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    ATTM12

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    202212019

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    © All Rights Reserved
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    ATTM12

    Uploaded by

    202212019
    4 views14 pages

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    © © All Rights Reserved

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    Copyright:

    © All Rights Reserved
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    4 views14 pages

    ATTM12

    Uploaded by

    202212019

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 14

    Treasury Management

    ©ArunThukral
    Redressal Mechanism
    Securitization
     Securitization is the procedure where an issuer designs a marketable
    financial instrument by merging or pooling various financial assets into one
    group. The issuer then sells this group of repackaged assets to investors

     In Securitization, the lending institution's assets are removed from balance


    sheet of that lending institution and are instead, funded by investors. These
    investors purchase a negotiable financial instrument evidencing this indebtedness.

    ©ArunThukral
    Redressal Mechanism
    Securitization
     Most mortgages are securitized, meaning the loans are sold and pooled
    together to create a mortgage security that is traded in the capital markets
    for profit. Though these securitizations can take many different forms, they are
    generally referred to as mortgage-backed securities, or MBS

    ©ArunThukral
    Redressal Mechanism
    Securitization
     Most mortgages are securitized, meaning the loans are sold and pooled
    together to create a mortgage security that is traded in the capital markets
    for profit. Though these securitizations can take many different forms, they are
    generally referred to as mortgage-backed securities, or MBS

    ©ArunThukral
    Redressal Securitization-
    Mechanism Instrument
     Pass through Certificates
     Pay through Securities
     Stripped Securities

    ©ArunThukral
    Liquidity Management-
    Forex & Trade Finance Transfer Pricing
     CEO’s Perspective
     Divisions works in silo at times
     Treasury primarily incharge of liabilities and many other
    departments handle the assets
     Starts with allocation of costs to different departments
     Cost allocation depends on the risk metrics(FTP Curve)
     Proportional revenue comes to Treasury
     Corporate treasury also faces this task

    6
    Tier II Capital
    Bank Guarantee Bonds
     Tier 2 capital is a component of the bank capital. It consists of the
    bank's supplementary capital including undisclosed reserves,
    revaluation reserves, and subordinate debt. Tier 2 capital is less
    secure than Tier 1 capital
     Tier 2 capital, from a bank perspective, is often divided into upper and
    lower tier 2 capital. The primary features of upper tier 2 capital are
    that it is senior to tier 1 capital, and carries less risk.
     Lower tier 2 capital, restricted to 25 percent maximums of a bank’s
    total capital, is subordinate to tier 1 and upper tier 2 capital, meaning
    that it is at the lowest rung of risk among tier 1 and tier 2 capital of a
    bank.
    7
    BACK
    Corporate Bonds OFFICE
     Deal Slip- Verification
     Confirmation with Counterparty
     Settlement
     Accounting
     Bookkeeping
     Nostro account reconciliation

    ©ArunThukral
    BACK
    Corporate Bonds OFFICE
     Funding and Security account with RBI
     Demat account with Depository Participants
     Adequate Margin with CCIL for Rupee and Dollar
    settlements
     Value date sacrosanct

    ©ArunThukral
    Operational
    Corporate BondsRisk and Legal Risk
    Reasons for Operational Risk
     Lack of Internal Controls
     Deficiencies in Information Systems
    Reasons for Legal Risk
     If Contracts are not legally enforceable
     If documented incorrectly

    ©ArunThukral
    VALUATION
    Corporate Bonds
     (a) Held to Maturity (HTM)
     (i) Investments classified under HTM need not be marked to market
    (MTM).
     (ii) The investments shall be carried at acquisition cost provided that
    it is less than the face value of the security.
     (iii) If acquisition cost is more than face value, the premium arising
    out of difference between face value and acquisition cost shall be
    amortised over the period remaining to maturity.

    ©ArunThukral
    VALUATION
    Corporate Bonds
     (b) Available for Sale (AFS)
    i. The individual securities in the AFS category shall be marked to
    market at quarterly or at more frequent intervals.
     (c) Held for Trading (HFT)
    i. The individual securities in the HFT category shall be marked to
    market at monthly or at more frequent intervals and provided for as in
    the case of those in the AFS category.

    ©ArunThukral
    VALUATION
    Corporate Bonds
     (a) Quoted securities
     The ‘market value’ for the quoted securities shall be the prices
    declared by the Financial Benchmark India Pvt. Ltd. (FBIL)
     For securities whose prices are not published by FBIL, market price
    of quoted security shall be as available from the trades/ quotes on
    the stock exchanges/ reporting platforms/trading platforms
    authorized by RBI/SEBI and prices declared by the Fixed Income
    Money Market and Derivatives Association of India (FIMMDA).

    ©ArunThukral
    Thanks
    ©ArunThukral

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