Definition Definition

Non-Rate Sensitive Assets

Definition (1):

Non-RSA or Non-Rate sensitive assets are those assets whose value (Present value/PV or Future Value/FV) does not necessarily change with the change in market interest rate.

Definition (2):

Non-Rate sensitive assets are those assets that are not rate-sensitive over the 1-year repricing horizon- it means that a change or fluctuation in the level of interest rates will not have any impact on the size or amount of the interest income produced by these assets over the coming year.

For measuring interest rate risk by applying the repricing gap approach items to be entered in different time bands on the repricing gap schedule are assets, liabilities, and off-balance-sheet items which are rate-sensitive items such as interest rate bearing items and non-interest-bearing items that are rate-sensitive like financial instruments sold at a discount e.g. zero-coupon bond, etc. Non-rate sensitive assets, liabilities, and off-balance-sheet items are to be entered in the “Non-rate sensitive” column.

Non-rate-sensitive assets and liabilities are spread over periods of time for reflecting the view of the management regarding the maturity of these funds.

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