Important Points for IC 99 - Asset Management Exam
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Insurance companies have been required to follow two Regulations : IRDA (Investment) Regulations and IRDA (Solvency) Regulations. These two regulations help the insurance sector to asset liability management.
The management of asset and liabilities require banks to reduce the cost of funds used Loans, Credits and investments and to ensure safety, security and quality of investments. To reduce the cost, the banks are required to take optimum deposits and borrowings at the reasonable rate of bank rate keeping in view the marginal rate of lending.
ALCO is the top most committee of a bank is required to oversee the implementation of ALM system in bank. ALCO is to be headed by CMD / ED of bank as per regulatory requirement.
The prime objective of implementation of Asset Liability Management (ALM) is optimum return on investment.
Portfolio selection is the trade-off between expected risk and expected return.
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