Non-deposit sources of funds for banks include borrowing from other banks or capital markets which poses certain risks. When banks rely heavily on non-deposit funding, they face liquidity risk if those funding sources are suddenly withdrawn. They also face interest rate risk, as non-deposit funding usually has floating rates tied to market interest rates, while bank assets like loans have fixed rates. This makes a bank's margins vulnerable to rate fluctuations. Additionally, relying on volatile non-deposit funding can undermine a bank's stability if a large portion of its liabilities are short-term in nature.

1. Explain the risks for the banks especially associated with non-deposit
Which act/s in the US Banking Sector supports the lifeline banking service? [1Mark]Explain
the different services that are covered under Lifeline Banking for low-income people.[2
Marks]What are the different non-deposit sources of funds for banks? [1Mark]Explain the
risks for the banks especially associated with non-deposit sources of funds.[2 Marks]What
is the difference between real and nominal interest rates? [1Mark]Explain the concept of
Interest Rate Determination in the light of the Loanable Fund Theory. [2 Marks]What are
financial derivatives? [1Mark]Explain the process of a financial Put Option with the help of
an example. [2 Marks][1Mark]interest-sensitive assets (ISA) and interest-sensitive
liabilities (ISL) of a financial firm are $125 million & $100 million respectively, what will be
its interest-sensitive GAP (IS GAP)? Calculate the Relative IS GAP ratio for the same financial
institution and comment, Is that firm Asset sensitive? [2 Marks]