Treasury Products for IIBF Exams: The Complete 2026 Guide with Q&A

If treasury products confuse you, you are not alone. This single topic carries heavy weight in IIBF, JAIIB and CAIIB exams. It mixes forex. Money markets, government securities and central-bank tools into one chapter. Master it once, and you unlock easy marks across multiple papers.

This 2026 guide breaks down every core treasury product in plain English. You will get clear definitions. A comparison table, common traps and exam-style Q&A. By the end. You will read a treasury question and know the answer on sight.

What Are Treasury Products in Banking?

A bank treasury is the desk that manages money. Risk and surplus funds. It buys and sells currencies. Lends and borrows for short periods, and invests in securities. Treasury products are simply the instruments it uses to do this.

These products fall into a few clear families. There are foreign-exchange deals. Money-market instruments, government and corporate securities, and derivative products. The treasury picks the right tool for liquidity, yield or hedging.

For IIBF aspirants, this chapter links theory to real bank operations. So learn the logic, not just the lines. That mindset also helps you crack our mock tests faster.

Foreign Exchange Treasury Products

Forex deals sit at the heart of every treasury. They let banks settle trade, hedge risk and manage surplus currency. The exam tests three deal types again and again.

Spot Trades

A spot trade settles currency within two working days from the trade date. The screen rate you see is the spot rate unless stated otherwise. It is the market's default reference price.

Two faster variants exist. TOD (today) settles on the same day. TOM (tomorrow) settles the next working day. Both usually quote at a small discount. Are less favourable to buyers than the spot rate.

Forward Contracts

A forward contract fixes an exchange rate today for a purchase or sale on a future date. Customers use it to lock currency risk. The treasury often covers that exposure by taking a reverse position in the inter-bank market.

Forward rates are not guesses about future prices. They are built from the interest-rate differential between two currencies. The differential is added to the spot rate for the low-yielding currency. Deducted for the high-yielding one.

Currency Swaps

A swap combines a spot and a forward deal. You buy a currency in the spot market. Sell the same amount forward. Or the reverse. Swaps are used mainly for funding needs, not speculation.

Money Market Treasury Products

The money market is where banks raise and deploy short-term funds. Maturity here never exceeds one year. This is a high-scoring zone in the exam, so go slow.

Call and Notice Money

The inter-bank market splits into call money and term money. Call money is an overnight market repaid the next working day. Notice money covers funds placed beyond overnight and up to 14 days.

Banks and primary dealers are the major players here. Participation rules for other entities are governed by RBI norms. Always confirm current eligibility on the latest RBI circular.

Treasury Bills (T-Bills)

Treasury Bills are short-term debt issued by the RBI on behalf of the central government. They carry no credit risk. Making them a safe parking spot for surplus funds. The price is set through an auction.

T-Bills are issued at a discount and redeemed at face value. The gap is your return, often called the implicit yield. They are held electronically and settled through the Clearing Corporation of India.

Commercial Paper (CP)

Commercial paper is an unsecured promissory note issued by highly rated corporates. It lets strong borrowers raise short-term funds cheaply. RBI guidelines and FIMMDA market practices govern its issue.

CP is issued at a discount and quoted on face value. It must usually be in demat form. Confirm the minimum rating. Amount and tenor on the latest official IIBF notification. As these limits change over time.

Certificate of Deposit (CD)

A certificate of deposit is a negotiable debt instrument issued by a bank against a deposit. It pays more than a regular bank deposit. It gives banks and corporates one more short-term investment option.

Repo, Reverse Repo and G-Secs

This block is the exam's favourite. Examiners love repo logic because it ties into RBI policy. Read each line twice.

Repo and Reverse Repo

A repo means selling a security. Agreeing to buy it back later at a higher price. The price difference is the interest. Banks use it to borrow short-term funds. Meet shortfalls in CRR or SLR.

A reverse repo is the mirror image. You buy securities now. Sell them back later at an agreed price. It lets a bank invest surplus funds for a short period.

Government Securities (G-Secs)

Government securities are issued by the Public Debt Office of the RBI. State governments issue State Development Loans. These are sold through RBI auctions to banks and primary dealers.

Interest is paid on face value at the coupon rate. The market price may sit above or below face value. When price rises, yield falls, and the reverse holds true.

Bonds, Debentures and STRIPS

Corporates and institutions issue medium and long-term bonds and debentures. These are non-SLR securities with higher yield than G-Secs. Treasuries invest in them for better returns.

Bonds come in many forms. You may see zero-coupon, floating-rate, deep-discount and convertible bonds. STRIPS split a bond's principal and interest into separate zero-coupon securities.

Treasury Products at a Glance

Use this table for last-minute revision. It maps each product to its purpose and tenor. Confirm exact figures on current RBI sources before the exam.

Liquidity Tools, CRR and SLR

The RBI's monetary policy aims to control inflation. Ensure market stability and regulate money supply. Two direct tools dominate here. Both are very common exam questions.

Cash Reserve Ratio (CRR)

CRR is the share of deposits a bank keeps with the RBI. It is calculated on net demand and time liabilities (NDTL). This includes demand deposits, time deposits, overseas borrowings and other liabilities.

Banks need not maintain CRR on items like paid-up capital. Reserves and certain claims. The RBI does not pay interest on the CRR balance. Confirm the current CRR rate on the latest RBI notification.

Statutory Liquidity Ratio (SLR)

SLR can be held in cash above CRR. Gold at market price, or approved securities valued per RBI norms. It ensures banks stay solvent and liquid. The Liquidity Adjustment Facility works alongside these ratios to manage daily liquidity.

Settlement Systems

Modern treasuries rely on robust plumbing. The Negotiated Dealing System handles inter-bank money-market deals. RTGS settles large inter-bank payments instantly. While DVP ensures delivery and payment happen together.

How to Study Treasury Products for IIBF

This chapter rewards smart effort over rote learning. Follow a simple, repeatable plan. It works for JAIIB and CAIIB alike.

1. Group the products: First sort everything into forex. Money market, securities and tools. Structure beats memory.
2. Learn the logic: Understand why forward rates use interest differentials. And why bond price and yield move opposite ways.
3. Make a one-page table: Recreate the comparison table above from memory. Revise it daily.
4. Drill questions: Solve 20–30 MCQs per sitting. Attempt our mock tests to time yourself.
5. Update figures: Cross-check every rate. Limit with current RBI and IIBF sources before exam day.

Read more strategy posts in our free guides. Consistent revision is what turns this chapter into guaranteed marks.

Common Mistakes to Avoid

Most aspirants lose easy marks to avoidable errors. Watch out for these traps. Each one is a frequent exam pitfall.

• Memorising old rates: Repo, reverse repo, CRR and SLR rates change often. Never quote figures from outdated notes.
• Confusing repo and reverse repo: Repo means the bank borrows. Reverse repo means it invests. Fix the direction in your mind.
• Mixing up TOD, TOM and spot: Remember the settlement days for each. The spot rate is the default screen rate.
• Forgetting price-yield logic: When a bond's price rises, its yield falls. This catches many candidates.
• Skipping the numericals: Practise implicit-yield and bond-yield sums. Examiners reward those who can calculate, not just recall.

Practice Q&A on Treasury Products

Test yourself with these exam-style questions. Cover the answers first, then check. This mirrors the real IIBF pattern.

1. Which currency is not fully convertible: USD, EURO, INR or GBP? Answer: INR. The Indian rupee is not fully convertible on the capital account.
2. Within how many working days does a spot trade settle? Answer: Two working days from the trade date.
3. How are forward rates decided? Answer: On the basis of the interest-rate differential between the two currencies.
4. What is a swap? Answer: A combination of a spot and a forward transaction. Used mainly for funding needs.
5. What is a repo used for by commercial banks? Answer: To borrow short-term funds and meet shortfalls in CRR or SLR.
6. What does the haircut on repo securities mean? Answer: The margin by. The principal exchanged is kept lower than the market value of the securities.
7. When a bond's market price rises, what happens to its yield? Answer: The yield falls. Price and yield move in opposite directions.

Frequently Asked Questions

What are treasury products in simple words?

Treasury products are the instruments a bank treasury uses to manage money. Risk and surplus funds. They include forex deals, money-market instruments, government securities and derivatives. Each serves a clear purpose like liquidity, yield or hedging.

Why are treasury products important for IIBF, JAIIB and CAIIB exams?

This topic appears across multiple papers and carries strong weight. It connects theory to real banking operations. Mastering it gives you reliable, repeatable marks.

What is the difference between repo and reverse repo?

In a repo. A bank sells securities and buys them back later, effectively borrowing funds. In a reverse repo. It buys securities and sells them back, effectively investing surplus. The RBI uses both under the Liquidity Adjustment Facility.

What is the difference between CRR and SLR?

CRR is the cash a bank keeps with the RBI. Earns no interest. SLR can be held in cash, gold or approved securities. Both are direct tools to control money supply. But they differ in form and treatment.

Where can I find the latest repo, CRR and SLR rates?

Always rely on current RBI policy statements. The latest official IIBF notification. These rates change with monetary policy. Never depend on old study material for exam-day figures.

Conclusion: Turn This Chapter Into Easy Marks

Treasury products look heavy at first. But the logic is simple once grouped. Learn the families, understand the why, and revise the comparison table daily. Do that, and these questions become free marks.

Now put theory into practice. Solve a full set of mock tests and read more in our free guides. Stay consistent, verify your figures, and walk into the exam with confidence. You have got this.

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