Introduction of treasury management, integrated treasury management ,Deal execution process, Deal settlement process, money market, Forex market

1. Under the guidance of:
R. Balasubramanian Sir
Section A, Group 8
Chandni Soni
Manjari Priya
Ankur Kumar
Akshat Srivastava
Dheeraj Singh
Rohit Sharma
Rahul Kumar

2. TOPICS PRESENTOR
Introduction to Treasury Management Dheeraj Singh
Structure of an Integrated Treasury Department Rahul Kumar
Functions of Treasury Department Akshat Srivastava
Deal Execution Process Manjari Priya
Deal Settlement Process Ankur Kumar
Treasury Components – Domestic Treasury Chandni Soni
Treasury Components – Forex Treasury Rohit Sharma
Conclusion Dheeraj Singh
Overview

3. Treasury Management
Interface between business and its financial providers.
Guardians of organization’s assets:
Responsibility for stewarding liquidity, optimizing capital structures and
supporting the execution of strategies that generate value for all
stakeholders.
Treasury Management monitors the internal processes and decisions that cause
changes in working capital and profitability.
Improve profits, maintain firm’s liquidity and mitigate
operational and financial risks.
Planning, organizing, controlling funds and working capital of the
enterprise in order to make the optimize use of the same.
Maintains key relationships with investors and lenders.

4. Treasury Management via Banks Perspective
 Treasury generally refers to the funds and revenue at the disposal of
the bank and day-to-day management of the same.
 With its emphasis on cash, risk and markets, treasury differs from
other finance activities.
 The treasury acts as the custodian of cash and other liquid assets.
 It is the window through which banks raise funds or place funds for
its operations.

5. Traditionally
 The role of treasury in banks was limited to ensuring the
maintenance of RBI stipulated norms
CRR
SLR
 Activity in foreign exchange was confined to meeting merchants
and customers their requirements in:
Imports
Exports
Remittances
Deposits
Then and Now

6. At Present
 Asset Liability Management
 Capital and Reserve Requirements
 Liquid Investments in Government Securities
 Liaison with Regulatory Bodies
 Risk Management
 Operational Decisions
 Monitor current and projected cash flows
 Back Office Functions – Branches – Forex Department
 They safeguard existing assets :
 Prudent investment of funds
 Guard against excessive losses: interest rates and foreign exchange positions.
Then and Now

8. Structure Of An Integrated Treasury Department

9. An Integrated Treasury Department
An integrated treasury acts as a centre of arbitrage and hedging
activities.
The treasury department is manned by:
 Font office: Dealing – Risk Taking
 Mid office: Risk Management and Management Information
 Back office: Confirmations, Settlements, Accounting and
Reconciliation
 Audit group
(In some cases the audit group forms a part of the middle office.)

10.  The dealers and traders constitute the front office.
 In the course of their buying and selling transactions, they are
the first point of interface with the other participants in the
market (dealers of other banks, brokers and customers).
 Acts as the bank’s interface to international and domestic
financial markets.
 It is the clearing house for risk and has the responsibility to
manage the treasury risks taken in all areas of the bank.
 They report to their department heads.
 They also interact amongst themselves to exploit arbitrage
opportunities.
FRONT OFFICE

11.  Responsible for onsite risk measurement, monitoring and
management reporting.
 Assessing likely market movements based on internal
assessments and external/internal research.
 Interact with Risk management department on liquidity and
market risk.
 Provides risk assessment to Asset Liability Committee (ALCO)
and is responsible for daily tracking of risk exposures,
individually as well as collectively.
MID OFFICE

12.  Accounting.
 Settlement.
 Reconciliation operations.
 Monitoring receipt of forex funds in interbank contracts.
 Statutory reports to the RBI.
BACK OFFICE
AUDIT GROUP
 Independently inspects/audits daily operations
 Ensure adherence to internal/regulatory systems and procedures

13.  Maximize portfolio profitability.
 Improves risk insulation.
 Synergize banking assets with trading assets.
 Single window service to customers.
 Effective MIS.
 Improved internal control.
 Minimization of risks and better regulatory compliance.
 Efficient utilization of funds
 Cost effective sourcing of liability
 Proper transfer pricing
 Availing arbitrage opportunities
 Online and offline exchange of information between the
money and forex dealers
Advantages Of Integrating Treasury
Operations

14. Functions Of Treasury Department
 Cash Forecasting
 Working Capital
Management
 Cash Management
 Investment
Management
 Treasury Risk
Management
 Management Advice
 Credit Rating Agency
Relations
 Bank Relationships
 Fund Raising
 Credit Granting
 Other Activities

15. Cash Management
 Maintain an effective collection and payment system.
 Management Information System (MIS).
1. Inventory
Management
2. Receivables
Management
3. Payables
Management

16. Liquidity Management
An optimum level of liquidity should be maintained in the business.
The most important tools for treasury management, to achieve its strategic
goals are:
1) Cash Flow Analysis
2) Working Capital Management

17. Deployment of funds
• In right quantity and at the right time.
• Like the acquisition of fixed assets, purchase of raw material, payment of
expenses like rent, salary, bills and interest.
• To achieve this it needs to keep an eye on all receipts of funds and the
application.
Availability of funds
• In adequate quantity
• At the right time
Optimum Utilization of resources
• Ensure the effective utilization of the firms resources.
• Reduce Operating Costs.
• Prevent Liquidity Shortage.

18. Risk Management
• Manage financial risk.
• Ensure predictable performance of the business.
• It tends to identify, measure, analyze and manage risk in order
to mitigate losses.
• Make such investments which have higher return and low
risk.

19. DEAL EXECUTION
PROCESS

20. Front Office Front Office Back Office Back Office

21. DEAL SETTLEMENT
PROCESS

22. Various Types Of Settlement

23. Treasury Components
DOMESTIC
TREASURY(MONEY
MARKET)
FOREX
TREASURY(FOREX
MARKET)

24. DOMESITC TREASURY

26. Money
Market
Instruments

27. FOREX TREASURY
(FOREX MARKET)

28. • Foreign exchange market is an
institutional arrangement for
buying and selling of foreign
currencies.
• Exporter sell the Foreign currencies
and importers buy them.

31. Conclusion
The treasury department is the heart of the banking industry.
Executives working in this department get a bird’s eye view of
the operations of a bank that are spread out over cities,
nations and even continents.
They understand the concept of cost of funds and oversee its
application.
Dynamic nature of Treasury needs specialized skills:
Complexity of instruments, systems and interactions with the
business (both operationally and strategically).