Professional Documents
Culture Documents
CAIIB
Module C
Risk Management
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Treasury Products
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Treasury Products
a. Spot Trades: Spot means currency bought and sold, with set
telement on the same day i.e. Today.
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Treasury Products
d. Investment of foreign exchange surpluses: Banks are permi
tted to invest foreign exchange surpluses in globle money mar
kets/in short-term securities. These can be done by
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Treasury Products
2. Money Market Products
Call money: The money that is lent for one day in this market is
known as Call Money.
The call money market is an integral part of the Indian Money
Market,where the day- to-day surplus funds (mostly of banks) are
traded.
Notice Money :If it exceeds one day but less than 15 days, it is
called "Notice Money“
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Treasury Products
Treasury Bills:
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Treasury Products
Repo:
Repo is used for lending and borrowing for 1 day to1 year.
Repos being short term (overnight) money market instruments
are necessarily being used for smoothening volatility in money
market rates by RBI through injection of short term liquidity into
the market as well as absorbing excess liquidity from the system
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Treasury Products
Repo/Reverse Repo:
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Treasury Products
Collateralized borrowing and lending obligation (CBLO)
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Treasury Products
Bills rediscounting:
The benefit to the lending bank is that their funds are invested at
term money rates and the credit risk is low as they have recourse
to the discounting bank.
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Treasury Products
(3) Securities market products:
-Government Securities:
To satisfy SLR requirement, banks can invest in Government
securities.
G-sec yeild set benchmark rates for corporate bonds, RBI has
issued bonds for various maturities ranging from 1 years to 30
years, so as to establish a market determined yield curve.
- Convertible Bonds:
Bond-holders are given an option to convert the debt into equity.
Coupon on convertible bond is generally lower than the
coupon on non-convertible bond.
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Treasury Products
Equities:
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Treasury Products
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Treasury Products
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Treasury Products
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Treasury Products
Thank You
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