Senior Bonds: A Structural Fix for Banks Necessary to Cure ALM Gaps, Improve Liquidity

Rising Asset-Liability Mismatches: Growing divergence in the tenors of loans and deposits has resulted in rising asset-liability mismatches (ALMs) in government banks, says India Ratings & Research (Ind-Ra). The cumulative negative funding gap up to one year increased to 15.7% of assets at end-March 2014 for government banks, from below 4% in 2002. The gap was over 20% for nine banks. In fact, six government banks (up from three banks in FY13) had a negative gap higher than the stock of government securities and cash. The gap implies a shortage of ready collateral that could be used to repo with the Reserve Bank of India (RBI) in
a liquidity squeeze. Read more

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About AIWMI

The Association of International Wealth Management of India (AIWMI) is a not-for-profit organization and a globally recognized membership association for finance professionals. AIWMI primarily focuses on the broad and strategic role of developing a more robust and forward-looking training infrastructure for the financial services sector and to promote more active industry involvement and collaboration in training and continuing education. AIWMI is offering advanced international certification programs along with a wide variety of high-quality executive education programs. AIWMI programs combine state-of-the-art knowledge and skills with practical experience and insights into the functioning of the financial sector. All AIWMI courses and educational events have an intense and pragmatic curriculum. Participants are exposed to the latest developments within the financial services sector. AIWMI plays a key role in guiding the development of the financial services sector. AIWMI works with key industry participants’ viz. the Government, the Regulators, the Industries/Associations, the Corporate, the Media and the General Public to achieve its objectives. Besides enhancing technical competence and professionalism in the industry, AIWMI organizes events and facilitates discussions to promote best practices in leadership and talent development in the financial sector with an aim to become Asia’s premier center of excellence for financial education.

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