Net Wealth Management In Bank Case Study

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ASSET LIABILITY MANAGEMENT IN BANKS BANK’S LIEN Banks need to maintain certain ratios and quantity of money with them in their day to day operations. Asset Liability management is a dynamic process of organizing, planning and controlling of assets and liabilities along with their yields, returns and maturity to maintain certain parameters such as liquidity and NII (Net Interest Income). ALM tries to maintain and sustain long term profits and the short term earnings along with any long term prospects of the bank. The parameters that make up the concept of ALM are: 1. Net Interest Income(NII) 2. Net Interest Margin(NIM) 3. Economic Equity Ratio Now we know that lending constitutes a major activity of a bank. The banking business revolves primarily…show more content…
A general lien grants the right of lien in all dues and not with respect to a particular due. It can be considered one of the most important rights of the bank. It is available even in the absence of an agreement but does not give the right to pledge. In the general lien, the law gives the right to retain the legal possession of the goods till the dues are paid off. Bank has a right of lien only when goods, securities amount to what the creditor owes to the bank. Banks take certain documents of proof and security while granting advances and these documents confer right to convert general lien as an implied pledge. The general of the banker is more than a right as it is also classified as implied pledge on the part of the borrower. Bank has a 'Right of Sale ' of goods under lien. Some principles governing the Lien: 1. The ownership of the security or even a good should be with a customer and just be deposited with the bank. 2. The bank can exercise the right to lien to over only those things of which it is not the owner. Money transfers are tricky and when it comes to money, it cannot exercise the right if it becomes the owner of the deposited sum. 3. If a contract has taken place before over this right, then the bank has to prove the existence of the contract. 4. Can take lien to only that amount to which the customer is liable. If he/she suffers a loss over this then the bank has to pay the damages…show more content…
2. The valuables are received as a safe deposit or custody. 3. The entrustment of the goods is for a specific purpose which has already been stated to the bank. 4. The valuables or documents of title are left in the bankers’ hand inadvertently. 5. The account is in the name of a trust. 6. When the banker has only a contingent debt. Contingent debt is a different kind of debt which is dependent on future developments that are uncertain. In legal terms the word contingent means something that might or might not happen in the future. A contingent debt is not exactly a definitive liability as it is purely based on the outcome of an event. If I want to cite an example, a court verdict is the apt one. Negative Lien The term ‘negative lien’ is commonly used to refer to an undertaking given by the borrower to the bank that he (i.e., borrower) will not create any charge such as pledge, collateral, lien, or mortgage, over his moveable and immovable assets and properties including uncalled capital without taking prior permission of the bank. In negative lien the goods and securities not under the possession of the bank are considered. Negative lien does not require registration with the Registrar of Companies or similar other

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