THE EFFECTIVENESS OF ASSET AND LIABILITY MANAGEMENT AS A PANACEA TO BANKS PROFITABILITY IN INDIA.

Indian Banking Industry has recently gone through diverse phases in terms development in history right from the onset of liberalization. This has exposed the Industry to uncertainty and to global competition making it imperative to have proper asset liability management system in place. This paper assessed the effectiveness of asset and liability management as a panacea to Banks profitability in India. The objectives of the study were to identity the risk factors associated with asset liability management amongst the selected Banks and to assess the various strategies for managing the interest rate risks of assets and liabilities. The research was carried out on four selected Banks in Lucknow, India, with emphasis on two National Banks and two Private Banks. These were the State Bank of India, Bank of Baroda, Axis Bank and HDFC Bank. The State Head Offices of the selected Banks with 60 respondents were selected as sample size via multi stage sampling technique. Questionnaires were designed consisting of open and close-ended questions and data were taken from both primary and secondary sources. Findings indicated that, the Banks’ Asset Liability Management involved the effective management of all the risk factors where strategies are also mounted by these Banks in controlling them. It was also recommended that Asset Liability Management is one of the vital tools for risk management in Banks, so Banks have to take great care for that. All Banks have to work properly with regard to the Asset Liability Management to increase their performance.