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  • Investment Policy

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    Avani Sisodiya
    50 vizualizări10 pagini
    The document outlines an investment policy for foreign banks. It discusses factors such as liquidity, profitability, safety, and diversity that influence the policy. The objectives are maximizing long-term yields while maintaining safety of principal. An investment committee is responsible for portfolio management and oversight. Both external factors like regulatory changes and internal factors like cash position influence the policy. The policy guides portfolio diversification, maturity limits, and categories of allowable investments.

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    The document outlines an investment policy for foreign banks. It discusses factors such as liquidity, profitability, safety, and diversity that influence the policy. The objectives are maximizing long-term yields while maintaining safety of principal. An investment committee is responsible for portfolio management and oversight. Both external factors like regulatory changes and internal factors like cash position influence the policy. The policy guides portfolio diversification, maturity limits, and categories of allowable investments.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca PPTX, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    50 vizualizări10 pagini

    Investment Policy

    Încărcat de

    Avani Sisodiya
    The document outlines an investment policy for foreign banks. It discusses factors such as liquidity, profitability, safety, and diversity that influence the policy. The objectives are maximizing long-term yields while maintaining safety of principal. An investment committee is responsible for portfolio management and oversight. Both external factors like regulatory changes and internal factors like cash position influence the policy. The policy guides portfolio diversification, maturity limits, and categories of allowable investments.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca PPTX, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    din 10

    Investment Policy

    Foreign Banks

    Introduction
    Objective - Maximizing long term portfolio yield Factors under consideration: Liquidity needs Pledging requirements Asset/liability management strategies Safety of principal
    Responsibilities Management of portfolio within good banking practice Satisfying liquidity and legal requirements Accountability of Investment Committee for Board of Directors Holding regular meetings Duties Reviewing the regular reports with regards to the portfolio performance and position Planning and execution of investment strategies

    Principles of Investment Policy of Bank


    Liquidity Profitability Safety or Security Diversity Saleability of Securities Stability in the value of investments Principle of tax exemption/benefits

    Importance of Investment Committee/Policy

    To define the ambitions and sustainability goals of a ban k To define minimum standards to be satisfied by a prospective client before rendering any financial service To provide constant flow of dependable earnings To provide a suitable balance of quality and diversification of assets Countercyclical balance to earnings - absorb funds when loan demand is slack and by provisioning funds when loan demand is strong To be complementary to banks other activities To reflect how the business operations of a bank impact the society To ensure that above reflection is implemented in every day decision making

    Factors Influencing the Investment Policy


    EXTERNAL: Estimation of future demand of liquidity Outlook of top management (low risklow reward outlook or high risk-high reward outlook etc.) The changes in RBI norms regarding SLR (Increase/decrease in SLR rates, chanes in norms regarding the type of securities to be kept under SLR)

    Factors Influencing the Investment Policy


    INTERNAL: Cash position Borrowed funds Quality of asset Maturity of asset Stability and earnings on loans Loan charge off experience Nature and stability of experience Working Capital position Dividend payout

    Parameters for Investment Policy


    Portfolio diversification - To minimize the risk of loss resulting from over concentration of assets in specific class, currency, Country, or economic sector Maturity limitation - The Bank shall attempt to match its investments with anticipated cash flow requirements However, a portion of the portfolio should be continuously invested in readily available funds such as in bank deposits or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations Portfolio management - Investments shall be actively managed to take advantage of market opportunities

    Investment Types
    SHORT TERM Government Securities Call Money Market Money Market Funds Debt Instruments Equity Instruments Mutual Funds Fixed Deposits (1 day to 3 months) Life/Permanent Insurance Commercial Papers Certificate Of Deposits

    Investment Types
    LONG TERM

    Long Term Govt. Bonds Forex Investments Mutual Funds Gold Deposit Schemes Post Office Savings Schemes

    Corporate Bonds
    Blue Chip Shares

    Investment Categories
    Held to Maturity HTM The securities acquired by the bank with the intention to hold them up to maturity Held For Trading - HFT The securities acquired by the bank with the intention to trade by taking advantage of the short-term price/interest rate movements Available for Sale AFS The securities which do not fall within the above two categories

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