MA0042 - TREASURY MANAGEMENT

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ASSIGNMENT

DRIVE FALL	2013
PROGRAM	MBADS – (SEM 4/SEM 6) / MBAN2 / MBAFLEX – (SEM 4)
SUBJECT CODE & NAME	MA0042 - TREASURY MANAGEMENT
SEMESTER	4
BK ID	B1813
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Q1. Mr. Ram was appointed as a treasury manager of a reputed bank and the bank wants to open an office overseas. What are the factors Mr. Ram should take into account?

(Responsibilities of treasurer-5 marks, Scope of treasury management-5 marks) 10 marks

Answer.

Main responsibilities of the Treasurer

Mr. Ram should take many factors into account. Each Management Committee will have its own way of doing things, and the way in which work is shared out can also depend on the skills, interests or amount of time that a person has to offer. The following points outline the typical financial responsibilities of a Treasurer:

1. General financial oversight

• Oversee and present budgets, accounts and financial statements to the management committee
• Liaise with designated staff about financial
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• Q2. Visit a public sector bank and a private bank and assess the roles of their treasury Departments to draw a similarity of functioning. Discuss the instruments that are traded in the banks.

(Treasury management in banks-5 marks, Money market instruments-5 marks) 10 marks

Treasury management in banks

In recent days, most of the Indian banks have classified their business into two primary business segments like treasury operations (investments) and banking operations (excluding treasury).

The treasury operations in banks are divided into:

Rupee treasury – The rupee treasury carries out various rupee based treasury functions like asset liability management, investments and trading. It helps in managing the bank’s position in terms of statutory requirements like cash reserve ratio, statutory liquidity ratio according to the norms of the Reserve Bank of India (RBI).

Q3. As a treasurer, while it would be essential to look at the company’s capital asset, you will also have to open foreign operating accounts and set up banking services in target areas. What steps would you take if your organization plans to expand globally?

(Describe the facilities provided to exporters and importers in India., Discuss the role of FEDAI. facilities provided to exporters and importers in India. )

Facilities Available To Exporters And Importers

Exporters

·         Exporters are provided timely and adequate credit to meet the exports commitments.

·         Exporters are allowed pre and post-shipment credit at competitive interest rates.

·         Export Credit is made available both in Indian Rupee and Foreign Currency as well.

·         All eligible exporters are issued ‘GOLD CARD HOLDER

Q4. Explain how banks gain on liquidity measures taken by RBI. Differentiate cash and liquidity management.

(Cash management-5 marks, Liquidity management-5 marks) 10 marks

Cash management

Cash management refers to a broad area of finance involving the collection, handling, and usage of cash. It involves assessing market liquidity, cash flow, and investments cash management, or treasury management, is a marketing term for certain services related to cash flow offered primarily to larger business customers. It may be used to describe all bank accounts (such as checking accounts) provided to businesses of a certain size, but it is more often used to describe specific services such as cash concentration, zero balance accounting, and automated clearing

Q5. BoI, was the first to cut its minimum rate of lending or the base rate by 0.25 per cent after a finance ministry diktat last week, is targeting to take domestic NIM up to 3.10 per cent for FY14 from previous year's 3 per cent. Explain how effectively it can manage its assets and liabilities. Discuss ALM process in commercial banks

(Management of assets and liabilities-5 marks, ALM process in commercial banks-5 marks) 10 marks

Management of assets and liabilities

In spite of a 0.25 per cent cut in the base rate, state-run Bank of India (BoI) is confident of meeting its net interest margin (NIM) targets as it expects a pick-up in credit and some benefit accruing from a fall in cost of funds, a top official has said.

"Some squeeze on the margins is inevitable but I think a combination of two factors--a reduction in the cost of funds lately and a likely pick up in the credit as the conditions in the economy improve--will help us meet our targeted margin," said V R Iyer, chairperson and

Q6. Visit your nearest bank, identify yourself as a student of treasury management and discuss with the bank manager regarding risk management program.

(Identification of risks-5 marks, Risk management program-5 marks) 10 marks

Identification of risks

Risk identification is the process of determining risks that could potentially prevent the program, enterprise, or investment from achieving its objectives. It includes documenting and communicating the concern.

The first step in risk management is to look closely at business

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