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Now RBI has issued detailed guidelines to Banks and FIs on asset liability management or ALM. many software companies notably have come out with sophisticate software for ALM. ALM means not profiling deposits (liabilities)on maturities but also loans and investments (assets). The idea is give bank managements, an idea about cash inflow and outflow and plan their deployment in such a manner that resources are put to maximum use and thus maximise earnings. Conversely the banks should not be hard put to meet their commitments under deposits when they become due. In short the banks are supposed to:
1. avoid asset liability mismatches
2. put their deployable resources to optimum use and earn maximum profits
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