INTRODUCTION TO TREASURY MANAGEMENT-II
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary objective of Treasury Management in a bank?
The primary objective is to manage the bank's liquidity, profitability, and risk arising from its balance sheet positions while ensuring compliance with regulatory requirements such as CRR, SLR, and ALM guidelines.
What is the 'Investment Fluctuation Reserve' (IFR) and why do banks maintain it?
Buffer reserve to absorb MTM losses on AFS and HFT portfolios.
What does the term 'Transfer Pricing' mean in the context of bank treasury?
Transfer pricing is the internal rate at which funds are transferred between the treasury and business units of a bank, ensuring each unit is charged or credited fairly for the cost or benefit of funds.
What is the 'Statutory Liquidity Ratio' (SLR) and how does it relate to treasury?
Mandatory investment in approved securities, managed primarily by treasury.
What is the role of the Treasury as a 'Profit Centre'?
When treasury operates as a profit centre, it actively trades in money markets, forex, and debt instruments to generate standalone profits, beyond merely managing internal fund requirements.
What is 'Cash Reserve Ratio' (CRR) and who manages it in a bank?
Mandatory cash balance with RBI, managed by treasury for daily compliance.
What is an Asset-Liability Committee (ALCO) and what is its function?
ALCO is a committee of senior management that oversees the bank's asset-liability management, setting policies for interest rate risk, liquidity risk, and funds transfer pricing to align the balance sheet with strategic goals.
What is a 'Certificate of Deposit' (CD) and who can issue it?
Negotiable money market instrument issued by scheduled commercial banks.
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