TREASURY MANAGEMENT

PRESENTATION
BY
S.K.VAZE
 TREASURY MANAGEMENT
• MORE AND MORE BANKS ARE
GETTING GLOBALISED
• AS A RESULT OF THIS CHANGING
SCENARIO, DYNAMICS OF FINANCIAL
MARKETS WORLD OVER ARE
UNDERGOING A TRANSFORMATION
 TREASURY MANAGEMENT
• ONE OF THE MAJOR CONSEQUENCES
IS THE INCREASING VOLATILITY IN
THE LEVEL OF
–INTEREST RATES
–EXCHANGE RATES
–MONEY SUPPLY
–PRICES OF COMMODITIES
 TREASURY MANAGEMENT
• MANAGEMENT OF AN BANK’S
LIQUIDITY TO ENSURE THAT
–THE RIGHT AMOUNT OF FUNDS ARE
AVAILABLE
–IN THE RIGHT PLACE
–IN THE RIGHT CURRENCY
–AT THE RIGHT TIME
 TREASURY MANAGEMENT
• IN SUCH A WAY AS TO
–MAXIMISE THE RETURNS
–MINIMISING FINANCING COSTS OF THE
BUSINESS
–CONTROL INTREREST RATE RISK
–CONTROL CURRENCY EXPOSURE TO AN
ACCEPTABLE LEVEL
 TREASURY MANAGEMENT
• IN SHORT, TREASURY MANAGEMENT
IS THE EFFICIENT MANAGEMENT OF
THE FINANCIAL RISKS AND LIQUIDITY
OF THE BANK.
 TREASURY MANAGEMENT
• FUNCTIONS OF A TREASURY IN A
LARGE TEXTILE UNIT ARE DIFFERENT
TO THAT IN A COMMERCIAL BANK.
 TREASURY MANAGEMENT
• HOWEVER THE FUNDAMENTAL ELEMENTS
OF
–STRATEGY,
–FUNDS MANAGEMENT
–RISK MANAGEMENT
–TAX PLANNING
–INSURANCE
–LIQUIDITY
–INTERNAL CONTROLS,
–SYSTEMS
REMAIN THE SAME FOR ALL TREASURY
DEPARTMENTS.
 STRUCTURE OF
TREASURY DEPARTMENT
• 1) FRONT OFFICE
• 2) MID OFFICE
• 3) BACK OFFICE
 TREASURY MANAGEMENT
FUNCTIONS OF A TREASURER
• 1. FUNDING
• 2. SHORT-TERM INVESTMENTS
• 3. RISK MANAGEMENT
• 4. BETTER INVESTOR RELATIONS
 TREASURY MANAGEMENT
• 5. ESTABLISHING BANK POLICY
• 6. INSURANCE AND TAX PLANNING
• 7. INTERNAL TREASURY CONTROLS
• 8. CAPITAL STRUCTURE
FORMULATION
 TREASURY MANAGEMENT
• TWO KEY DECISIONS
–FINANCING DECISIONS
–DEPLOYMENT DECISIONS
 TREASURY MANAGEMENT
• FINANCING DECISIONS
–HOW MUCH TO MOBILISE
–FROM WHERE TO MOBILISE
–FROM WHOM TO MOBILISE
–AT WHAT COST TO MOBILISE
–WHEN TO MOBILISE
 TREASURY MANAGEMENT
• DEPLOYMENT DECISIONS RELATE TO
THE SELECTION OF ASSETS IN WHICH
FUNDS WILL BE DEPLOYED BY THE
BANK, WITH A VIEW
• 1) TO ENSURE SAFETY OF FUNDS
• 2) TO EARN RETURNS WITH THE
OBJECTIVE OF INCREASING THE
WEALTH OF THE SHAREHOLDERS.