banking and wealth management

7/29/2019 Banking and Wealth Management

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Banking and Wealth

Management

Treasury Management

By: Nokesh Hirendra Lele

Roll: 04


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Integrated Treasury

Integrated Treasury refers to integration of moneymarket, securities market and foreign exchangeoperations.

a. Meeting reserve requirementsb. Efficient merchant services

c. Global cash management

d. Optimizing profit by exploiting market opportunities in forex

market, money market and securities market

e. Risk management

f. Assisting bank management in ALM


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Treasury

Function Responsible ForFront office DealingMid-Office Risk management, accounting and

management informationBack office Confirmations, settlement and reconciliation


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Functional Representation

Dealing

SettlementMIS


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Investment Options


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Money Market

Certificate of Deposit (CD)

Commercial Paper (C.P)

Inter Bank Participation Certificates

Inter Bank term Money

Treasury Bills

Call Money


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Features of CD

CDs can be issued by all scheduled commercialbanks except RRBs

Minimum period 15 days

Maximum period 1 yearMinimum Amount Rs 1 lac and in multiples of

Rs. 1 lac

CDs are transferable by endorsement

CRR & SLR are to be maintained

CDs are to be stamped


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Commercial Paper

Commercial Paper (CP) is an unsecured money market instrument

issued in the form of a promissory note.

Who can issue Commercial Paper (CP)

Highly rated corporate borrowers, primary dealers (PDs) and

satellite dealers (SDs) and all-India financial institutions (FIs)

CP can be issued for maturities between a minimum of 15 days

and a maximum upto one year from the date of issue.

If the maturity date is a holiday, the company would be liable to

make payment on the immediate preceding working day.

CP is issued to and held by individuals, banking companies, other

corporate bodies registered or incorporated in India and

unincorporated bodies, Non-Resident Indians (NRIs) and Foreign

Institutional Investors (FIIs).


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REPO

It is a transaction in which two parties agree to sell and

repurchase the same security. Under such an agreement the sellersells specified securities with an agreement to repurchase thesame at a mutually decided future date and a price

Uses of Repo

It helps banks to invest surplus cashIt helps investor achieve money market returns with sovereign risk.

It helps borrower to raise funds at better rates

An SLR surplus and CRR deficit bank can use the Repo deals as aconvenient way of adjusting SLR/CRR positions simultaneously.

RBI uses Repo and Reverse repo as instruments for liquidity

adjustment in the system


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Call Money Market

The call money market is an integral part of the Indian Money

Market, where the day-to-day surplus funds (mostly of banks) aretraded. The loans are of short-term duration varying from 1 to 14days.

The money that is lent for one day in this market is known as "Call

Money", and if it exceeds one day (but less than 15 days) it isreferred to as "Notice Money".


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Demand and Time Liabilities

Main components of DTL are: Demand deposits (held in current and savings

accounts, margin money for LCs, overdue fixeddeposits etc.)

Time deposits (in fixed deposits, recurring deposits,reinvestment deposits etc.)

Overseas borrowings

Foreign outward remittances in transit (FC liabilitiesnet of FC assets)

Other demand and time liabilities (accrued interest,credit balances in suspense account etc. )


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SLR

SLR is to be maintained in the form of thefollowing assets:

Cash balances (excluding balances maintained for CRR)

Gold (valued at price not exceeding current market

price)

Approved securities valued as per norms prescribed byRBI.


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Thank You

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