ASSET LIABILITY MANAGEMENT IN CO-OPERATIVE BANKS

The inflow outflow of deposits i.e., liability and inflow of loans and investments i.e., assets has its own pattern. Basically deposit maturity patterns and loan maturity pattern are different back in time as per commitment. So outflow of liability is assured. But there is no such reliable assurance for asset incoming. Though the borrower has made commitment to pay back at certain time, the commitment may not be followed. Premature withdrawal is one more factor. All this crates mismatches between asset and liability. Mismatch beyond certain point may create problems of liquidity. Therefore ALM is very important