treasury management- final
TRANSCRIPT
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Treasury Management
Presented By:
Deepa Jaiswal
Allen Lopes
Chirag Pagdhare
Staynel Rodrigs
Asha Tilwani
MMS-II 2012-12
GROUP NO: 4
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Introduction
It is an crucial tool of finance.
It is the management of cash, fund, currency, bank
and financial risk
In this there is estimation of risk for investment of
cash.
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Cont.
A place where stores of treasures are kept; the place of
deposit, care, and disbursement of collected funds
Collects funds and disburses money.
Managing Funds through proper allocation
Responsibilities fall under the scope of CFO
The CFOs responsibilities include capital management, riskmanagement, strategic planning, investor relations and
financial reporting
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Treasury Management
Treasury forms a vital part of any commercial banks activities. It isthe window through which the bank raises funds from or places
funds in markets
Traditionally, banks in India, the role of Treasury was limited to
ensuring the maintenance of RBIs stipulated norms for cash reserveratio (CRR) & Statutory Liquidity Ratio(SLR)
The deregulation of financial markets began with the shift to
market- determined exchange rates and moved ahead with the
freeing of Bank deposit and lending rates
The RBI began using monetary intervention tools such as LAF and
Open Market Operations (OMOs) to manage liquidity
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Banks Treasury Departments
A Fixed Income or Money Market desk that is devoted to buying and
selling interest bearing securities
A Foreign exchange or "FX" desk that buys and sells currencies
A Capital Markets or Equities desk that deals in shares listed on the stock
market
Proprietary Trading desk that conducts trading activities for the bank's own
account and capital
ALM desk that manages the risk of interest rate mismatch and liquidity
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Integrated Treasury
Integrated Treasury refers to integration of money market,securities market and foreign exchange operations.
Objectives
a. Meeting reserve requirements
b. Provision for adequate and timely liquidityc. Global cash management
d. Optimizing profit by exploiting market opportunities in forex
market, money market and securities market
e. Risk managementf. Efficient merchant services
g. Assisting bank management in ALM
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OBJECTIVES OF INTEGRATED TREASURYMANEGEMENT POLICY
To maintain Statutory Liquidity Ratio (SLR) and Cash ReserveRatio (CRR) in terms of RBI guidelines
To achieve optimum level of return from the investment
operation including forex transactions keeping in mind the
liquidity and risk aspects of the portfolio. To manage liquidity i.e. to bridge temporary mismatch in fund
position by resorting to various options viz. Call, CBLO etc.
To maintain maturity pattern of investments consistent with
the banks need for funds and in line with Asset Liabilitymanagement Policy of the Bank
To manage credit risks, liquidity risk, market risk and
operational risk in tune with banks risk management policies
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Integrated Treasury Department
Make investment in their ownaccount
SLR, CRR, CP, CD, TB, Bonds &Debentures, Equities and various
other derivatives
DomesticTreasury
Operations
Conduct operation on behalf of
clients Spot and forward markets, foreign
exchange swap markets , FCNRand Nostro Account.
Forex TreasuryOperations
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Structure of Treasury Department
Function Responsible for
Front office Dealing
Mid-Office Risk management, accountingand management information
Back office Confirmations, settlement andreconciliation
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FRONT OFFICE
BACK OFFICEMID OFFICE
Dealing
MIS
settlement
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Bank Treasury Departments
Money market desk
A Fixed Income or Money Market desk that is devoted to buying
and selling interest bearing securities
Foreign exchange or FX desk
A Foreign exchange or "FX" desk that buys and sells currencies
Equities DeskA Capital Markets or Equities desk that deals in shares listed on
the stock market.
Derivatives Desk
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http://en.wikipedia.org/wiki/Fixed_Incomehttp://en.wikipedia.org/wiki/Money_Markethttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Capital_Marketshttp://en.wikipedia.org/wiki/Equitieshttp://en.wikipedia.org/wiki/Equitieshttp://en.wikipedia.org/wiki/Capital_Marketshttp://en.wikipedia.org/wiki/Foreign_exchange_markethttp://en.wikipedia.org/wiki/Money_Markethttp://en.wikipedia.org/wiki/Fixed_Income -
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Functions of Treasury Management
Reserve Management & Investment
Cash Management
Liquidity & Funds Management
Risk Management
Asset liability management
Transfer Pricing
Derivative products
Arbitrage
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Reserve Management & Investment
Meeting CRR/SLR obligations
a) CRR4.75%
b) SLR23%
Appropriate mix of investment portfolio
Cash Management
Control & care of the cash assets and liabilities of the
organization. Selection of investment products, investment brokers,
methods of borrowing, cash management informationsystems.
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Liquidity & Funds Management
Analysis of cash flow arising out of asset liabilitytransaction
Fund various asset of balance sheet
Policy inputs to strategic planning and yield expected incredit and investment.
Risk Management
Changes in Interest rates Increasing NPAs
Increasing level of disintermediation
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Transfer Pricing
Transfer of funds to related party.
Assist in enhancing profits
Performance evaluation
Derivative Products
Develop Interest Rate Swap and other cross currencyderivative products
Hedge banks own exposure and also sell to customers
Arbitrage
Risk less profits
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What is Asset Liability
Management
An attempt to match : Assets & Liabilities
In Terms of : Maturities & interest rate sensitivities
To Minimize: Interest rate risk & Liquidity Risk
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Asset LiabilityManagement
AssetManagement
How Liquid areassets of banks
LiabilityManagement
How easily bankscan generate loans
from market
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ALM
ALM is an integral part of the financial management process
of a bank.
ALM is concerned with strategic balance sheet management
involving risks caused by changes in interest rate, exchange
rates and liquidity position of the bank.
ALM can be termed as risk management technique designed to
earn an adequate return while maintaining a comfortable
surplus of assets beyond liabilities.
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Thank You
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