1. TREASURY OPERATIONS & MANAGEMENT- UNIT 2
Liquidity Management CRR/SLR/CCIL/RTGS, Objectives, Sources & Deployment, Internet Control, Netting, etc.(3 Lectures)

2. TO&RM- UNIT 2
OBJECTIVE, SOURCES & DEPLOYMENT: *LIQUIDITY can be defined as ability to meet the liabilities exactly when they fall due. This is at the heart of Banking operations *A Bank’s liquidity stems from the following - Cash in excess of CRR Investment in securities over & above SLR, (which can be used to borrow under CBLO/REPO from CCIL/RBI
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3. TO&RM- UNIT 2
Contd Swapping Forex funds with INR Return flow from investment in treasury bills, securities, interest & instalments on loans Undrawn lines from RBI, SIDBI, NABARD, EXIM BANK, NHB, etc Normal accretion in deposits which may take time for deployment
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4. TO&RM- UNIT 2
LIQUIDITY SHORT SITUATION Tap various sources Optimise cost In extra ordinary situations, Bank may borrow from RBI against collateral
SURPLUS SITUATION Money Market Lending Reverse REPO – Buying Treasury Bills, CPs, Securities Repaying refinance
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5. TO&RM- UNIT 2
CRR RBI is empowered to increase CRR from 3% to 20% of NDTL Exclusion of following liabilities is made in calculations: a) Paid up capital b) Loans taken from RBI, IDBI, NABARD c) Aggregate of liabilities towards other banks/ FIs as notified by Central Govt.
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6. TO&RM- UNIT 2
DEMAND Liability: Current account, a portion of Saving Fund, overdue FD, cash certificate, outstanding TTs, DDs, credit balance in Cash credit, security deposits
TIME LIABILITIES: FD, cash certificates, RDs, Time liability portion of Saving Deposit, Deposits held as security against advance
OTHER LIABILITY: Bills Payable, Unpaid dividends, sundries account, Interest accrued on deposits
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7. TO&RM- UNIT 2
STATUTORY LIQUIDITY RATIO Reporting fortnight is from Saturday to Friday – Statement is submitted by Bank to RBI in a format Ratio cant be lower than 25% on any day and RBI can hike it up to 40% Investment in Govt. and other approved securities, includes Central/ State Govt. Securities & Treasury Bills (cash mismatches)
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8. TO&RM- UNIT 2
REAL TIME GROSS SETTLEMENT *Electronic based settlement of inter-bank and customer based transactions with support from RBI *Transfer of funds is on immediate basis; as such more than 90% transactions are on this *This is fully integrated with the accounting system of RBI *Uses INFINET a secured and state of the art network
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9. TO&RM- UNIT 2
ESSENTIAL COMPONENTS OF RTGS *Membership of Indian Financial Network *Establishment of Payment Gateway *Use of Structured Financial Messaging System (SFMS) as a common messaging format *Use of Electronic coding and decoding technology *Unique Identification of Bank’s branch for RTGS
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10. TO&RM- UNIT 2
FUNCTIONING OF RTGS *Each Bank to open RTGS account with RBI *Dedicated account for RTGS settlement *Account funded in the morning and squared in the evening when it shows nil balance *Shortfall in the account if any, is adjusted under intra-day liquidity withdrawal facility against securities given by the bank *Surplusis transferred to the Current account of the bank
TO&RM- UNIT 2
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11. TO&RM- UNIT 2
CLEARING CORPORATION OF INDIA LTD: *Institution is a clearing house for settling trades on a guaranteed basis *Products handled by by CCIL are a)G-Secs/State Govt./T Bills i) Outrights ii) REPOs/CBLOs iii) RBI auctions
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12. TO&RM- UNIT 2
b) FOREX *USD/INR * -Spot * -Cash * -Forward *CCIL has introduced a dealing and trading platform for Forex called FX Clear. * FX Clear enables trade to be done with order matching mode and negotiation mode
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13. TO&RM- UNIT 2
Contd… *CCIL applies the concept of novation & multilateral netting in its operation *Novation introduces CCIL as the intermediary responsible for clearing and settlement of trades *CCIL takes responsibility for delivery, making & receiving payments to and fro from all the counter parties for all transactions.
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P K MITRA

14. END OF PRESENTATION
ASSIGNMENT Explain following key words: *Arbitrage *Derivatives *Emerging Market Countries *Leveraging *Speculation *Short-sale *Tradable assets
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19/11/2013
P K MITRA