Page 41 - Banking Finance July 2022
P. 41
ARTICLE
TREASURY :
NEW PROFIT
CENTRE OF
BANKS
Backdrop: skills work in it. In this article, we will provide a brief
overview of these treasury operations and also learn how
We know that main business of any bank is accepting deposit
this department has evolved as a profit making machine for
from its customers and lend it at a higher rate to generate
most of these banks in our country.
income. But in last 20 years or so banking business has
crossed many boundaries and ventured into many different
kind of business to make profit. For executing so many Bank Treasury in Initial Days:
different activities, banks have recruited huge manpower Traditionally, the role of the Treasury in Indian banks was
and they work in different departments across different limited to ensuring the maintenance of the RBI stipulated
offices. norms for Cash Reserve Ratio (CRR) which mandates that a
minimum proportion of defined demand and time liabilities
However, amongst the various departments present in be kept as deposit with the central bank without any return
banks, treasury is one among the most important and Statutory Liquidity Ratio (SLR) which obliges banks to
department and at the same time the least understood one. invest a specified percentage of their liabilities in notified
In most of the banks, treasury is attached to their corporate securities issued by the Government of India and State
offices and people with highly specialized knowledge and Governments with some returns attached to it.
Earlier, treasury's activities in foreign exchange were also
About the author
confined to meeting merchants' and customers'
Nilotpal Banerjee requirements for imports, exports, remittances and
Chief Manager (Faculty) deposits. Furthermore, Indian Money Market was also not
Staff Training Centre, Powai
structured and easily accessible. Therefore, hardly any banks
Mumbai
were dealing is this market. Following the recommendations
BANKING FINANCE | JULY | 2022 | 41