We are expanding our Internal audit team and looking for professionals having relevant Internal Audit experience. Location: Pune Skills: Internal audit Experience: 1 to 5 years of prior work experience in internal audits (preferably with manufacturing, FMCG sector) Qualifications: CA, Engineers, MBA, Semi-Qualified CA, Graduate Position: Associate Consultant – Consultant – Sr. Consultant Kindly share …
Pwc is hiring candidates for Audit (Assurance) at various locations Locations – Bangalore / Chennai/ Hyderabad Level – Associate Qualification – CA Experience- Fresher Kindly drop a message if interested https://www.linkedin.com/feed/update/urn:li:activity:7021397885053210624?utm_source=share&utm_medium=member_desktop Favorite
Pwc Looking for Advisory – Deals – Valuations/Transaction Services Advisory – Deals – Transaction Services Qualification: CA (Fresher) Location: Mumbai,Gurugram Skills: Statutory Audit / Any added experience in Financial Due Diligence will be added advantage. Advisory – Deals – Valuations Qualification: CA (Fresher) Location: Mumbai Skills : Statutory Audit / Valuation Experience if any will …
Vacancies for CA Freshers in Deloitte India having exposure in Statutory Audit. Locations : Bangalore, Delhi, Hyderabad, Mumbai, Pune, Kolkata Interested ones can mail their CVs at cabhartirai9@gmail.com with Preferred location. Favorite
Vacancies have opened up in Grant Thornton Bharat #CA2023 #usgaap for USGAAP profile for Mumbai location only Cleared CA Final (both groups) for consultants having prior statutory audit articleship experience Consultant: US GAAP : Mumbai Interviews will be conducted within this week itself Immediate joiners are encouraged Interested candidate can DM me for further details …
EY is Hiring in Assurance!! Inviting application for CA Freshers for our “Assurance Cluster” QUALIFICATION: Cleared CA Finals in November 2022 attempt LOCATION: Mumbai ELIGIBILITY: Strong knowledge and experience in handling statutory Audit assignment Required Core Skills: · Efficient verbal and written communication · Teaming, facilitation, relationship-building Please share your resume if you are interested. …
BNP Paribas has openings for CA Freshers (Nov 2022 ONLY) Vacancies: 12 Job Location : Mumbai-Goregaon (Nirlon Knowledge Park) 5 days working (Except quarter ending) Budget CTC: Max 8.50 LPA + 25K WFH Allowance. Only Mumbai candidates can apply Profile : Financial and Regulatory Reporting (Different teams) Interested candidates can send CV to sagarshah9000@gmail.com (Candidates …
BNP Paribas – Financial and Regulatory Reporting Read More »
EY is looking for recent CA’s for accounting role, IND AS, IGAAP at Mumbai Joining – Immediate. Pls connect to 9082760634 to send cv. Favorite
Reliance Jio is hiring CA’s from Nov’22 batch (Jan’23 results) at Navi Mumbai Rankholders added advantage Role: FP&A / FinOps Immediate joinee only apply. Pls send CVs to puja.sharma@ril.com Favorite
Hiring CA in Internal Audit in Blue Dart Express Ltd at Chennai Experience: Minimum 1-3 years in Internal Audit. Ready for traveling 5-7 days a month. Pls share CV to sukanyas@bluedart.com Favorite
Deloitte is looking for Deputy Manager / Manager at Delhi NCR Candidates should have good Internal audit experience in large advisory firms Sector – Manufactured/ Oil & Gas Pls send CV to akhilgupta@deloitte.com Favorite
Grant Thornton Global Audit Delivery (GT GAD) is hiring for Audit – CA/CPA/ACCA QUALIFIED Experience required in statutory audit background- Consultant – 0 to 3 years (Nov 22 qualified as well) Assistant Managers (AM1) – min 3 years Interested candidates can DM https://www.linkedin.com/feed/update/urn:li:activity:7022781923810783232?utm_source=share&utm_medium=member_desktop Favorite
BDO India LLP is hiring Fresher “Chartered Accountants” for “Audit and Assurance” Role: Associate Qualifications: CA (Mandatory) Post Qualification Experience: 0-1 Year Location: Mumbai Interested candidates can mail their resumes at neeraj.r.sharma2302@gmail.com for referrals with subject line as eg. Audit and Assurance – Associate – Mumbai “RESUMES RECEIVED WITHOUT THE SUBJECT FORMAT MENTIONED ABOVE WILL …
Vacancy In KPMG India – Tax Position – Senior Location – PAN India Department – Tax Requirements- •Qualified CA – CA Fresher Nov-22 Batch •Exposure to Taxation during Articleship will be advantage Please share your Resume to apply DM for more details https://www.linkedin.com/feed/update/urn:li:activity:7018906545522380800?utm_source=share&utm_medium=member_desktop Favorite
PwC is hiring Newly qualified CA Below are the vacancy details Tech Risk Assurance Services Banglore Chennai Gurugram Hyderabad Mumbai Ahmedabad Pune Kolkata Advisory – Deals – Transaction Services Mumbai Gurugram Advisory – Tech Consulting Mumbai Bangalore Hyderabad Kolkata Chennai New Delhi Gurugram Assurance – Audit Mumbai Pune Ahmedabad Gurugram Hyderabad Pune Chennai Banglore Advisory …
EY is Hiring in Tax! Inviting application for CA Freshers for our “Tax Cluster – Chennai” Qualification: Cleared CA Final (Nov 2022 attempt only) Profiles: ACR | IDT | DT | TP Location: Chennai *Local Candidates preferred* Ideally, you’ll also have: Strong verbal and written communication, teaming, facilitation, relationship-building, presentation, and negotiation skills. Be highly …
Senior: Qualified Chartered Accountants/CPA with Statutory Audit experience upcoming blitzes 30th Jan – Chennai (Virtual) 2nd Feb – All Locations (Virtual) 6th Feb – Chennai (Virtual) 9th Feb – Kolkata (Virtual) https://www.linkedin.com/feed/update/urn:li:activity:7023164447456174080?utm_source=share&utm_medium=member_desktop Favorite
1. Statutory Audit- Bangalore, Kolkata, Ahmedabad, Pune, Mumbai, Hyderabad, & Delhi 2. Taxation- Gurgaon, South & West 3. Transfer Pricing & BPS- Mumbai 4. Business Consulting 5. IT&SA-Hyderabad 6. ITGC- Gurgaon 7. FDD & Valuation- Mumbai 8. Internal Audit-Chennai https://lnkd.in/d-xfpgBM Favorite
Financial Fees → Financing fees are related to raising debt or the issuance of equity and can be capitalized and amortized over the tenor of the debt (~5-7 years). Transaction Fees → On the other hand, transaction fees refer to the M&A advisory fees paid to investment banks or business brokers, as well as the …
How does the treatment of financing fees differ from transaction fees in an LBO model? Read More »
PIK interest (“paid-in-kind”) is a form of non-cash interest, meaning the borrower compensates the lender in the form of additional debt as opposed to cash interest. PIK interest typically carries a higher interest rate because it has a higher risk to the investor (i.e.,delayed payments result in less certainty of being paid). From the perspective …
Industry Cyclicality: A potential LBO contender should produce steady cash flow. Therefore,from a risk perspective, an investment is less appealing when revenue and demand changes arevery cyclical and reliant on the current economic conditions (or other external variables). Customer Concentration: As a general rule, no one customer should represent more than 5–10% of total revenue …
Leverage ratios link a company’s debt holdings to a particular cash flow indicator, most frequently EBITDA. The financing climate and the industry will have a significant impact on the leverage ratio parameters; nonetheless, the total leverage ratio in an LBO range from 4.0x to 6.0x, with the senior debt ratio normally being around 3.0x. Total …
Which credit ratios would you consider when evaluating a borrower’s financial situation? Read More »
A candidate for an LBO should possess the majority (or all) of the following qualities: A mature industry with a defendable market position, a business model with recurring revenue, a strong, committed management team, and a variety of revenue streams with little cyclicality; and steady, predictable cash flow generation Low Capex Needs & Working Capital …
What qualities make a company the perfect candidate for an LBO? Read More »
1) Deleveraging – As more loan principal is paid down with the help of the cash flows produced by the acquired company, the value of the equity held by the private equity firm increases over time. 2) EBITDA Growth Increasing EBITDA can be done through introducing new growth strategies to boost revenue, cost-cutting initiatives to …
A PE firm will typically monetize their investment in one of the following ways: Sale to a Strategic Buyer: Sales to strategic buyers typically have higher valuations and are more convenient since they are willing to pay more for the likelihood of synergies. Another alternative is to sell to another financial buyer (often known as …
What are the private equity firms’ investment exit strategies? Read More »
Ans. A high percentage of borrowed money is typically used to finance an LBO, and the private equity sponsor contributes just a modest amount of equity to the deal. The sponsor will be able to earn more money when selling the investment because the debt’s principal will be reduced throughout the course of the holding …
What is the basic intuition underlying the usage of debt in an LBO? Read More »
Step 1 – Entry Valuation – Calculating the implied entry valuation based on the entry multiple and LTM EBITDA of the target firm is the first step in creating an LBO model. Step 2 – Sources and Uses, the proposed transaction structure will then be shown in the “Sources and Uses” section. The “Sources” side …
Walk me through the mechanics of building an LBO model for a financial buying. Read More »
An LBO is the purchase of a business, whether it is privately held or publicly listed, in which a sizeable portion of the purchase price is financed by debt. The remaining sum is covered by equity contributions from the financial sponsor, and, in some situations, stock transfers made by the current management team of the …
A non-binding agreement that outlines the basic terms & conditions of an investment. It serves as a model for creating more comprehensive, binding documents. Favorite
Equity dilution is the reduction in shareholders’ stock holdings in a firm. Whenever shareholders provide equity ownership to external investors (like private equity firms) in return of money, it is called equity dilution. Favorite
Pre- Money Valuation – Pre-money valuation is the value of a firm before any outside capital in most recent/proposed round of funding has been added. Pre-money is best defined as the potential value of a start-up before it starts to receive outside funding. This valuation not only provides investors with a sense of the current …
There are 8 Stages of funding given below: • Pre-seed funding stage • Seed funding stage • Series A funding • Series B funding • Series C funding • Series D funding and beyond • Exit via IPO Favorite
Capital invested in a business or other entity that is not publicly listed or traded is known as private equity.Private Equity investors prefer to invest in stable companies, whereas Venture Capital (VC) investors usually come in during the start-up phase. Favorite
Dry powder is the amount of committed but unallocated capital that a venture capital (VC) or private equity (PE) company has on hand. It is, in other words, a cash reserve that has not yet been invested. Investors and businesses strategically use dry powder, a highly liquid asset, to achieve financial success. Favorite
Strategic buyers must carefully analyse purchases based on how the targets will “tie in” with their existing company and business units since they frequently incorporate the acquired business into a larger corporation. Moreover, strategic buyers are primarily interested in acquiring the company to achieve synergies in long run. Financial buyers, on the other hand, typically …
Difference between strategic buyers and financial buyers? Read More »
A financial buyer is a type of acquirer in an M&A that is primarily interested in a buying the company with an intention to sell later at some point, thereby generating returns. These buyers see companies as projects and have some exit strategies. Private Equity firms’ investments can be a good example of financial buyers. …
EXTRA- Few tips for Technical round of interviews in FP&A Since FP&A roles and responsibilities vary from industry to industry, students are advised to have a brief knowledge of the following before an interview: ● Understand the industry and its business and operations ● Know the business model of the company and its geographical spread …
Professionals in a variety of businesses rely on financial modeling. Here are just a few examples: Bankers use it in sales and trading, equity research, and both commercial and investment banking, public accountants use it for due diligence and valuations, and institutions apply financial models in private equity, portfolio management, and research. Note: You can …
What Types of Businesses Use Financial Modeling? Read More »
A hurdle rate is the minimum rate of return on a project or investment required by a manager or investor. It allows companies to make important decisions on whether or not to pursue a specific project. The hurdle rate describes the appropriate compensation for the level of risk present—riskier projects generally have higher hurdle rates …
● A risk assessment is a systematic process that involves identifying, analyzing, and controlling hazards and risks. It is performed to determine which measures are, or should be, in place to eliminate or control the risk in the workplace in any potential situation. ● The process of risk assessment generally includes the following steps: ○ …
Matching concept states that expenses that are incurred in an accounting period should be matching with the revenue earned during that period. Thus, all expenses for that accounting period whether or not paid during that year and all revenue whether earned or not during the period should be considered to calculate profit or loss. Hence, …
● Pivot Table is an interactive way to quickly summarize large amounts of data. It is used to summarize, sort, reorganize, and group. It allows us to extract the significance from a large, detailed data set. ● VLOOKUP: It is a function that makes Excel search for a certain value in a column, to return …
Key ratios for measuring the profitability of the company are ● Return on Equity ● Gross Profit margin ● Net Profit margin ● Earnings per share Favorite
The main reason for the increase in accounts receivable is an increase in credit sales by the company. Favorite
Some of the key ratios considered by investors while investing are: ● Price-to-Cash-Flow Ratio ● Debt-to-Equity Ratio ● Quick Ratio ● Price-to-Earnings Ratio Favorite
MIS reports focus on raw data, trends, patterns in that data, and comparisons with relevant past data. MIS reports are also an effective tool for managers to track business operations across various departments. Furthermore, they provide clarity and enhance communication. They also help the company managers and the management team to make informed decisions, pinpoint …
MIS stands for Management Information system. It can be described as a system that provides important information for the management of your company. MIS collaborates with people, technology, and business processes within an organization. It also describes how the relationship with other organizations and people affects your company. An MIS report is used to highlight …
What is an MIS Report? Mention few types of MIS Reports. Read More »
Costs and other expenses in a company can be forecasted by any of the following methods: ● Percentage of Revenues ● Costs other than depreciation as a percent of revenues and depreciation from a separate schedule ● Costs other than depreciation as a percent of revenues and depreciation from a separate schedule Note: You can …
The linkage of the 3 financial statements can be described as: ● Financing activities mostly affect the balance sheet and cash from finalizing, except for interest, which is shown on the income statement. ● Net income from the income statement flows to the balance sheet and cash flow statement. ● The sum of the last …
How are the 3 financial statements linked together? Read More »
On the balance sheet, the asset account of inventory is reduced by the amount of the write-down, and so is shareholders’ equity. The income statement is hit with an expense in either COGS or a separate line item for the amount of the write-down, reducing net income. On the cash flow statement, the write-down is …
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In Financial Planning & Analysis (FP&A), the practice of creating financial models is primarily for short to medium-term budgeting, forecasting, and planning at a corporation (or operating company). FP&A teams work with the accounting and finance departments to compile consolidated budgets, refine forecasts, and report on actual vs. expected results. The financial models are internal …
● Payback period: The payback period calculates the length of time required to recoup the original investment. Payback periods are typically used when liquidity presents a major concern. ● Internal Rate of Return: The internal rate of return (or expected return on a project) is the discount rate that would result in a net present …
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● A rolling forecast is a report that uses historical data to predict future numbers and allows organizations to project future results for budgets, expenses, and other financial data based on their past results. This enables organizations to adapt plans and resource allocations based on changes in the economy, the industry, or the business. ● …
What is a rolling forecast? How is it different from a traditional budget? Read More »
Significant aspects to be kept in mind: ● Detailed information on the business of the company ● Major revenue sources ● Operational expenses ● Investments of the company ● Capital structure ● Major assets and liabilities Note: Students are advised to go through the Financial Statements and Annual reports of the specific company beforehand. Favorite
● Segmentation- Grouping of data having common attributes. Useful for areas like customer segmentation by customer type, geographical spread, etc. ● Data visualization- which includes graphical representation of the data across multiple dimensions and variables ● Trend analysis- showing whether the results are improving or not over time and drawing conclusions for further analysis and …
Have a brief knowledge of: ● Life stage of the company or its products/services ● Impact of government policies ● Recent project(s) launched by the company & its performance ● Any major event/catastrophe affecting the industry ● Any recent judgments impacting the industry Note: Students are advised to study the industry trends of the company. …
A general answer and a structured answer are given below – General Answer: Improving margins and profits is an important goal for any business, and there are several strategies that can be implemented to achieve this. Increase sales: One of the most straightforward ways to improve margins and profits is to increase sales. This can …
Variance commentaries can be on different aspects of a business such as: ● Costs ● Revenue ● Profit and Loss ● Expenses ● Efficiency In each of the above, the actuals are compared with the standard or targeted prices and thereafter reasons for variances are also analyzed. This helps the company to identify bottlenecks and …
Driver-Based Planning is an approach in which the key business variables which drive a company’s success are identified and used to forecast where the company is heading, with the results being used to produce plans and budgets. Essentially, it involves the linking of analytics data to the financial planning and budgeting process. The business drivers …
Budget vs. actual: compares actual financial results to budgeted or planned results. Variance analysis: explains the difference between budgeted and actual results. Cash flow: tracks the inflow and outflow of cash. Sales forecast: predicts future sales based on historical data and market trends. Financial modeling: uses mathematical techniques to forecast future financial performance. Key performance …
● The compound annual growth rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment’s life span. ● The compounded annual growth rate (CAGR) is one of …
● Variance analysis is the actual difference between 2 data points. It is the process of examining each variance in detail and determining the reasons why the budget was not met. Variance analysis helps an organization to be proactive in achieving their business targets and helps in identifying and mitigating any potential risks which eventually …
Variance analysis and Key factor of variance analysis? Read More »
The inclusion of inventory in Current Ratio and its exclusion from the Quick Ratio is the key difference between the two. Favorite
An Asset to Turnover Ratio is an efficiency indicator which shows what multiple is turnover of the total assets employed in a business. Favorite
The role of Cash Flow lies in showing the movement of cash between two points of time. It shows where the cash had come from and where it was utilized. The Cash Flow Statement is an extremely effective tool for a business enterprise to determine: ▪ Whether the operations are resulting in cash generation. ▪ …
Long term debt may be defined as one which is used to fund the capital of a business. In other words, it is intended to be invested in long term assets, i.e., those assets which create revenue stream for the company. On the other hand, short term debt is one which is used primarily for …
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FSA is an extremely important tool for enabling the management to: ▪ Evaluate business performance on all the key parameters such as profitability, solvency, efficiency, and wealth building. ▪ Determine areas of concern; and ▪ Take corrective action. Favorite
Working capital is the excess of current assets over current liabilities. In other words, it is the money invested in those assets of a business which are intended to be converted into cash in the ordinary course of business. In calculating the working capital, we add up all the current assets such as inventory, receivables, …
What is working capital? How will you calculate it? Read More »
Credit risk is the risk taken by a bond investor that the bond’s issuer will default by failing to pay interest and repay principal on schedule. Favorite
A financial instrument in a company that is near or is currently going through bankruptcy. This usually results from a company’s inability to meet its financial obligations. As a result, these financial instruments have suffered a substantial reduction in value. Distressed securities can include common and preferred shares, bank debt, trade claims (goods owed) and …
A sudden drop in the general availability of loans or a sudden increase in the cost of borrowing from banks is known as a credit squeeze. Favorite
A loan-to-value (LTV) ratio is an equation that lenders use to assess the amount of risk associated with a loan. In other words, how much loan borrower is getting against its mortgaged property. An LTV of 80% means borrower is getting 80% of its property value as loan amount. Favorite
Net worth is the amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. A consistent increase in net worth indicates good financial health. Favorite
Your debt-to-income ratio (DTI) is a measure of your monthly debt compared to your monthly income, calculated by your monthly debt divided by your monthly gross (pre-tax) income. DTI is one of the factors used to determine how much you can afford in a monthly EMI payment. Favorite
A down payment is the amount of cash you pay upfront toward the purchase of a home. It’s often expressed as a percentage of the selling price of a home—typically 5–20% depending on the type of loan. The difference between your down payment and the price of the home is what you finance with a …
Two categories of credit facilities exist: Quick loans, primarily for working capital requirements. Overdraft, letter of credit, factoring, export credit, and other short-term loans are only a few examples. Loans with a long duration are necessary for purchase or capex. It covers bridge loans, mezzanine loans, bank loans, notes, and securitization. Favorite
By examining the outstanding debts of a company, credit agencies assist the market evaluate the creditworthiness of that company. However, it wouldn’t be wise to put all your faith on credit rating companies’ ratings. To determine whether to issue a loan to a company, we must consider both its risk profile and the ratings from …
How do credit rating companies helps in credit analysis? Read More »
There are numerous things I would consider. First, examine the company’s financial performance over the last five years by looking at all four financial statements. Then consider the overall assets, and see what resources are available for use as collateral. Additionally, learn how the company has been using its resources. Next, determine whether the cash …
How would you decide whether to lend to a business? Read More »
There is no fair debt-capital ratio because it might vary from business to business. For new businesses, the debt would be little or non-existent. Therefore, the debt-to-capital ratio for start-ups would be in the range of 0 to 10%. But when it comes to small enterprises, the debt-to-capital ratio is a little higher, hovering between …
Are banks targeting a specific debt-to-capital ratio? Read More »
One of the most significant interview questions for credit analysts is this one. A business must pay interest when it takes on debt. The interest coverage ratio demonstrates to the business their ability to handle their interest costs. Interest Coverage Ratio = [EBIT / Interest Expense] The greater the ratio better would be the company’s …
DSCR = Net Operating Income / Total Debt Service Where total debt service is annual principal + interest payment to be made DSCR ratio gives an idea of whether the company can cover its debt-related obligations with the net operating income it generates. If DSCR>1, it means that the company is generating enough operating income …
Though it might sound complicated, underwriting simply means that your lender verifies your income, assets, debt, and property details to issue final approval for your loan. Underwriting happens behind the scenes, but that doesn’t mean you won’t be involved. Your lender might ask for additional documents and answers, such as where bank deposits came from, …
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Your answer to this question, tells the interviewer, if you are aware of the responsibilities you’ll need to perform in this role, your capability, readiness, and commitment. Make sure that you have read the job description well and are prepared to answer the questions. Some of the things that you can talk about are: ▪ …
What are the important responsibilities of a Credit Analyst? Read More »
These two are very commonly confused positions. The two may look similar but they are very different. While a loan officer helps the customers through the process of procuring the loan like explaining them various options, assisting with various documents etc., a Credit Analyst studies their case and decides if they can be granted the …
How is a Credit Analyst different from a Loan Officer? Read More »
Credit Analysis is the process of getting together the financial information about a customer (corporations and individuals) and evaluating it to assess their ability to repay a loan, they have applied for. To do this, various ratios are calculated and compared with the industry standards to ensure that while the customer gets the loan, the …
The risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external eventsFor emergence of such a risk four causes have been mentioned and they are people, process, systems and external factors. (a) People risk – Lack of key personnel, lack of adequate training/experience of dealer (measured …
Credit risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers or counterparties. In a bank’s portfolio, losses stem from outright default due to inability or unwillingness of a customer or counterparty to meet commitments in relation to lending, trading, settlement and other financial transactions. Alternatively, losses result …
Foreign exchange risk may be defined as the risk that a bank may suffer losses as a result of adverse exchange rate movements during a period in which it has an open position, either spot or forward, or a combination of the two, in an individual foreign currency. The banks are also exposed to interest …
Interest rate risk is the risk where changes in market interest rates might adversely affect a bank’s financial condition. The immediate impact of changes in interest rates is on the Net Interest Income (NII). A long term impact of changing interest rates is on the bank’s net worth since the economic value of a bank’s …
Liquidity risk is the potential inability to meet the bank’s liabilities as they become due. It arises when the banks are unable to generate cash to cope with a decline in deposits or increase in assets. It originates from the mismatches in the maturity pattern of assets and liabilities. Measuring and managing liquidity needs are …
Market risk may be defined as the possibility of loss to a bank caused by changes in the market variables. The Bank for International Settlements (BIS) defines market risk as “the risk that the value of on or off-balance sheet positions will be adversely affected by movements in equity and interest rate markets, currency exchange …
The banking operations are confined to lending, accepting deposits and miscellaneous services. It is the treasury which operates in financial markets directly, establishing a link between core banking functions and market operations. Thus, the market risk is identified and monitored through treasury. Treasury uses derivatives and other means to bridge the liquidity and rate sensitivity …
EXPLAIN THE RELATIONSHIP BETWEEN TREASURY AND ALM? Read More »
Duration is an important measure of the interest rate sensitivity of assets and liabilities as it takes into account the time of arrival of cash flows and the maturity of assets and liabilities. It is the weighted average time to maturity of all the preset values of cash flows. Duration basically refers to the average …
Gap analysis model measures the direction and extent of asset-liability mismatch through either funding or maturity gap. It is computed for assets and liabilities of differing maturities and is calculated for a set time horizon. This model looks at the repricing gap that exists between the interest revenue earned on the bank’s assets and the …
Analytical models are very important for ALM analysis and scientific decision making. The basic models are as follows: (a) GAP Analysis Model (b) Duration GAP Analysis Model (c) Scenario Analysis Model (d) Value at Risk (VaR) model Favorite
The Asset – Liability Committee (ALCO) consisting of the bank’s senior management including CEO should be responsible for ensuring adherence to the limits set by the Board as well as for deciding the business strategy of the bank (on the assets and liabilities sides) in line with the bank’s budget and decided risk management objectives. …
DISCUSS THE ROLE AND FUNCTIONS OF ASSET LIABLITY MANAGEMENT COMMITTEE Read More »
As per the RBI Guidelines on Asset Liability Management (ALM) System, the ALM process rests on following three pillars: (i) ALM Information Systems • Management Information Systems • Information availability, accuracy, adequacy and expediency. (ii) ALM Organisation • Structure and responsibilities • Level of top management involvement (iii) ALM Process • Risk parameters • Risk …
ENUMERATE THE THREE REST PILLARS OF ALM PROCESS AS PER RBI GUIDELINES ? Read More »
Asset Liability Management (ALM) defines management of all assets and liabilities (both off and on balance sheet items) of a bank. It requires assessment of various types of risks and altering the asset liability portfolio to manage risks. Asset Liability Management provides a comprehensive and dynamic framework for measuring, monitoring and managing liquidity, interest rate, …
Banks should not capitalise the Broken Period Interest paid to seller as part of cost, but treat it as an item of expenditure under Profit and Loss Account in respect of investments in Government and other approved securities. However, the banks should comply with the requirements of Income Tax Authorities in the manner prescribed by …
WHAT IS THE TREATMENT OF BROKEN PERIOD INTEREST? Read More »
In respect of securities included in any of the three categories where interest/ principal is in arrears, the banks should not reckon income on the securities and should also make appropriate provisions for the depreciation in the value of the investment. The banks should not set-off the depreciation requirement in respect of these non-performing securities …
