Asset-liability management is managing the risk that pertain from the changes of the composition of assets and liabilities of a Bank. ALM as a policy tool provides the guidance as how to adopt and adapt strategies critically important to strike right balance between the pool of liabilities & assets in such a manner as to generate expected level of financial result through better trade-offs.

Asset & liability Management entails the balance sheet wise risk management, so, it is of imperative need to have structured and systematic process in place. As per Bangladesh Bank prudential guidelines, Asset Liability Management Committee requires to be constituted comprising of the Senior Management of the Bank & other executives having exposures relevant field. The committee needs to arrange periodical meeting and should review the decision of the meeting with due consideration of the market situation for portfolio wise positioning/repositioning. ALM desk officials prepare ALCO paper incorporating local and international economic update, market liquidity forecasts, interest rate projections, balance sheet analysis and recommend measures to be taken to optimize balance sheet whether to reduce or increase deposit and lending rates.