What is the composition of ALCO of banks in India?

The size (number of members) of ALCO would depend on the size of each Bank, level of business and organizational structure. To ensure commitment of the Top Management and timely response to market dynamics, the CEO or the Secretary should head the Committee. The Chiefs of Investment / Treasury including Forex, Credit, Planning, etc can be members of the Committee. In addition, the Head of the Information Technology Division, if a separate division exists should also be an invitee for building up of Management Information System (MIS) and related IT network. Bank may at their discretion even have Sub-committees and Support Groups.Banks are now operating in a fairly deregulated environment and are required to determine their own interest rates on deposits (other than saving account) and interest rates on their advances. The interest rates on banks' investments in government and other permissible securities are also market related. Intense competition for business, involving both the assets and liabilities, together with increasing volatility in the domestic interest rates as well as foreign exchange rates, has brought pressure on the management of banks to maintain an optimal balance between spreads, profitability and long-term viability. The unscientific and ad-hoc pricing of deposits in the context of competition, and alternative avenues for the borrowers, results in inefficient deployment of resources. At the same time, imprudent liquidity management can put banks' earnings and reputation at great risk. These pressures call for a comprehensive approach towards management of banks' balance sheets and not just ad hoc action.

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Asset-Liability Committee (ALCO), is headed by the CEO/CMD or the ED. The Management Committee or any specific Committee of the Board (usually the Risk Management Committee of the Board) oversees the implementation of the ALM system and reviews its functioning, periodically.

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5.3 Composition of ALCOThe size (number of members) of ALCO would depend on the size of each institution, business mix and organisational complexity. To ensure commitment of the Top Management and timely response to market dynamics, the CEO/CMD or the ED should head the Committee. The Chiefs of Investment, Credit, Resources Management or Planning, Funds Management / Treasury (forex and domestic), International Business and Economic Research can be members of the Committee. In addition, the Head of the Technology Division should also be an invitee for building up of MIS and related computerisation. Some FIs may even have Sub-committees and Support Groups. http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=31&Mode=0 Rfe. The RBI is India's central bank

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