CAIIB · BFM · Chapter 1

Introduction to Treasury Management

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.

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Q

Define Treasury Management in modern banking context.

A

Function connecting bank's deposit-taking, lending with money, securities, and forex markets.

Q

What were the three traditional Treasury functions pre-reform?

A

Maintain cash balances, deploy surplus funds, source funds for cash-flow gaps.

Q

Name two statutory reserve obligations Treasury must meet.

A

CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) prescribed by RBI.

Q

What does Integrated Treasury mean?

A

Integration of money market, securities market, and forex operations into unified function.

Q

State current Rupee convertibility status on current account.

A

Rupee is fully convertible on current account for regular trade and remittances.

Q

What is the new ECB automatic-route ceiling effective February 2026?

A

USD 1 billion outstanding per borrower OR 300% of net worth, whichever higher.

Q

List three sources of foreign-currency funds for banks.

A

Offshore branches, NRI deposits (FCNR/NRE/NRO), EEFC accounts, ECB float funds.

Q

Define the three books maintained by Integrated Treasury operationally.

A

ALM Book (liquidity), Merchant Book (client transactions), Trading Book (proprietary positions).

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