{"id":19373,"date":"2013-05-09T13:01:23","date_gmt":"2013-05-09T07:31:23","guid":{"rendered":"http:\/\/vskills.in\/certification\/tutorial\/?p=19373"},"modified":"2024-04-12T14:15:41","modified_gmt":"2024-04-12T08:45:41","slug":"liquidity-risk-management","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/","title":{"rendered":"Commercial Banking | Liquidity Risk Management"},"content":{"rendered":"<p><a class=\"vsc\" href=\"http:\/\/www.vskills.in\/certification\/Certified-Commercial-Banker\"><span class=\"vsc-cn\" style=\"text-align: center;\"><span style=\"color: red;\">Certify and Increase Opportunity.<\/span><br \/>\n<span style=\"color: green;\">Be <\/span><br \/>\nGovt. Certified Commercial Banker<br \/>\n<\/span><\/a><\/p>\n<h1>Liquidity Risk Management<\/h1>\n<h2>Introduction<\/h2>\n<p>\u2018Liquidity\u2019 in banking is defined as the ability to meet anticipated and contingent cash need. These cash need occurs when there are withdrawal of deposits, liability maturities and loan disbursals. The requirement is met by increasing deposits and borrowings, loan repayments, investment maturities and the sale of assets.<\/p>\n<p>The need for liquidity arises from,<\/p>\n<ul>\n<li>Need to replace the out flowing funds that results in funding risk.<\/li>\n<li>Need to compensate for an expected inflow that has not occurred giving rise to time risk.<\/li>\n<li>Need to meet contingent liabilities when it becomes due.<\/li>\n<li>Need to undertake new transactions when required giving rise to call risk.<\/li>\n<\/ul>\n<p>Inadequate liquidity can lead to liquidity insolvency of the bank without being capital insolvent (negative net worth). Excessive liquidity also negatively affects a bank as it results in low asset yields and poor earnings.<\/p>\n<p>There are a few methods by which a bank can gain liquidity when the need arises<\/p>\n<ul>\n<li>Central Bank: An important source of short-term liquidity in domestic currency is the central bank. Certain assets can be rediscounted or used as collateral for short-term loans.<\/li>\n<li>Collateralized Lending Facility: Here, the scheduled commercial banks are provided refinance up to 0.25 percent f their fortnightly average outstanding aggregate deposits. Such refinance is available for two weeks at the Bank Rate. The amount drawn under CLF will have to be paid off within 90 days.<\/li>\n<li>Foreign Currencies: With foreign currency, the central bank cannot be depended on for liquidity. In a system of floating exchange rates, central banks are not obliged to exchange foreign currencies for domestic currency at fixed rates or as required by banks. Hence the liquidity required by banks have to be raised through dealings in financial markets and from lines of credit established with other banks.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Certify and Increase Opportunity. Be Govt. Certified Commercial Banker Liquidity Risk Management Introduction \u2018Liquidity\u2019 in banking is defined as the ability to meet anticipated and contingent cash need. These cash need occurs when there are withdrawal of deposits, liability maturities and loan disbursals. The requirement is met by increasing deposits and borrowings, loan repayments, investment&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[54],"tags":[],"class_list":["post-19373","page","type-page","status-publish","hentry","category-commercial-banker"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Liquidity Risk Management Tutorials<\/title>\n<meta name=\"description\" content=\"\u2018Liquidity\u2019 in banking is defined as the ability to meet anticipated and contingent cash need. These cash need occurs when there are withdrawal of deposits\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Liquidity Risk Management Tutorials\" \/>\n<meta property=\"og:description\" content=\"\u2018Liquidity\u2019 in banking is defined as the ability to meet anticipated and contingent cash need. These cash need occurs when there are withdrawal of deposits\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/\" \/>\n<meta property=\"og:site_name\" content=\"Tutorial\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/vskills.in\/\" \/>\n<meta property=\"article:modified_time\" content=\"2024-04-12T08:45:41+00:00\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/\",\"url\":\"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/\",\"name\":\"Liquidity Risk Management Tutorials\",\"isPartOf\":{\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/#website\"},\"datePublished\":\"2013-05-09T07:31:23+00:00\",\"dateModified\":\"2024-04-12T08:45:41+00:00\",\"description\":\"\u2018Liquidity\u2019 in banking is defined as the ability to meet anticipated and contingent cash need. These cash need occurs when there are withdrawal of deposits\",\"breadcrumb\":{\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.vskills.in\/certification\/tutorial\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Commercial Banking | Liquidity Risk Management\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/#website\",\"url\":\"https:\/\/www.vskills.in\/certification\/tutorial\/\",\"name\":\"Tutorial\",\"description\":\"Vskills - A initiative in elearning and certification\",\"publisher\":{\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.vskills.in\/certification\/tutorial\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/#organization\",\"name\":\"Vskills\",\"url\":\"https:\/\/www.vskills.in\/certification\/tutorial\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2017\/07\/vskills-min-logo.jpg\",\"contentUrl\":\"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2017\/07\/vskills-min-logo.jpg\",\"width\":73,\"height\":55,\"caption\":\"Vskills\"},\"image\":{\"@id\":\"https:\/\/www.vskills.in\/certification\/tutorial\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/vskills.in\/\",\"https:\/\/x.com\/vskills_in\",\"https:\/\/www.linkedin.com\/company-beta\/1371554\/\",\"https:\/\/www.youtube.com\/channel\/UCMWnscxPwRF_PqXo9B7q_Tw\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Liquidity Risk Management Tutorials","description":"\u2018Liquidity\u2019 in banking is defined as the ability to meet anticipated and contingent cash need. These cash need occurs when there are withdrawal of deposits","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/","og_locale":"en_US","og_type":"article","og_title":"Liquidity Risk Management Tutorials","og_description":"\u2018Liquidity\u2019 in banking is defined as the ability to meet anticipated and contingent cash need. These cash need occurs when there are withdrawal of deposits","og_url":"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/","og_site_name":"Tutorial","article_publisher":"https:\/\/www.facebook.com\/vskills.in\/","article_modified_time":"2024-04-12T08:45:41+00:00","twitter_misc":{"Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/","url":"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/","name":"Liquidity Risk Management Tutorials","isPartOf":{"@id":"https:\/\/www.vskills.in\/certification\/tutorial\/#website"},"datePublished":"2013-05-09T07:31:23+00:00","dateModified":"2024-04-12T08:45:41+00:00","description":"\u2018Liquidity\u2019 in banking is defined as the ability to meet anticipated and contingent cash need. These cash need occurs when there are withdrawal of deposits","breadcrumb":{"@id":"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.vskills.in\/certification\/tutorial\/liquidity-risk-management\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.vskills.in\/certification\/tutorial\/"},{"@type":"ListItem","position":2,"name":"Commercial Banking | Liquidity Risk Management"}]},{"@type":"WebSite","@id":"https:\/\/www.vskills.in\/certification\/tutorial\/#website","url":"https:\/\/www.vskills.in\/certification\/tutorial\/","name":"Tutorial","description":"Vskills - A initiative in elearning and certification","publisher":{"@id":"https:\/\/www.vskills.in\/certification\/tutorial\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.vskills.in\/certification\/tutorial\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.vskills.in\/certification\/tutorial\/#organization","name":"Vskills","url":"https:\/\/www.vskills.in\/certification\/tutorial\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.vskills.in\/certification\/tutorial\/#\/schema\/logo\/image\/","url":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2017\/07\/vskills-min-logo.jpg","contentUrl":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2017\/07\/vskills-min-logo.jpg","width":73,"height":55,"caption":"Vskills"},"image":{"@id":"https:\/\/www.vskills.in\/certification\/tutorial\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/vskills.in\/","https:\/\/x.com\/vskills_in","https:\/\/www.linkedin.com\/company-beta\/1371554\/","https:\/\/www.youtube.com\/channel\/UCMWnscxPwRF_PqXo9B7q_Tw"]}]}},"_links":{"self":[{"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/pages\/19373","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/comments?post=19373"}],"version-history":[{"count":2,"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/pages\/19373\/revisions"}],"predecessor-version":[{"id":54190,"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/pages\/19373\/revisions\/54190"}],"wp:attachment":[{"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/media?parent=19373"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/categories?post=19373"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vskills.in\/certification\/tutorial\/wp-json\/wp\/v2\/tags?post=19373"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}