Articles by A V Rajawade

The focus of this article is not so much the quantitative or specific aspects of the budget as some qualitative issues regarding the economy. It touches on some developing trends and, since the budget is the peg on which it hangs, refers to one or two specific proposals.

If the Indian judicial system delivers neither efficiency nor probity nor disciplined, well-argued judgments on interpretation of laws, contracts and crimes, surely something needs to be done? The new law minister has his work cut out for him.

The biggest weakness of the prescribed model is that it clubs together all assets/liabilities, i e, those with fixed maturities and those with no fixed maturities, whether in theory (saving bank) or practice (working capital finance, generally linked to the prime lending rate). This leads to a number of compromises to be made in classification and therefore reduces the effectiveness of the model in measuring the interest rate risk.

From the angle of pricing assets and liabilities a clear and quantified articulation of a bank's strategic objective is needed and this will need to be an adequate return on investment. This is the second of a series of articles discussing the different issues involved in asset liability management by banks.