An Introduction to Treasury Management: Functions, Importance, and Strategic Role

Capital Market, Foreign Exchange

IntroductionTreasury management refers to the strategic oversight and administration of an organization’s financial assets and liabilities. It encompasses a broad range of activities including cash management, investment planning, funding decisions, and financial risk mitigation. The primary objective of treasury management is to ensure that sufficient liquidity is maintained, cash flows are optimized, financial risks are…

Organization of Treasury Operations in Banks

Capital Market, Foreign Exchange

IntroductionThe treasury department in a bank is a critical function responsible for managing liquidity, investments, funding, and financial risk. To ensure effective execution and control, treasury operations are typically structured into three key components: the front office, middle office, and back office. This tripartite structure ensures that transactions are executed efficiently, risks are properly monitored,…

The Evolving Role of Treasury in Banks: From Cost Center to Profit Center

Capital Market, Foreign Exchange

IntroductionIn the banking sector, treasury functions have traditionally been classified as cost centers, primarily focused on managing cash flow, maintaining liquidity, and minimizing financial risks and operational costs. However, in recent years, there has been a notable shift towards positioning treasury as a profit center—a unit that actively contributes to revenue generation through trading, investment,…

The Process of Globalization and Its Impact on Treasury Management in Banks

Capital Market, Foreign Exchange

IntroductionTreasury management refers to the strategic administration of an organization’s financial resources, with the objective of optimizing the use of surplus funds, maintaining liquidity, minimizing the cost of funds, and mitigating both operational and financial risks. In the context of banks, treasury operations are essential for ensuring financial stability, managing risks, and supporting overall strategic…

Integrated Treasury Management in Banks: Concept, Functions, and Strategic Advantages

Capital Market, Foreign Exchange

IntroductionIntegrated Treasury Management refers to the consolidation of a bank’s domestic and foreign exchange treasury operations into a unified framework. Traditionally, banks maintained separate departments for managing domestic treasury functions—primarily focused on statutory reserve management and fund deployment—and foreign exchange treasury operations—focused on currency risk management and forex-related transactions. The evolution of treasury functions and…

A lesson on Forex Treasury operations in Banks

Foreign Exchange

In India, over 90% of Treasury operations, in the forex (foreign exchange) market are between the banks. The inter-bank foreign currency operations are taking place for two purposes namely (i). Buying and selling foreign currency on behalf of their customers as an intermediary. (ii). Proprietary trading (buying and selling currencies on its own account) with…

Trade Credit: Regulatory frame work for Buyers Credit and suppliers credit

Foreign Exchange20 Comments

Buyers’ credit finance means finance for payment of imports in India arranged by the importer (buyer) from a bank or financial institution outside India. The suppliers’ credit means credits extended for imports directly by the overseas supplier instead of a bank or financial institution.  Although both buyers’ credit and supplier credit are credit facilities to…