| COVER
STORY Basel
Principles of Interest Rate Risk Management : Implications for Indian Banking
- - SK Bagchi In
the light of deregulation of interest rates, it may be appropriate to see through
the principles of management, supervision of interest rate risk and their implications
in Indian Banking. These principles are developed by the Basel Committee (BC)
on Banking Supervision in July 2004.Banking involves intermediation between Funds
Surplus Units and Funds Deficit Units, thereby facilitating risk shifting and
cash flow timing transactions in financial markets. Interest rate risk is an input
in treasury risk management, as much as for mobilizing funds from "surplus units"
(savers) by way of deposits/ other sources of funds where interest is payable
and at the same time, while on lending the funds to "deficit units" (borrowers)
interest is earnable by a bank.
© 2007 IUP . All Rights Reserved
TREASURY
The
Future of Chinese Banking Sector : Ripe for the Next Stage?
- - Kalyan J Sandilya
The
intiative of Chinese Government to open up its financial markets in 2007 seems
to be a great opportunity for overseas banks. It is a wakeup call to Chinese banks
to reform their internal processes. The article, discusses some of the risks and
challenges faced by the Chinese banks. Over the past few years many positive and
profound changes have taken place in the China's financial sector. China's banking
sector is now looking much far better, with slight modifications in the financial
fundamentals and structural changes, particularly in the ownership structure.
Several Chinese banks have been adopting internal reforms in the earnest.
© 2007 IUP . All Rights Reserved
TREASURY
Credit
Rating : A Guidepost for Investment Safety
- - K Mallikarjunan Credit
rating is nothing but arriving at a logical prediction of the regularity and the
magnitude of the prospective cash flow of the "issuer" of a security against the
servicing obligations and the repayment to the investor during the tenure. In
other words, it is a system, which makes clear to the investor that the credit
or default risk is associated with the investment.
© 2007 IUP . All Rights Reserved
FOREX
The
Dutch Disease : Modern Versions
- - TR Shastri
Dutch
Disease has been broadly understood as the inability to manage too much wealth,
like a rich man falling ill due to the availability of too much money for consumption.
For a nation, the sudden discovery of exportable wealth itself will be counterproductive
for export efforts of other products. This is because of the strengthening of
home currency and diversion of resources to manufacture non-tradables. There are
many reasons for `Dutch Disease', like the subsequent change of composition of
capital flow.
© 2007 IUP . All Rights Reserved
RISK
Option
Trading Strategy : An Overview of Butterfly Spread
- - Smitha Ramachandran
Option
Trading strategies are the predefined set of rules that can be executed in a sequential
manner. Many trading strategies like Strips, Straddles and Spreads etc., are used
for trading options to book profits. The article focuses on the Butterfly spread.
© 2007 IUP . All Rights Reserved
INTERVIEW
Interest
Rates Hedging Instruments
- - Ashish Ghiya
The
Managing Director, Derivium Capital and Securities Pvt. Ltd., expressed his views
on Interest Rates Hedging Instruments in India. Hedging interest rate risk in
Indian scenario can only be performed through interest rate swaps and forward
rate agreements. These are derivatives introduced by the Reserve Bank of India
(RBI) on Indian interest rates in July, 1999. An Interest Rate Swap (IRS) is an
agreement between two parties to exchange stated interest rate obligations for
certain period, in respect of a notional principal amount.
© 2007 IUP . All Rights Reserved
BOOK
REVIEW Understanding
Emerging Markets : Building Business BRIC by Brick
- - Author: Stefano Pelle Since
the beginning of the new millennium, a spectacular growth of some emerging countries
has been noticed increasingly by the media and the opinion leaders. Western countries
seem to have finally realized that countries like India and China are not only
exotic locations to spend holiday time, but also extremely promising investment
destinations and are growing economies with the potential of becoming the growth
drivers in the years to come. This book explores the understanding of emerging
markets in building business in the BRIC nations.
© 2007 IUP . All Rights Reserved. |
