Proposals for any topic in banking managment Essay

Proposals for any topic in banking managment - Essay Example All these funds are to be deployed in various avenues considering the risk and return factors. These avenues are, however, not alike in their returns. The assets, such as cash in hand, money at call and short notice, are held as per the liquidity requirements, and the return on these funds is almost zero, except money at call and short notice. Investments under Statutory Liquidity Ratio (SLR) serve the purpose of liquidity as well as income. (Alberto and Lapuz, 2005, 7)The rate of return on such investments should be adequate enough to cover financial and operating costs. Further, lending is a significant area of employment of funds in terms of size of funds involved as well as quantum of revenue generated. However, it carries a high degree of credit risk. In addition, banks also use a portion of their funds for creating their business infrastructure, which facilitates an enabling environment to conduct business and generate income. Efficient management of funds essentially includes raising of funds and their use in the manner that generates revenues sufficient to meet the operational as well as financial costs and contributes a reasonable return on capital. Thus, the objective of earning profits shall be fulfilled by an appropriate design of funds management on sound commercial principles.