Funds and Investment Funds and Investment CASA Deposit Deposit in bank in current and Savings account. High Cost Deposit Deposits accepted above card rate (for the deposits) of the bank. Liquid Assets Liquid assets consists of: cash, balances with RBI, balances in current accounts with banks, money at call and short notice, inter-bank placements due within 30 days and securities under “held for trading” and “available for sale” categories excluding securities that do not have ready market. Funding Volatility Ratio Liquid assets [as above] to current and savings deposits - (Higher the ratio, the better) Market Liability Ratio Inter-bank and money market deposit liabilities to Average Total Assets ALM Asset Liability Management (ALM) is concerned with strategic balance sheet management involving all market risks. It also deals with liquidity management, funds management, trading and capital planning. ALCO Asset-Liability Management Committee (ALCO) is a strategic decision making body, formulating and overseeing the function of asset liability management (ALM) of a bank. Banking Book The banking book comprises assests and liabilities, which are contracted basically on account of relationship or for steady income and statutory obligations and are generally held till maturity. Venture Capital Fund A fund set up for the purpose of investing in startup businesses that is perceived to have excellent growth prospects but does not have access to capital markets. Held Till Maturity(HTM) The securities acquired by the banks with the intention to hold them up to maturity. Held for Trading(HFT) Securities where the intention is to trade by taking advantage of short-term price / interest rate movements. Available for Sale(AFS) The securities available for sale are those securities where the intention of the bank is neither to trade nor to hold till maturity. These securities are valued at the fair value which is determined by reference to the best available source of current market quotations or other data relative to current value. Yield to maturity (YTM) or Yield The Yield to maturity (YTM) is the yield promised to the bondholder on the assumption that the bond will be held to maturity and coupon payments will be reinvested at the YTM. It is a measure of the return of the bond. Convexity This represents the rate of change of duration. It is the difference between actual price of a bond and the price estimated by modified duration. Foreign Currency Convertible Bond A bond issued in foreign currency abroad giving the investor the option to convert the bond into equity at a fixed conversion price or as per a pre-determined pricing formula. Trading Book Investments in trading book are held for generating profits on the short term differences in prices/yields. Held for trading (HFT) and Available for sale (AFS) category constitute trading book. CRR Cash reserve ratio is the cash parked by the banks in their specified current account maintained with RBI. SLR Statutory liquidity ratio is in the form of cash (book value), gold (current market value) and balances in unencumbered approved securities. Stress testing Stress testing is used to evaluate a bank’s potential vulnerability to certain unlikely but plausible events or movements in financial variables. The vulnerability is usually measured with reference to the bank’s profitability and /or capital adequacy. Scenario Analysis A method in which the earnings or value impact is computed for different interest rate scenario. LIBOR London Inter Bank Offered Rate. The interest rate at which banks offer to lend funds in the interbank market. Basis Point Is one hundredth of one percent. 1 basis point means 0.01%. Used for measuring change in interest rate/yield. Fraud Frauds have been classified as under, based mainly on the provisions of the Indian Penal Code (a) Misappropriation and criminal breach of trust. (b) Fraudulent encashment through forged instruments, manipulation of books of account or through fictitious accounts and conversion of property. (c) Unauthorised credit facilities extended for reward or for illegal gratification. (d) Negligence and cash shortages. (e) Cheating and forgery. (f) Irregularities in foreign exchange transactions. (g) Any other type of fraud not coming under the specific heads as above.
Posted on: Mon, 21 Jul 2014 22:11:35 +0000
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