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Q.1 Explain how organization structure of commercial bank treasury facilitates in handling various treasury operations.

Ans:- The treasury organisation deals with analysing, planning, and implementing treasury functions. It deals with issues of profit centre, cost centre etc. The organisations managing interfaces with treasury functions include intragroup communications, taxation, recharging, measurement and cultural aspects.

Structure of treasury organisation
Figure depicts the structure of treasury organisation which is divided into five groups.

Figure : Treasury Organisations
  • Fiscal – This group includes budget policy planning division, industrial and environmental division, common wealth state relationships, and social policy division.
  • Macroeconomic – This group deals with economic sector of the organisation. It includes domestic and international economic divisions, macroeconomic policy and modeling division.
  • Revenue – This group is concerned with the taxes in an organisation. It includes business tax division, indirect tax, international and treaties division, personal and income division, tax analysis and tax design division.
  • Markets – This group mainly deals with selling of products in the competitive market. It includes competition and consumer policy, corporations and financial services policy, foreign investments and trade policy division.
  • Corporate services – This group deals with overall management of the treasury organisation. It includes financial and facilities division, human resource division, business solutions and information management division.
Treasury management in banks
In recent days, most of the Indian banks have classified their business into two primary business segments like treasury operations (investments) and banking operations (excluding treasury).
The treasury operations in banks are divided into:
  • Rupee treasury – The rupee treasury carries out various rupee based treasury functions like asset liability management, investments and trading. It helps in managing the bank’s position in terms of statutory requirements like cash reserve ratio, statutory liquidity ratio according to the norms of the Reserve Bank of India (RBI). The various products in rupee treasury are:
1.    Money market instruments – Call, term, and notice money, commercial papers, treasury bonds, repo, reverse repo and interbank participation etc.
2.    Bonds – Government securities, debentures etc
3.    Equities
  • Foreign exchange treasury – The banks provide trading of currencies across the globe. It deals with buying and selling currencies.
  • Derivatives – The banks make foundation for Over the Counter (OTC). It helps in developing new products, trading in order to lay off risks and form apparatus for much of the industry’s self-regulation.
The role of policies in strategic management was described in this section. The next section deals with inter-dependency between policy and strategy.


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