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					            As a case : SBI and DCB

Parth   Pavneet   Raghavendra   Raman   Sidharth
                    Group 3
            Infinity Business School
                                        Treasury Management.. Meaning

Treasury Services

•   Management of an enterprise‘ (including banks) holdings in and
    trading in government and corporate bonds, currencies, financial
    futures, options and derivatives, payment systems and the associated
    financial risk management.

The main functions of the Treasury Department are :

•   Money Management desk
•   Daily Funds Management for the Bank
•   Balance Sheet Management
•   Management of assets and liabilities of the bank viz. Cash Reserve Ratio
    (CRR) and Statutory Liquidity Ratio (SLR) of the bank.
                                       Treasury Management.. Functions

Money Market Desk

   – Management of assets and liabilities of the bank viz. Cash Reserve Ratio
     (CRR) and Statutory Liquidity Ratio (SLR) of the bank
   – Daily Funds/ Balance Sheet Management for the Bank

Equity Desk

   – Offers services to enable the corporate client to trade in equities in stock
     markets all over the world
                                  Treasury Management.. Functions…

Forex Desk

   – Offers corporate clients access to foreign markets and manages financial
     exposures and risks
   – Offers trading capabilities in different currencies in established and
     emerging markets worldwide—giving organizations ready access to the
     world’s currency markets

Asset Liability Management

   – Coordinates the management of assets and liabilities so that an
     adequate return may be earned
                                               The Structure of Treasury


•   Profile India's largest bank is also home to the country's biggest and
    most powerful Treasury, contributing to a major chunk of the total
    turnover in the money and forex markets.

•    Through a network of state-of-the-art dealing rooms in India and
    abroad, backed by the assured expertise of informed professionals,
    the SBI extends round-the-clock support to clients in managing their
    forex and interest rate exposures.
                                          The Structure of Treasury…

Rupee Treasury

• The Rupee Treasury carries out the bank’s rupee-based treasury
functions in the domestic market.
         Broadly, these include asset liability management,
investments and trading.

•The Rupee Treasury also manages the bank’s position regarding
statutory requirements like the cash reserve ratio (CRR) and the
statutory liquidity ratio (SLR), as per the norms of the Reserve Bank
of India.
                                               The Structure of Treasury…

Products and Services

• Asset Liability Management (ALM): The ALM function comprises
management of liquidity, maturity profiles of assets and liabilities and
interest rate risks.

• Investments: SBI offers financial support through a wide spectrum of
investment products that can substitute the traditional credit avenues of a
corporate like commercial papers, preference shares, non-convertible
debentures, securitized paper, fixed and floating rate products. SBI invests
in primary and secondary market equity as per its own discretion.
                                                The Structure of Treasury…


The bank’s trading operations are unmatched in size and value in the
domestic market and cover government securities, corporate bonds, call
money and other instruments. SBI is the biggest lender in call.

Forex Treasury (FX)

The SBI is the country’s biggest and most important Forex Treasury,
both in the Interbank and Corporate Foreign Exchange markets, and
deals with all the major corporates and institutions in all the financial
centers in India and abroad.
                                            The Structure of Treasury…

Portfolio Management & Custodial Services

The Portfolio Management Services Section (PMS) of State bank of India
has been set up to handle investment and regulatory related concerns of
Institutional investors functioning in the area of Social Security.

Treasury Management Group

The Treasury Management Group (TMG) is a part of the International
Banking Group (IBG) and functions under the Chief General Manager
(Foreign Offices). As the name implies the department monitors the
management of treasury functions at SBI’s foreign offices including asset
liability management, investments and forex operations.
                       All About The Treasury Operations in a Bank

• The Treasury Operations Department is responsible for Treasury's middle
and back office functions, all systems services, and provides Cash
Management and Banking Relations services for a bank as a whole

• Treasury Operation’s cross-functional staff provide pricing and valuation,
performance measurement, transaction and securities processing and
compliance support functions

•The middle office provides quantitative analytics support and operational
risk reporting and coordinates Treasury's control risk assessments related
to internal corporate governance and risk management functions
                  All About The Treasury Operations in a Bank….

• Treasury Operations implements and manages information systems in
support of Treasury's asset management, funding, pension investment and
cash operations functions

• The operational units are structured to provide dedicated processing and
analytical support for the Banking, Capital Markets and Financial
Engineering (BCF), Investment Management (IMD), Quantitative Risk and
Analytics (QRA), and Pension Investment (PID) Departments
                                                  Treasury Products in a Bank

                        Commercial Paper

• Commercial Paper (CP) is a short-term, fixed maturity, unsecured promissory
note issued in the open markets as an obligation of the issuing entity.
• Commercial Paper is usually issued with maturities of less than 365 days, with
the most common having maturities of 90 days.
• Commercial Paper is sold either directly by the issuer or through a securities
• For entities with a sufficient credit rating, Commercial Paper is generally backed
by bank lines of credit or letters of credit.
• Banks are active in the Commercial Paper market as issuers, investors, dealers,
and lenders on lines of credit used to back Commercial Paper issuance
                                            Treasury Products in a Bank..

                       Rupee options

• CALL and PUT Options are advanced hedging instruments used to
hedge your imports and exports

          CALL Option – gives the right to buy the asset at a given price
for a specified date and time.
          PUT Option – gives the right to sell the asset at a given price for
a specified date and time

• These options have associated costs as they provide unlimited upside
potential while protecting the downside. These costs can be reduced by
structuring based on the clients’ view.
• Structuring involves buying and selling options at various levels in
different multiples. The buying and selling is done based on the client's
underlying exposure, view, risk appetite and cost sensitiveness.
                                         Treasury Products in a Bank…

                    Currency Swaps

• Currency swaps are a private over-the-counter (OTC) contracts which
commit two counter parties to exchange, over an agreed period, two
streams of interest payments denominated in different currencies.

• At the end of the defined time period, the parties exchange their
corresponding principal amounts at the preagreed exchange rate in the

Modifications of Currency Swaps

Principal-Only Swaps - the principals is exchanged but not the interest.
Coupon-Only Swaps - the interest is exchanged but not the principal
                                              Treasury Products in a Bank…

                    Certificate of Deposit

• A document written by a bank or other financial institution that is evidence of a
deposit, with the issuer’s promise to return the deposit plus earnings at a
specified interest rate within a specified time period.

• CDs can be issued by scheduled commercial banks (excluding Regional Rural
Banks). Select Financial Institutions (FIs) that have been permitted to raise short-
term resources under umbrella limit fixed by RBI, can issue CDs within the
umbrella limit fixed by RBI.

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