1. User Guide
  2. Counterbalancing Strategies
  3. Counterbalancing Strategy Definition
  4. Counterbalancing Positions
  5. Sale of Other Assets

10.1.3.2 Sale of Other Assets

This counterbalancing position type allows you to sell a non-marketable asset such as a fixed asset or an earning asset prior to its maturity. Sale of other assets generates new cash inflow in the sale bucket and reverses all original cash flows occurring between the sale bucket and maturity. Only unencumbered assets (identified through encumbrance status) are available for selection as a part of this counterbalancing strategy.

As part of this counterbalancing position, you are required to select a non-marketable asset and provide the following sale parameters:
  • Value of Assets to be Sold: This is the percentage of the asset that is to be sold. This value has to be within the sale limit, if any, specified for the asset.
  • Discount (in %): This is the discount applied to the asset value to determine the inflows on sale.
  • Revised Inflow Bucket: This is the sale bucket i.e. bucket where the cash inflows are generated due to the sale.
The cash flows on sale of other assets are calculated as follows:
  1. Original maturity bucket and maturity amount of the asset is identified.
  2. Cash inflows to be posted to the sale bucket are calculated as follows:
    cash inflow sale bucket

  3. Original cash flows occurring from the sale bucket to the maturity bucket are reversed as follows:
    cash outflow

    Note:

    • The sale of other assets includes loans and fixed assets. All assets of the banks excluding marketable assets are available for sale as part of this counterbalancing position.
    • The amount available for sale depends on the sale limit that is specified. For example, if the total value of land held by the legal entity is $10000000 and a sale limit of 30% is specified, then the land worth of a maximum of $3000000 is allowed to be sold while counterbalancing.
    • In case of partial sale, only the balance amount is available for further counterbalancing actions including sale and repo. If an asset is sold partially, it is allowed to be selected again for the purpose of sale provided the sale parameters differ i.e. a different haircut or sale bucket.