for preparation of Gap reports Liquidity and Interest Rate Sensitivity is the benchmark. HFCs which are better equipped to reasonably estimate the behavioural pattern of various components of assets and liabilities on the basis of past dataempirical studies could classify them in the appropriate time buckets, subject to approval by the ALCOBoard. A copy of the note approved by the ALCOBoard may be sent to the NHB. The present framework does not capture the impact of premature closure of deposits and pre-payment of loans and advances on the liquidity and interest rate risks profile of HFCs. The magnitude of premature withdrawal of deposits during the periods of volatility in market interest rates is quite substantial. HFCs should, therefore, evolve suitable mechanism, supported by empirical studies and behavioural analysis, to estimate the future behaviour of assets, liabilities and off-balance sheet items to changes in market variables and estimate the probabilities of options.