Abstract
The Indian banks are exposed to so many risks like interest rate risk, liquidity risk, credit risk and exchange rate risk which affect the net interest income and profitability of the banks. This paper is aimed at measuring interest rate risk in public and private sector banks in India with the help of gap analysis. It is also found whether there is any difference in the level of interest rate risk in the selected public and private sector banks of India. The findings revealed that both the private sector banks and public sector banks are exposed to interest rate risk.
Highlights
These days, The Indian Economy is going to be a world class economy
It is true that this sector is exposed to so many risks and interest rate risk is one of them
Interest rate risk is the risk to earnings or capital arising from movements in interest rates
Summary
These days, The Indian Economy is going to be a world class economy. The Indian banking industry is one of the most important parameter of the Indian economy which is adopting new advancements in terms of technology, diversification and expansion. It is true that this sector is exposed to so many risks and interest rate risk is one of them. Interest rate risk is the risk to earnings or capital arising from movements in interest rates. Sometimes it moves in the favour of the lender, but the debt burden of the borrower gets bigger. In banking sector interest rate risk is considered the most important area which affects earnings and liquidity in banks. It is necessary for the management of the bank to focus on the methods to measure this risk accurately and do sound efforts to mitigate this risk
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