Dynamics of Asset Liability Management in Indian Public Sector Banks: A Comprehensive Analysis of Deposit and Lending Practices

Abstract

This research investigate into the complexity of Asset Liability Management (ALM) in the context of Indian Public Sector Banks (PSBs), with a focus on deposit and lending practices. The selected banks for deposit and lending analysis?SBI, Bank of Baroda (BOB), Canara Bank, Bank of India (BOI), and Punjab National Bank (PNB)?offer a diverse perspective due to variations in operations, size, government influence, risk management, innovation, market trends, and regulatory compliance. The research design outlines the objective, scope, methodology, variables, and significance of the study, spanning the years 2011-12 to 2019-20. The techniques employed include the crucial Loan-to-Deposit Ratio (LDR) analysis, providing a metric to assess liquidity and potential risks. Additionally, correlation analysis explores the relationship between deposit and lending growth. The data analysis section offers a detailed examination of the selected banks' performance, highlighting deposit and lending trends, CAGR, and LDR growth. Notably, the study identifies high correlations between deposits and loans, underscoring the banks' reliance on deposits for lending activities. The overall analysis indicates positive growth in deposits and advances for the chosen period, with State Bank of India and Canara Bank emerging as top performers. However, the slow LDR growth suggests cautious lending strategies, possibly influenced by concerns about asset quality and capital adequacy. The research concludes by acknowledging the challenges faced by Indian public sector banks but highlights their progress and essential role in the nation's economy. The findings have implications for policymakers, banking professionals, and researchers in the financial sector, contributing to a deeper understanding of deposit and lending practices in major public sector banks.