefore the liabilities are more than the assets. This is a negative gap. So the
company should take steps to ensure the liquidity position.

(4)The total current liabilities for the above 1 year are Rs.529926.82 is more than the total assets for the
above 1 year Rs.430354.8. Therefore the liabilities are more than the assets. This is a negative gap. So the
company should take steps to ensure the liquidity position.
 2.4 TABLE
Structural liquidity statement as on 31-3-2023

(Rs. In Lakhs)

S.no. Particulars Upto 3 momths 3-6 months 6-12 months Above 1years Total
A LIABILITIES:
1 DEPOSITS
I) Current A/C 998.25 0 0 2994.76 3993.01
ii) Savings A/C 2351.63 0 0 7054.9 9406.53
iii) Term Deposits 3860.87 21958.14 29535.68 118010.02 173364.71
Sub-total 7210.75 21958.14 29535.68 128059.68 186764.25
2 Borrowing 33421.23 73972.32 65328.19 139630.18 312351.92
3 Other Liabilities 22274 1926.62 1689.58 160740.84 186631.04
TOTAL 'A' 62905.98 97857.08 96553.45 428430.7 685747.21
B ASSETS
1 Cash in hand & Balance 8614.44 0 0 411.04 9025.48
2 Advances
I) LT – operations 22602.8 0 0 222561.37 245164.17
ii) ST-operations 80033.7 43083.29 80265.3 5832.45 209214.74
iii) other loans including BP 1809.51 17582.02 2860.37 39613.13 61865.03
3 Investments 14775 6500 10850 61325.22 93450.22
4 Other Assets 15755.15 678.46 81.37 50512.59 67027.57
TOTAL 'B' 134976.16 67843.77 94057.04 379844.76 676721.73
C MISMATCHES (B-A) 72070.18 -30013.31 -2496.41 -48585.94
D C as % to A 128.26 -30.6 -2.59 -11.24
 STRUCTURAL LIQUIDITY STATEMENT AS ON
31-3-2023

Rs in lakhs
S.No Particulars Upto 3 months 3-6 months 6-12 months Above 1 year Total
A Liabilities:
1 Deposits
I. Current A/c 797.51 2392.51 3190.02
II. SB A/c 2326.15 6978.46 9304.61
III. Fixed Dep. 6527.21 14607.72 16270.13 117894.11 155299.17
Sub-Total 9650.87 14607.72 16270.13 127265.08 167793.8
2 Borrowings 49186.96 62102.79 65967.38 144680.44 321937.57
3 Paid-up Share Capital 19013.72 19013.72
4 Reserves and Surpluses 64270.99 64270.99
5 Other provisions 47222.42 47222.42
6 Balance P & L A/C 415.72 415.72
7 Other Liabilities 16210.24 829.28 1070.16 16703.4 34813.08
TOTAL (A) 75048.07 77539.79 83307.67 419571.77 655467.3
B. ASSETS:
1 Cash in Hand 734.22 734.22
2 Balances 1405.71 565.04 629.98 4931.5 7532.23
3 Advances:
Soft ware-LT 25804.99 5618.56 148457.6 179881.15
Soft ware-ST 17632.22 49643.25 63833.34 80567.43 211676.24
Bills purchased 329.64 329.64
Other Loans 574.44 653 10409.89 45096.54 56733.87
4 Current Assets / Investments 25668.8 15400 11200 60506.4 112775.2
5 Fixed Assets & other Assets 20234.38 672.05 9053.33 55954.99 85804.75
TOTAL (B) 92274.4 66933.34 100745.1 395514.46 655467.3
C Mismatches (B-A) 17226.33 -10606.45 17437.43 -24057.31
D C as % to A 22.95 -13.68 20.93 -5.73
COMPARATIVEASSETLIABILITYSHEETASON31STMARCH

2023-2022
ABSOLUTE
CHANGE
PARTICULARS 2019 2020 INCREASE/
IN %
DECREASE

ASSETS

CURRENTASSETS

CASH&BANKBALANCE 14,121,860 15,11,751 -1,26,10,109 89.29

SUNDRYDEBTORS 65,10,948 16,22,803 -48,88,145 75.07

DEPOSITS 2,91,926 8,27,407 5,35,544 183.45

CENVANT 24,03,543 64,25,816 40,22,273 167.34

INCOMETAX 2,49,757 6,14,801 3,65,044 146.15

ADVANCETAX 12,58,000 19,50,000 6,92,000 55.00

INVENTORIES 11,75,48,402 21,16,88,390 94,13,99,88 80.88

EXCISEDUTYPAIDIN
1,52,682 5,44,356 3,91,674 256.52
ADVANCE
TAXDETECTEDAT
59,838 - -59,838 100
SOURCE

TOTAL 14,25,96,956 22,51,85,387 -8,25,88,431 57.99

LOANS&ADVANCES

LOANS & GROUP

2,09,12,698
CONCERNS(INTER 4,09,11,931 -199,99,233 48.88
13,34,70,060
CORPORATEBODIES)
ADVANCETOCANE
1,80,47,409 80,04,767
GROWERS

STAFFADVANCE 1,73,317 3,99,273 2,25,956 130.37

 OTHERADVANCE 8,59,690 6,41,023 -21,86,67 25.43

TOTAL 5,99,92,347 16,34,27,821 10,34,35,474 172.41

TOTALCURRENT
20,25,89,303 55,20,41,029 34,94,51,726 172.49
ASSETS

TOTALFIXEDASSETS 11,78,44,260 11,29,58,523 -48,85,737 4.14

MISCELLANEOUS
EXPENDITURES
PRELIMINARY
122,300 19,57,834 18,35,534 15,00.82
EXPENSES

WRITTENOFTOTALME

TOTALASSETS 32,05,55,863 50,35,29,565 18,29,73,702 57.08

LIABILITIES

SHARE CAPITAL &

RESULTS&SURPLUS
PAIDUPEQUITY
2,71,11,890 2,71,11,890 - -
SHARESCAPITAL

RESERVES&SURPLUS 3,46,30,113 5,08,12,447 1,61,82,334 46.72

TOTALCAPITAL
6,17,42,003 7,79,24,337 1,61,82,334 26.20
&RESERVES

LONG-TERMLIABILITIES 58.35

SECUREDLOANS 19,10,18,611 7,95,55,940 -11,14,62,671 1384.47

UNSECUREDLOANS 1,94,57,888 28,88,46,517 26,93,88,621 63.95

TOTALLONGTERM
27,22,18,502 44,63,26,794 17,41,08,292 63.95
LIABILITIES
CURRENT
LIABILITY&PROVISION
SUNDRYCREDITORS
3,00,94,997 5,54,93,648 2,53,98,471 84.39
FOR MATERIALS
 SUNDRYCREDITORS
2,68,009 14,12,857 11,44,848 427.16
FOR EXPENSES
OTHERLIABILITIES&PR
48,81,795 2,96,446 -45,85,349 93.92
OVISIONS

PROVISIONFORTAX 1,06,80,560 - -1,06,80,560 100

TOTALCURRENT
4,83,37,361 5,72,02,771 88,65,410 183.40
LIABILITIES

TOTALLIABILITIES 32,05,55,863 50,35,29,565 18,29,73,702 5.08

INTERPRETATION:

The comparative balance sheet of the co-reveals that during the year 2019 fixed assets
decreased by RS 48,85,737 I.e.… 4.14%while long term liability from outsides (loans)
has increased by 17,41,08,292 i.e., 4.14%and there is neither increase nor decrease in
share capital. The pattern of investment towards Fixed Assets reveals that long term
sources of funds are utilized for fixed assets.

The current assets has been increased by 34,94,51,726i.e,172.49% the current

liabilities have increased by 4,83,37,361 to 5,72,62,771 by Rs 88,65,410i.e.183.40%.The
deviation of the current assets of liabilities is very low. In this year the co-working
capital positions it not good.

Reserves and surplus have increased from 3,46,30,113 to 5,08,12,447byRs1,61,82,334. It

shows that the company’s profitabilityposition of the companyis good.

The overall Asset position of the MARUTI SUZUKI. During the period of study is
satisfactory.
 COMPARATIVEASSETLIABILITYSHEETOFYEARENDING
31ST MARCH 2020-2023

ABSOLUTEI
PARTICULARS 2020 2023 NCREASE/ CHANGEIN%
DECREES
ASSETSCASH
&BANK 15,11,751 1,99,36,365 18,42,46,614 1218.75
BALANCE

SUNDRYDEBTOR 16,22,803 16,50,832 28,209 1.73

DEPOSITS 8,27,407 8,71,404 43,997 5.32

CENVANT 64,25,816 10,63,21,121 9,98,95,305 1554.59

TAXDEDUCTED
- 3,647 3,647 -
SOURCE

ADVANCETAX 19,50,000 16,23,415 -3,26,585 16.75

INVENTORIES 21,16,88,390 15,01,52,853 61,535537 29.07

INCOMETAX 61,48,01 - -6,14,801 100

TOTAL 22,51,85,387 29,63,15,752 7,11,30,365 31.59

OTHER
85,96,90 10,07,589 147,899 17.20
ADVANCES

TOTAL 16,34,27,821 10,66,4695 -15,27,63,126 93.47

TOTALCURRENT
38,86,13,208, 30,69,80,447 -8,16,32761 21.00
ASSETS

FIXEDASSETS 11,29,58,523 1,50,86,98113 13,95,73,9590 1235.62

1,31,21,48,99
TOTALASSETS 50,35,29,565 1,8,56,78,560 260.59
5
PAIDUPEQUITY
2,71,11,890 2,71,11,890 - -
SHARECAPITAL
 RESERVES&
5,08,12,447 35,39,1549 -1,54,20,898 30.35
SURPLUS
TOTALCAPITAL&R
7,79,24,337 14,25,03,439 6,45,79,102 82.87
ESERVES

LONG-
TERMLIABILITIES

SECUREDLOANS 7,95,55,940 1,02,34,73,851 94,3917911 1186.48

UNSECURED
28,88,46517 61,83,41,930 32,9495,413 114.07
LOANS
TOTAL LONG
44,63,26794 1,78,43,19,220 13,37,99,2426 299.78
TERMLIABILITIES
SUNDRY
CREDITORSFOR 5,54,93,648 24,77,0016 -30,72,3632 55.36
MATERIALS
SUNDRY
CREDITORSFOR 14,12,857 48,11,183 33,98,326 240.52
EXPENSES
OTHER
LIABILITIES& 2,96,446 14,37,208 11,40,762 384.81
PROVISIONS
TOTALCURRENT
5,72,02,771 31,35,9340 -25,84,3431 45.18
LIABILITIES
TOTAL
50,35,29,365 18,15,678,560 13,12,14,8995 260.59
LIABILITIES

INTERPRETATION:

The comparative balance sheet of the co-reveals that during the year 2023 fixed
assets increased by RS 1,39,57,590 by1235.62%while long term liability from outsides
(loans) has increased by 13,37,79,92,426 i.e.299.78% and there is neither increase nor
decrease in share capital. The pattern of investment towards Fixed Assets reveals that
long term sources of funds are utilized for fixed assets.

The current assets has been increased by 7, 11, 30,365 i.e., 31.59%. the current
liabilities have decreased by 5,72,02,771 to 3,13,59,340by Rs2,58,43,431. i.e.45.18%.
The deviation of the current assets of liabilities is very low. In this year the co-working
capital positions it not good.
 Reserves and surplus have increased from 37, 22,163 to 5, 08, 12,447the amount
of RS.1, 54, 20,898. It shows that the company’s profitability position ofthe company
is good.

Theoverall Asset positionoftheMARUTISUZUKI.Duringtheperiod of studyis

satisfactory.

LIQUIDITYRATIOS

CURRENT RATIO:
This is the most widely used ratio. It is the ratio of current assets and current
liabilities. It shows a firm’s ability to cover its current liabilities with its current assets.
Generally 2:1 is considered ideal for concern i.e. current assets should be twice of the
current liabilities.If the current assets are two times of the current liabilities, there will be
no adverse effect on business operations when the payment of current liabilities is made.
If the ratio is less than 2, difficulty may be experienced in the payment of current
liabilities and day-to-day operation of the business may suffer. If the ratio is higher than
2, it is comfortable for the creditor but, for the business concern, it is indicator of idle
funds and a lack of enthusiasm for work. It is calculated as follows:

CURRENTRATIO=CURRENTASSETS/CURRENT LIABILITIES

Forthecalculationthisratio
 Currentassetsincludeinventories,sundry debtors,cashandbankbalances
and loans and advances.
 Currentliabilitiesincludecurrentliabilitiesandprovisions.
 (RUPEESINLAKHS)

CURRENT CURRENT CURRENT

YEARS
ASSETS LIABILITIES RATIOS

2017-2018 234274 340710 0.687

2018-2019 589973 401302 1.470

2023-2022 263114 196578 1.338

2020-2023 256922 233971 1.098

700000

600000

500000

400000
CURRENTASSETS
300000 CURRENTLIABILITIES

200000

100000

0
2017-2018 2018-2019 2019-2020 2020-2021

INTERPRETATION:

The current ratio the significance is 2:1 whereas the companyis not able to reach in this
4 years it is recommended to increase the current ratio.

QUICKRATIO(OR)ACIDTESTRATIO:

This is the ratio of liquid assets to current liabilities. Is shows a firm’s ability to
meet current liabilities with its most liquid or quick assets. The standard ratio 1:1 is
consideredidealratioforaconcern.Liquidassets arethose,whichcanbe convertedinto
 cash within a short period of time without loss of value. This can be calculated byusing
the formula.

QUICKRATIO=QUICKASSETS/CURRENTLIABILITIES

Forthecalculationofthisratio
 Liquid assets of quick asset includes Sundrydebtors, cash and bank balance
and loan and advance.

 Currentliabilitiesincludecurrentliabilitiesandprovisions.

(RUPEESINLAKHS)

QUICK CURRENT CURRENT

YEARS
ASSETS LIABILITIES RATIOS

2017-2018 188182 340710 0.55

2018-2019 536531 395877 1.35

2023-2022 214366 196578 1.09

2020-2023 195500 233972 0.83

600000

500000

400000

300000 LIQUIDASSETS
CURRENTLIABILITIES
200000

100000

0
2017-2018 2018-2019 2019-2020 2020-2021
INTERPRETATION:

Thesignificance of this ratio is 1:1 whereas the companyis able to reach this in the year
2017 - 2018, 2018 - 2019, all other years it is below.

1. LEVERAGERATIOS

DEBTEQUITYRATIO:

This ratio examines the relationship between borrowed funds and owner’s funds
of a firm. In other words, it measures the relative claims of creditors and owners against
the assets of a firm.This ratio is also known as debt to net worth ratio.It is calculatedas
follows:

DEBTEQUITYRATIO= LONGTERMLIABILITIES

SHAREHOLDER’SFUNDS

Forthecalculationofthisratio

 Long–termliabilitiesincludedsecuredloans,unsecuredloansanddeferred credits.

 Shareholder’sfundsincludesharecapitalandreservesandsurplus.

(RUPEESINLAKHS)

LONGTERM SHAREHOLDER’S DEBTEQUITY

YEARS
LIABILITIES FUNDS RATIOS

2017-2018 662910 350000 1.89

2018-2019 79700 350000 0.23

2023-2022 8248 164512 0.05

2020-2023 54743449 49093096 1.11

 60000000

50000000

40000000

30000000 LONGTERMLIABILITIES
SHAREHOLDER’SFUNDS

20000000

10000000

0
2017-2018 2018-2019 2019-2020 2020-2021

INTERPRETATION:

Explains the relationship between longterm debts to shareholders funds which is

gradually decreasing from 2023-2022.

FIXEDASSETSRATIO:

Thisratioshowstherelationshipbetweenfixedassetsandcapital employed.
Fixed assets ratio explains whether the firm has raised adequate long term funds to meet
its fixed assets requirements and it gives an idea as to what part of the capital employed
has been used in purchasing fixed assets for the concern. If the ratio is less than one it is
good for the concern.The ideal ratio is 0.67 and it is calculated as under.

FIXEDASSETSRATIO=FIXEDASSETS/CAPITALEMPLOYED
 (RUPEESINLAKHS)

YEARS FixedAssets CapitalEmployed FixedAssetratio

2017-2018 45379 1900277 0.023

2018-2019 77378 493131 0.156

2023-2022 85938 263114 0.326

2020-2023 80886283 256921819 0.314

300000000

250000000

200000000

150000000 SHAREHOLDER’SFUNDS
TOTALASSETS
100000000

50000000

0
2017-2018 2018-2019 2019-2020 2020-2021

INTERPRETATION:

Incaseoffixedassetsratio,itisashowingatrendoffluctuationi.e.increaseand decrease trend.

CURRENTASSETSTOFIXEDASSETSRATIO:

This ratio will differ from industry to industry and, therefore no standard can be
laid down. A decrease in the ratio maymean that trading is slack or more mechanization
has been put through. An increasing in the ratio may reveal that inventories and debtors
have unduly increased or fixed assets have been intensively used.
RATIOOFCURRENTASSETSTOFIXEDASSETS=CURRENTASSETS/FIXED ASSETS

(RUPEESINLAKHS)

CURRENT
CURRENT
YEARS FIXEDASSETS ASSETS/FIXED
ASSETS
ASSETS

2017-2018 234274 45379 5.16

2018-2019 589973 77378 7.62

2023-2022 263114 85938 3.06

2020-2023 256922 80886283 0.003

900000

800000

700000

600000 CURRENTASSTES

500000 FIXEDASSETS
400000
CURRENTASSETS/FIXED
300000 ASSETS
200000

100000

INTERPRETATION:

2020-2023thisrationisdecreasedandthereafterithasdecreasedtothemaximum existent.
 2. TURNOVERRATIO

INVENTORYTURNOVERRATIO:

This ratio, also known as stock turnover ratio, establishes relationship between
cost of goods sold during agiven period and the average amount of inventory held during
that period. This ratio reveals the number of items finished stock is turned over during a
given accounting period. Higher the ratio the better it is because it shows that finished
stock rapidly turned over. On the other hand, a low stock turnover ratio is not desirable
because it reveals the accumulation of obsolete stock, or the carrying of too much stock.
This ratio is calculated as follows:

STOCKTURNOVERRATIO=COSTOFGOODSSOLD/AVERAGESTOCK

Forthecalculationofthisratio
 COST OF GOODS SOLD = OPENING STOCK + PURCHASES +
MANUFACTURING EXPENSES – CLOSING STOCK

 AVERAGESTOCK=OPENINGSTOCK+CLOSINGSTOCK/2 (RUPEES

IN LAKHS)

STOCK
COST OF
YEARS AVERAGESTOCK TURNOVER
GOODSSOLD
RATIO

2017-2018 13008 4157 3.12TIMES

2018-2019 20255 4561 4.44TIMES

2023-2022 18080 3521 5.13TIMES

2020-2023 202967 35146 5.77TIMES

 250000

200000

150000 Series1
Series2

100000 Series3

50000

INTERPRETATION:

This ratio will explain the relationship between cost of goods sold to average
stock the inventory turnover ratio is gradually decreasing and thereafter increased in a
year 2020-2023.
 FINDINGS:

1. ALM technique is aimed to tackle the market risks. Its objective is to stabilize and
improve Net interest Income (NII).

2. Implementation of ALM as a Risk Management tool is done using maturity profiles and
GAP analysis.

3. ALM presents a disciplined decision making framework for while at the same time
guarding the risk levels.

4. For the duration of up to 3 months, the has a positive gap Rs 17226.33 per the year 2023
& Rs72070.18 for the year 2022 however for the year 2023 there is a negative Gap of
Rs 62548.39.

5. For duration of 3-6 months, the has a negative Gap of Rs 10606.45 for the year 2022 &
Rs 30013.31 for the year 2022. In the year 2023 is able to maintain a positive gap of
Rs 62467.14.

6. For the duration 6-12 months, the has positive Gap of Rs 17437.43 in the year 2023.
However for the year 2022 & 2023, the Gap is negative.

7. For the time duration of above 1 year the has negative Gap in all the 3 years is Rs
24057.31 In the year 2023, Rs 48585.94 in the year 2022 of& Rs 99572.02 in the year
2023.

69
 CONCLUSION:

 The burden of the Risk and its Costs are both manageable and transferable. Financial
service firms, in the addition to managing their own risk, also sell financial risk
management to others. They sell their services by bearing customers financial risks
through the products they provide.

 A financial firm can offer a fixed-rate loan to a borrower with the risk of interest rate
movements transferred from the borrower to the.

 Financial innovations have been concerned with risk reduction than any other subject.
With the possibility of managing risk near zero, the challenge becomes not how much
risk can be removed.

 Financial services involve the process of intermediation between those who have
financial resources and those who need them, either as a principal or as an agent.
Thus, value breaks into several distinct functions, and it includes the intermediation of
the following:

 Maturity Preference mismatch, Default, Currency Preference mis-match, Size of

transaction and Market access and information.

70
 SUGGESTIONS:

 They should strengthen its management information system (MIS) and computer
processing capabilities for accurate measurement of liquidity and interest rate Risks in
their Books.

 In the short term the Net interest income or Net interest margins (NIM) creates
economic value of the which involves up gradation of existing systems &
Application software to attain better & improvised levels.

 It is essential that remain alert to the events that effect its operating environment &
react accordingly in order to avoid any undesirable risks.

 HDFC requires efficient human and technological infrastructure which will future
lead to smooth integration of the risk management process with effective business
strategies.

71
 BIBILIOGRAPHY:

Title of the Books Author

1. Risk management Gustavson hoyt

2. Management Research magazine P.M.Dileep Kumar

3. India financial system M.Y. Khan

WEBSITES:

 WWW.HDFC.SAP.IN

 WWW.RBI.ORG

72
 BIBLIOGRAPHY

Yearof
TitleoftheBooks Author Publication
Publication
South-western,
Gustavsonhoyt
Risk management Division Of 2021
ThomsonLearning

CapitalMarketInvestment
P.M.DileepKumar SonaliPublications 2022
In India

Tata Mcgraw-hill
Indianfinancialsystem M.Y.Khan 2023
EducationPrivateLtd

WEB SITES

www.hsbc.inwww.googlefina
nce.co
mwww.assectindia.comwww.
mbastu dyadda.com
www.wikipedia.com

JOURNALSANDMAGAZINES

EconomicTimes TheBusinessArea
TimesofIndia
Monthlycompanypublis
hing
Economicstandard BusinessStandard


73