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Treasury Process

•Investments Category are

  • Government Securities (Gsec),
  • shares,
  • other investments, such as, Commercial Papers, Certificate of Deposits, Units of Mutual Funds, Venture Capital Funds and Real Estate Funds Debentures and Bonds.

•Products in Trading category are

  • Forex and Derivatives (Over-The-Counter (OTC) and Exchange traded) the products involved are Options, Swaps, Futures, Foreign Exchange (FX) forwards, Interest derivatives)
  • Core areas of Treasury Operations: The core areas of treasury operations in a bank can be functionally divided into the following broad compartments as mentioned below:
  • Dealing Room Operations (Front office operations);
  • Middle Office (Market Risk department / Product Control Group); and
  • Back office.
  • Front Office: Deals are entered by dealers on various trading /Communication platform such as Reuters’ system, telephonic conversation. Dealers must ensure that all risk/credit limits are available before entering into a deal. Also, the deal must not contravene the current regulations regarding dealing in INR with overseas banks/counter-parties. As soon as the deal is struck with counter-party, the deal details are either noted in a manual deal pad or punched in front office system of the Bank which gets queued in for authorization.
  • Middle Office: Middle Office includes risk management, responsibility for treasury accounting, and documentation of various types, producing the financial results, analysis and budget forecasts for the treasury business unit. It is also responsible for monitoring of counter- party, country, dealer and market-related limits that have been set and approved in other areas of the bank such as the credit department.
  • Back Office Operations: The mainstream role of the Back Office is in direct support of the trading room or front office. This includes verification by confirmation, settlement. Back office is also involved in a number of reconciliation processes, including the agreement of traders’ overnight positions, and brokerage.


Risk & Controls around the Treasury Process


Key Controls

Unauthorized securities setup in systems such as Front office/Back office.

Appropriate Segregation of duties and review controls around securities master setup/amendments.

Inaccurate trade is processed.

Appropriate Segregation of duties and review controls to ensure the accuracy and authorization of trades.

Unauthorized confirmations are processed.

Complete and accurate confirmations to be obtained from counter-party.

Insufficient Settlement




Effective controls on securities and margins.

Incomplete and inaccurate data flow between systems.

Inter-system                            reconciliations, batch processing controls.



Insufficient settlements.

funds                  are



Controls at CCIL/NEFT/RTGS settlements to ensure the margin funds availability and the timely funds settlements.

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