ASSET - LIABILITY MANAGEMENT

In the world of Financial Institutions and Banks’ Asset Liability Management (ALM) was the significant tool. ALM can be defined as ‘an operation for assessing the risks to which a bank is exposed to’. The concept of ALM covers also off balance sheet activities such as swaps, futures and options along with management of balance sheets items such as assets and liabilities. ALM is pursuit to meet the risk arising from mismatches between assets and liabilities in terms of their maturities and interest rate sensitivities.