A PROJECT REPORT ON (TREASURY MANAGEMENT IN BANKS) FOR (ABHYUDAYA CO-OPERATIVE BANK LTD.

MASTER OF MANAGEMENT STUDIES (MMS) UNIVERSITY OF MUMBAI

SUBMITTED TO SINHGAD INSTITUTE OF BUSINESS MANAGEMENT CHANDIVALI

UNDER THE GUIDANCE OF (MS. PALLAVI YEWALE) SUBMITTED BY (SAGAR JETHWANI) (BATCH 2011-2013 & ROLL. NO 32.) (FINANCE)

TREASURY MANAGEMENT IN BANKS

MEANING Treasury is the glue binding together liquidity management, asset/liability management, capital requirements and risk management. It has an increasingly important job to do. At one end of the spectrum it manages balance sheets and liquidity, and does good things to enhance the yield on assets and minimize the cost of liabilities, mostly through the clever and intelligent use of derivatives.

OBJECTIVES OF THE STUDY

To know about the functions, organizational structure and objective of Treasury Management in Banks. To understand the elements of Treasury Management and the functions of treasurer. To understand the risk associated with Treasury Management and their mitigation. To know the future scope involved in Treasury Management & role of information technology in Treasury Management. To have an in-depth knowledge of how ABHYUDAYA BANK manages its treasury as ABHYUDAYA BANK is one of the player in money and forex market.

TREASURY MANAGEMENT: AN OVERVIEW

Cash Management Risk Management Insurance Management Accounts Receivable Management Accounts Payable Management Bank Relations Investor Relations

 To take advantage of the attractive trading and arbitrage opportunities in the bond and forex markets. To deploy and invest the deposit liabilities, internal generation and cash flows from maturing assets for maximum return on a current and forward basis consistent with the banks risk policies/appetite. To fund the balance sheet on current and forward basis as cheaply as possible taking into account the marginal impact of these actions. To effectively manage the forex assets and liabilities of the bank. To manage and contain the treasury risks of the bank within the approved and prudential norms of the bank and regulatory authorities. To adopt the best practices in dealing, clearing, settlement and risk management in treasury operations. To maintain statutory reserves- CRR and SLR- as mandated by the RBI on current and forward planning basis. To deploy profitably and without compromising liquidity the clearing surpluses of the bank To act as profit center for the bank.

OBJECTIVES OF THE TREASURY MANAGEMENT

FUNCTIONS OF TREASURY DEPARTMENT IN BANKS

Reserve Management & Investment Liquidity & Funds Management Asset Liability Management & Term Money Risk Management Transfer Pricing Arbitrage Coordination Fraud Protection

ELEMENTS OF TREASURY MANAGEMENT

Cash Reserve Ratio/Statutory Liquidity Ratio Management Dated Government Securities Call Money Market Treasury Bills Market Inter-Bank Term Money Certificates of Deposits Commercial Paper Ready Forward Contracts Commercial Bills

TREASURY PRODUCTS & SERVICES

Forward Contract Forward Rate Agreement Currency Swap Option

TYPES OF RISKS ASSOCIATED WITH TREASURY

Operational Risk Financial Risks Liquidity Risk Interest Rate Risk Value-At-Risk Forex (Market) Risk Legal Risk

ROLE OF INFORMATION TECHNOLOGY IN TREASURY MANAGEMENT

Negotiated Dealing System Other Trading Platforms/System Straight-through-processing Conversion of Physical Securities to Demat

OVERALL FINDING OF THE STUDY

Risk involved in treasury management for Abhyudaya Bank is the same like operational risk and financial risk and they aim for a well integrated and innovative management of treasury with low risk and proper function of treasury assets and liabilities. It also has good career opportunities.

LIMITATION OF THE STUDY

Time allotted for making project is very limited. As study is restricted only to a specific area. If time permits then there would be a vast scope of study of different organizational treasury management or having a comparative study between two banks. Study allotted has a page constraint. The information required for indepth study is not possible. Due to lack of work experience, there is a disadvantage for making a project as there is no in-depth practical information of the subject. If there would be work experience, the project would have been of practical information. Treasury management has awareness among the banking sector only which restricts from getting information from public. There is no space horizon. So study on treasury management is restricted only to Indian scenario. So we cant have a comparative study with other countries.

CONCLUSION
The paradigm shift in the risk exposure levels of the financial institutions, has definitely led to treasury management assuming a center stage. Undoubtedly all financial institutions need to perform treasury management. But to have a proper treasury management function in place, a thorough understanding of the various operations on its assets/ liabilities becomes essential. Such an understanding will enable the financial institution to identify and unbundle the risks and further aid in adopting and developing appropriate risk management models to manage risks.