The full form of OBE is Off-Balance Sheet Exposures

Off-balance sheet (OBS) items is a term for assets or liabilities that do not appear on a company’s balance sheet. Although not recorded on the balance sheet, they are still assets and liabilities of the company. Off-balance sheet items are typically those not owned by or are a direct obligation of the company. For example, when loans are securitized and sold off as investments, the secured debt is often kept off the bank’s books. Prior to a change in accounting rules that brought obligations relating to most significant operating leases onto the balance sheet, an operating lease was one of the most common off-balance items.

Off-balance sheet exposures refer to activities that are effectively assets or liabilities of a company but do not appear on the company’s balance sheet. The off-balance sheet exposures in banking activities refers to activities that do not involve loans and deposits but generate fee income to the banks. The non-fund based facilities like Issuance of letter of guarantee, letter of credit, deferred payment guarantee, letter of comfort; Investments of clients held by an investment company etc. which are contingent in nature are some of the examples off -balance sheet exposures of the banks. The above mentioned items do not appear on the institution’s balance sheet until and unless they become actual assets or liabilities. Nevertheless, off-balance sheet items are detectable as they are appearing in the notes to financial statement of the organization. As per generally accepted accounting principles (GAAP) require an organization to disclose these and financing arrangements in the notes to their audited financial statements.