Treasury ????

: Integrated Treasury:
Integrated Treasury refers to integration of money market, securities market and foreign exchange operations.

Functions:
-Meeting reserve requirements.

-Efficient merchant services.

-Global cash management. -Optimizing profit by exploiting market opportunities in forex market, money market and securities market. -Risk management.

-Assisting bank management in ALM.(Asset Liability

Management.

Treasury
Function Responsible for
Front office Mid-Office Dealing Risk management, accounting and management information Confirmations, settlement and reconciliation

Back office

FRONT OFFICE

Dealing

MID OFFICE

BACK OFFICE

settlement MIS

Treasury

Money Market
Certificate of Deposit (CD) Commercial Paper (C.P) Inter Bank Participation Certificates Inter Bank term Money Treasury Bills Call Money

Certificate of Deposit
CDs are short-term borrowings in the form of Usance Promissory Notes having a maturity of not less than 15 days up to a maximum of one year. CD is subject to payment of Stamp Duty under Indian Stamp Act, 1899 (Central Act) They are like bank term deposits accounts. Unlike traditional time deposits these are freely negotiable instruments and are often referred to as Negotiable Certificate of Deposits

Features of CD

CDs can be issued by all scheduled commercial banks except RRBs Minimum period 15 days Maximum period 1 year Minimum 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

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)

Eligibility for issue of CP

the tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs. 4 crore; b) (b) the working capital (fund-based) limit of the company from the banking system is not less than Rs.4 crore c) and the borrowal account of the company is classified as a Standard Asset by the financing bank/s.
a)

Rating Requirement

All eligible participants should obtain the credit rating for issuance of Commercial Paper Credit Rating Information Services of India Ltd. (CRISIL) Investment Information and Credit Rating Agency of India Ltd. (ICRA) Credit Analysis and Research Ltd. (CARE) Duff & Phelps Credit Rating India Pvt. Ltd. (DCR India) The minimum credit rating shall be P-2 of CRISIL or such equivalent rating by other agencies

Maturity
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.

To whom issued
CP is issued to and held by individuals, banking companies, other corporate bodies registered or incorporated in India and unincorporated bodies, NonResident Indians (NRIs) and Foreign Institutional Investors (FIIs).

Repo

Uses of Repo It helps banks to invest surplus cash It 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 a convenient way of adjusting SLR/CRR positions simultaneously. RBI uses Repo and Reverse repo as instruments for liquidity adjustment in the system

Meaning of Repo

It is a transaction in which two parties agree to sell and repurchase the same security. Under such an agreement the seller sells specified securities with an agreement to repurchase the same at a mutually decided future date and a price The Repo/Reverse Repo transaction can only be done at Mumbai between parties approved by RBI and in securities as approved by RBI (Treasury Bills, Central/State Govt securities).

Coupon rate and Yield

The difference between coupon rate and yield arises because the market price of a security might be different from the face value of the security. Since coupon payments are calculated on the face value, the coupon rate is different from the implied yield.

Factors influencing interest rates

The factors which govern the interest rates are mostly economy related and are commonly referred to as macroeconomic factors. Some of these factors are: 1) Demand for money 2) Government borrowings 3) Supply of money 4) Inflation rate 5) The Reserve Bank of India and the Government policies which determine some of the variables mentioned above.

Treasury Bills
Treasury bills, commonly referred to as TBills are issued by Government of India against their short term borrowing requirements with maturities ranging between 14 to 364 days. All these are issued at a discount-to-face value. For example a Treasury bill of Rs. 100.00 face value issued for Rs. 91.50 gets redeemed at the end of it's tenure at Rs. 100.00.