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Treasury Management in Banking NMIMS 2020

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Treasury Management in Banking

NMIMS Assignment Dec 2020

Solution Status: In-process – Need 2-3 days after payment

1st Semester NMIMS Dec 2020 – Rs. 3000/- Only

2nd Semester NMIMS Dec 2020 – Rs. 3000/- Only

3rd Semester NMIMS Dec 2020 – Rs. 3000/- Only

4th Semester NMIMS Dec 2020 – Rs. 2500/- Only

Note: You have to edit 10-20% before submission for avoid copy case. Why need

Q1. In today’s era, due to the uncertainties in the economic environment, most Organizations have increased their cash holding. As a part of the treasury team in an organization, highlight some of the best practices in treasury operation with respect to cash holdings. (10 Marks)
Q2. Sneha had just completed her MBA and was placed in a bank. She was appointed to manage the foreign exchange department. Her manager had asked to prepare a short report on various exposures she would be facing while handling foreign exchange transactions. Help her to prepare the report keeping in mind key exposures. (10 Marks)
Q3. In recent times bank is witnessing volatility in interest rates as well as foreign exchange rates .Thus putting pressure on the banks for maintaining a good balance among spreads, profitability and long-term sustainability.
a. As a risk mitigating manager write a short note on asset – Asset liability management (ALM) and its importance (5 Marks)
b. Discuss the two main type of ALM technique in the banks. (5 Marks)

June 2020

Q1. Explain the various approaches to measure risks. As a treasury manager of a bank, which approach will you follow to evaluate stress events of liquidity position of your bank.

Q2. Explain duration GAP analysis in banks. Calculate the duration Gap of the following excerpts from the balance sheet of a bank. Also calculate the impact on the equity of the bank in the different interest rates scenarios.

TM Solution for NMIMS Assignment June 2020

Scenarios for Impact analysis:

  1. Interest rates increased by 1%
  2. Interest rates decreased by 1%

Q3. Maruti Suzuki Ltd. has imported machinery worth 1 million USD and the invoice is payable in 90 days. Current Spot rate in the market is USD/INR 75 while 90 Days forward is quoted at USD/INR 76. The prominent economists predict the spot rate after 90 days at USD/INR 76.5.

Cost of Borrowing for Maruti in India is 10% and USD Interest Rate = 2%.

A 90 days Call option with exercise price of USD/INR 75 for 100,000 USD is available at premium of INR 2.

You are required to calculate impact on transaction exposure under following scenarios:

  1. Company decides to use Forwards & Options for hedging (5 Marks)
  2. Company decides to use Money Market hedging (5 Marks)

NMIMS APRIL 2020

Q1. Explain yield curves with the help of India GOI bond yield curve. Explain the relationship between the bond prices, yield and duration
Q2. Explain duration GAP analysis in banks. Calculate the duration Gap of the following excerpts from the balance sheet of a bank. Also calculate the impact on the equity of the bank in the different interest rates scenarios.

Scenarios for impact analysis


Scenarios for Impact analysis:

Interest rates increased by 1%

Interest rates decreased by 1%

Case Study:
PMC Bank, which has lately been in the news for fraudulently extending loans to Housing Development & Infrastructure Ltd (HDIL), imperiling deposits of numerous customers, is just the latest in a series of cooperative banks that have been placed under restrictions by the RBI. As of March 2019, 26 urban cooperative banks (UCBs) were placed under directions of the central bank for putting depositors at risk, thanks to mismanagement or fraud. PMC Managing Director Joy Thomas has admitted to hoodwinking the auditors, bank’s board and the RBI for many years by concealing the default on loans to the tune of Rs. 6,500 crore taken by real estate firm Housing Development and Infrastructure Ltd (HDIL).

This means operations are restricted deposits are stuck lead to chaos among depositors for their hard earned deposits.

a. What are the various risk faced by the banks? Elaborate how risk management norms (Basel norms for e.g.) being provided by RBI can help avoiding such situations.

b. What are the reasons that such default happened in PMC bank? Do you think this can be avoided if proper risk management has been implemented by the bank or RBI?