Derivative Products
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.
One-liners from this chapter
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What is Asset-Liability Management (ALM)?
Discipline of measuring, monitoring, managing asset-liability mismatch to earn spread without losing liquidity or absorbing rate shocks.
Why do banks deliberately run mismatched books?
To capture term-premium by funding longer-duration assets with shorter-duration liabilities and earn interest-rate spread.
What are the two silent killers in banking?
Liquidity risk (cash-flow mismatch) and interest-rate risk (re-pricing/valuation mismatch) from maturity transformation.
Current RBI CRR and SLR rates (April 2026)?
CRR: 3.00% of NDTL; SLR: 18.00% of NDTL.
Current Repo Rate and MSF/Bank Rate (April 2026)?
Repo: 5.25%; SDF: 5.00%; MSF/Bank Rate: 5.50% (held steady from February 2026).
What are Basel III liquidity compliance floors for banks?
LCR ≥ 100% and NSFR ≥ 100%.
Define liquidity gap in ALM.
Liquidity Gap = Sources of funds − Uses of funds in a specific time bucket.
What does positive liquidity gap indicate?
Surplus cash in that bucket; a placement opportunity for the bank.
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