SYNOPSIS

INTRODUCTION TO TREASURY Treasury management is the area which was linked with accounting related activities till some year back. But, now, the focus has been completely shifted from accounting activities to decision making. Treasury management is fast emerging as a specialization in many companies and the accounting function is being delinked from the finance function. Highly focused knowledge of capital markets, instruments and investment avenues, treasury and risk management and related areas, has become essential for managing the treasury profit centre successfully. A bank needs to ensure both efficient implementation of their budgets and good management of their financial resources. Spending agencies must be provided with the funds needed to implement the budget in a timely manner and the cost of borrowing must be minimized. Sound management of financial assets and Liabilities are also required. Treasury dept. helps in the preparation and execution of budget, management of financial operations and also play a role in auditing and evaluation.

TREASURY MANAGEMENT IN UBI

United Bank of India has a strong presence in the Treasury Market in India. The Foreign Exchange treasury at Head office is equipped with state of art technology, highly experienced and motivated staff with professional skills. The Bank deal in all the major international currencies i.e. US$, GBP, Euro, Yen as well as other currencies. The treasury undertakes the following treasury related activities: Foreign Exchange Inter Bank Placements / Borrowings Sale & Purchase of currency on behalf of customers Forward Cover Bookings Cross Currency Swaps Interest Rate Swaps (IRS) Foreign Exchange Money Market Operations

PURPOSE AND SCOPE OF STUDY

Purpose of the project To understand the day to day role and functions of Integrated Treasury, the instruments used by it. Its global dimension and the typical organization of treasury activity in a Bank. Market Risk Valuation. Understand the investment policy of the bank. Study of Liquidity management that is an important function of Treasury i.e. maintaining adequate cash balances to meet day-to-day requirements, deploy surplus funds generated in operation ,sourcing funds to bridge occasional gaps in cash flow, maintaining minimum cash balances required as per cash reserve ratio (CRR) and investing funds in approved securities to the extent required under Statutory Liquidity Ratio (SLR) . Apart from liquidity management, we will also know that treasury is also a profit centre, with its own trading and investing activity in Foreign exchange, Equity, Securities etc, both in primary market as well as secondary market.

Scope of the Project Study of investment procedure of the UBIs Treasury Department. The scope of my project is mostly limited to theoretical & Analytical knowledge only. The project is made on the basis of secondary data.

Executive Summary

The bank recognizes Treasury Activity as an important segment responsible for managing liquidity, managing Statutory Reserve requirement and maximizing the return on its surplus resources by operating in various segments of financial markets.

The another objectives of UBIS Treasury Department is ensuring the risk management. For this it uses the different measurement tools such that Beta, Convexity, Modified Duration, Duration, Value at Risk, Price value of basis points.

The project covers the organization structure, various objectives and the functions of the Treasury. The project gives clear idea about the products in the integrated Treasury and also the important strategies adopted by the dealers and traders in order to maximize their profit which is the main objective in Treasury.

For analysis and finding I made a portfolio of 6 companies of three different sectors i.e IT sector (TCS, INFOSYS), Automobile sector(Tata Motors, Mahindra & Mahindra), FMCG (HUL, Godrej). I collected the 3 months data from BSE and NSE site and calculated each day return for the respective 6 companies and accordingly calculated the mean, S.D and beta. The greater focus is on the investment / foreign exchange and Fund policies of the bank.

The project is also about the Treasury Management Operations in the Indian Banks & also covers the changing role of treasury in the banks with financial market reforms The project covers the Government Securities Market, Foreign Exchange Market, Derivatives Market and Money Market. It also includes the strategic adopted by the dealers to maintain the required Cash Reserve Ratio and Statutory Liquidity Requirement

CONSTRAINTS & LIMITATIONS: 1) The study of the project is that it is basically academic. 2) The information related to the investment is highly confidential. 3) Bank is not interested in providing crucial information about their dealing department, Investment made, hence proper analization could not be made. 4) The little bit differences of the process for managing the treasury in the different banks is not possible individually for each and every individual bank.