The document discusses treasury management in banks. It defines treasury as the storage place for a bank's cash assets like gold, silver, and money. Treasury management involves managing a bank's liquidity, investments, foreign exchange activities, and other financial operations. It aims to efficiently manage the bank's cash flows, maintain sufficient liquidity levels, and maximize returns while mitigating risks like interest rate fluctuations or currency volatility. The key roles of a bank's treasury department include cash forecasting, working capital management, investment management, and providing advice to ensure the bank meets its financial objectives.

1. INTRODUCTION
Group Members:
Bijay Shrestha
Bebina Arjyal
Sadikshya Dahal
Priyanka Roniyar
Sanjay Thakur
Swikar Dahal

2. Treasury
• Treasure - Gold, silver, jewelry, money
• Treasury – Storage place of treasure
• Treasury generally refers to the funds and
revenue of the bank.

3. Why management of money is
needed?
• Until recently, no major efforts were made to
manage cash.
• Competitive business environment resulting from
the liberalization of the economy, there is a
pressure to manage cash.
• The demand for funds for expansions coupled
with high interest rates, foreign exchange
volatility and the growing volume of financial
transactions have necessitated efficient
management of money.

4. • Managing the daily cash flow and liquidity of
funds within the bank.
• Handling the bank's investments in securities,
foreign exchange, asset/liability management.
• Includes a bank's collections, disbursements,
investment and funding activities.

5. • The corporate handling of all financial matters.
• It is the window through which banks raise funds
or place funds for its operations.
• The key goal of treasury management is planning,
organizing and controlling cash assets to satisfy
the financial objectives of the organization.
• Management of a company’s finances including
its cash flow, investments, etc.

6. • Every bank has a treasury department.
• Acts as the custodian of cash and other liquid
assets.
• Under the control of the chief financial officer
(CFO) or Treasurer.
• Handled on a day-to-day basis by the
organization's treasury staff, controller.
• Working capital management of banks and
financial institutions.

7. Scopes Of Treasury Mgmt :
1. Liquidity Management
2. Money Market Transaction
3. Capital Market Transaction
4. Correspondent Banking
5. Foreign Exchange Management
6. Rate Determination

8. Scope of Treasury Management
• Liquidity Management
To maintain the adequate level of liquidity and
raise the profitability.

9. • Money Market Transaction.
The treasury department will purchase the
treasury bill within the approved limits.

10. • Capital Market Transaction
Treasury Department shall make the long term
investment in capital market

11. Correspondent Banking
A correspondent banking is established through a bilateral contract with
foreign bank to co-operate in such banking services as money
transfer, foreign exchange and trade finance. Banks use
correspondent banking relationship to deliver services to customers
on markets where the bank has no physical presence. A
correspondent bank provides services to a respondent bank. Both
banks maintain correspondent balances in each other’s interbank
account.

12. o For instance, if you live in USA and you ask your local bank
to set up a Rupees A/C for you, they will most likely open a
“Nostro A/C” with a correspondent agent bank in Nepal that
they have banking relationship with for that specific purpose.

13. Foreign Exchange Management
o Popularly referred as FOREX
o The conversion of one country’s currency into that of another.
o It is the minimum number of units of one countries currency
required to purchase one unit of the other countries currency.
o Different countries have different currencies with different values.
o When international trade takes place payment is made in their
currencies.
For this purpose the concept of foreign exchange came into operation.

14. Treasury management covers Foreign exchange in it. Treasury
management also does Foreign exchange as per the need and
requirement of clients and financial institutions.All the trade
that take place in the foreign currency market involves the
buying of one currency, this is because the value of one
currency is determined by comparing through another
currency.

15. The determination of rate is the determination of exchange value
between two counties currency.
Treasury management also determines the rate of one currency in
comparision to another country currency. Generally, the rate
value of currency is determined by the interaction between the
demand and supply of currency.
Rate Determination

16. Rate Determination
o Balance of payments
o Demand and supply
o Purchasing power parity
o Interest rate

17. Role and Function of Treasury
Management
The treasury department occupies a central role in the finances of the
modern corporation. The treasury department is responsible for
company’s liability. To meet the goal, a treasury department would
need to perform the following roles over time:

18. Cash Forecasting
Dislike the accounting staffs who handle the cash receipt and disbursement
activities on daily basis, treasury staffs need to draw all those accounting staffs
records (within the organization including its subsidiaries if any), and compile
it to generate a cash forecast (short and long-range).

19. Working Capital Management
The treasurer should be aware of working
capital levels and trends, and advise
management on the impact of proposed
policy changes on working capital levels.

20. Investment Management
• the treasury staffs are responsible for the proper investment of
it. Three primary goals of the role are:
(a) maximum return on investment;
(b) matching the maturity dates of investments with a company’s
projected cash needs; and most importantly is
(c) not putting funds at risk.

21. Cash Managemnet
• The treasury staff uses the information
obtained from cash forecast and working
capital management activities to ensure
sufficient cash is available for opertional needs

22. Treasury Risk Management
• The treasury staffs are also responsible to create risk management strategies
and implement hedging tactics to mitigate the whole company’s risk—
particularly in anticipating
(a) market’s interest rates may rise and leave the company pays on its debt
obligations; and
(b) company’s foreign exchange positions that could also be at risk if
exchange rates suddenly worsen.

23. Credit rating agency relations
• The treasury staff shows the quick responds to
information requests from the credit agency’s review
team.

24. Management Advice
• Treasury staffs monitors the market conditions
and provide the necessary advice to the
company.

25. Bank Relations
The treasurers meets with the representatives of bank that the company uses, to:
discuss the company’s financial condition, the bank ’ s fee structure, any debt granted
to the company by the bank, and foreign exchange transactions, hedges, wire transfers,
cash pooling, and so on.

26. Fund Raising
• It maintains excellent relation with the investment community
for fund raising purposes that is important—from the
(a) brokers and investment bankers who sell the company’s debt
and equity offerings; to the
(b) the investors, pension funds, and other sources of cash, who
buy the company’s debt and equity.

27. Credit Granting
• The treasury department grants credit to the customer
to manage the cash.

29. Principle of Security
• Banks should invest the investable funds in
safe or secure areas in which default risk will
be minimum.

30. Principle of Liquidity
• Maintain adequate level of liquidity to meet
borrower and depositor’s demand

31. Principle of Profitability
• Investment made by banks should provide the
maximum returns possible.

33. Principle of Portfolio
• Invest in the portfolio of various assets with
the objectives of the risk mitigation.