A STUDY ON ASSET LIABILITY MANAGEMENT AND ITS IMPACT ON PROFITABILITY OF COMMERCIAL BANKS IN INDIA

Asset Liability Management (ALM) is an important strategic financial management tool used by commercial banks to manage liquidity risk, interest rate risk, and profitability. In the modern banking environment, maintaining a balance between assets and liabilities is essential for ensuring financial stability and sustainable growth. This study examines the impact of Asset Liability Management on the profitability of selected public sector banks in India, namely State Bank of India, Bank of Baroda, and Indian Bank, during the period 2020–2025.The study analyses various ALM indicators such as Credit-Deposit Ratio, Current Ratio, Return on Assets, and Net Interest Margin. Secondary data have been collected from annual reports, RBI publications, and financial statements of the selected banks. The findings reveal that effective management of liquidity and proper matching of assets and liabilities positively influence the profitability and financial stability of banks. Among the selected banks, State Bank of India demonstrates comparatively better ALM efficiency and profitability performance during the study period. Keywords: Asset Liability Management, Liquidity Risk, Profitability, Public Sector Banks, Net Interest Margin, Return on Assets.