INTRODUCTION

Treasur
y
• Treasure - Gold, silver, jewelry, money
• Treasury – Storage place of treasure
• Treasury generally refers to the funds and
revenue of the bank.
 Treasury management
Treasury management (or treasury operations) includes
management of an enterprise's holdings, with the ultimate goal of
maximizing the firm's liquidity and mitigating its operational,
financial and reputational risk. Treasury Management includes a
firm's collections, disbursements, concentration, investment and
funding activities. In larger firms, it may also include trading in
bonds, currencies, financial derivatives and the associated
financial risk management.
The art of managing, within the acceptable level of risk,
the consolidated fund of the bank optimally and profitably is
called Treasury Management.
Most banks have whole departments devoted to treasury
management and supporting their clients' needs in this area. Until
recently, large banks had the stronghold on the provision of
treasury management products and services.

For non-banking entities, the terms Treasury Management and

Cash Management are sometimes used interchangeably, while, in
fact, the scope of treasury management is larger (and includes
funding and investment activities
Bank Treasuries may have the following departments:

• A Fixed Income or Money Market desk that is devoted to

buying and selling interest bearing securities

• A Foreign exchange or "FX“ desk that buys and sells currencies

• A Capital Markets or Equities desk that deals in shares listed on

the stock market.
Treasury Management Objectives
 Maintaining Liquidity
 Optimizing Cash Resources
 Establishing and Maintaining Access to Short-
Term Financing
 Maintaining Access to Medium- and Long-Term Financing
 Maintaining Shareholder Relations
 Managing Risk
 Coordinating Financial Functions and Sharing
Financial Information
 Why management of money is
needed?
• Until recently, no major efforts were made to
manage cash.
• Competitive business environment resulting from
the liberalization of the economy, there is a
pressure to manage cash.
• The demand for funds for expansions coupled
with high interest rates, foreign exchange
volatility and the growing volume of financial
transactions have necessitated efficient
management of money.
• Managing the daily cash flow and liquidity of
funds within the bank.
• Handling the bank's investments in securities,
foreign exchange, asset/liability management.
• Includes a bank's collections, disbursements,
investment and funding activities.
• The corporate handling of all financial matters.
• It is the window through which banks raise funds
or place funds for its operations.
• The key goal of treasury management is planning,
organizing and controlling cash assets to satisfy
the financial objectives of the organization.
• Management of a company’s finances including
its cash flow, investments, etc.
• Every bank has a treasury department.
• Acts as the custodian of cash and other liquid
assets.
• Under the control of the chief financial officer
(CFO) or Treasurer.
• Handled on a day-to-day basis by the
organization's treasury staff, controller.
• Working capital management of banks and
financial institutions.
 Scopes Of Treasury Mgmt :

1. Liquidity Management

2. Money Market Transaction

3. Capital Market Transaction

4. Correspondent Banking

5. Foreign Exchange Management

6. Rate Determination
 Scope of Treasury Management
• Liquidity Management
To maintain the adequate level of liquidity and
raise the profitability.
• Money Market Transaction.

The treasury department will purchase the

treasury bill within the approved limits.
• Capital Market Transaction

Treasury Department shall make the long term

investment in capital market
 Correspondent Banking
A correspondent banking is established through a bilateral contract with
foreign bank to co-operate in such banking services as money
transfer, foreign exchange and trade finance. Banks use
correspondent banking relationship to deliver services to customers
on markets where the bank has no physical presence. A
correspondent bank provides services to a respondent bank. Both
banks maintain correspondent balances in each other’s interbank
account.
o For instance, if you live in USA and you ask your
local bank to set up a Rupees A/C for you, they will most
likely open a “Nostro A/C” with a correspondent agent bank
in Nepal that they have banking relationship with for that
specific purpose.
 Foreign Exchange Management
o Popularly referred as FOREX

o The conversion of one country’s currency into that of another.

o It is the minimum number of units of one countries currency

required to purchase one unit of the other countries currency.
o Different countries have different currencies with different values.

o When international trade takes place payment is made in their

currencies.

For this purpose the concept of foreign exchange came into operation.
Treasury management covers Foreign exchange in it. Treasury
management also does Foreign exchange as per the need and
requirement of clients and financial institutions.All the
trade that take place in the foreign currency market involves
the buying of one currency, this is because the value of one
currency is determined by comparing through another
currency.
 Rate Determination

The determination of rate is the determination of exchange value

between two counties currency.

Treasury management also determines the rate of one currency in

comparision to another country currency. Generally, the rate
value of currency is determined by the interaction between the
demand and supply of currency.
 Rate Determination
o Balance of payments

o Demand and supply

o Purchasing power parity

o Interest rate
 Role and Function of Treasury
Management
The treasury department occupies a central role in the finances of
the
modern corporation. The treasury department is responsible for
company’s liability. To meet the goal, a treasury department would
need to perform the following roles over time:
 Cash Forecasting
Dislike the accounting staffs who handle the cash receipt and disbursement
activities on daily basis, treasury staffs need to draw all those accounting
staffs records (within the organization including its subsidiaries if any), and
compile it to generate a cash forecast (short and long-range).
Working Capital Management

The treasurer should be aware of working

capital levels and trends, and advise
management on the impact of proposed
policy changes on working capital levels.
 Investment Management
• the treasury staffs are responsible for the proper investment of
it. Three primary goals of the role are:
(a) maximum return on investment;
(b)matching the maturity dates of investments with a company’s
projected cash needs; and most importantly is
(c) not putting funds at risk.
 Cash Managemnet
• The treasury staff uses the information
obtained from cash forecast and working
capital management activities to ensure
sufficient cash is available for opertional needs
 Treasury Risk Management
• The treasury staffs are also responsible to create risk management
strategies and implement hedging tactics to mitigate the whole company’s
risk— particularly in anticipating

(a)market’s interest rates may rise and leave the company pays on its debt
obligations; and
(b)company’s foreign exchange positions that could also be at risk if
exchange rates suddenly worsen.
 Credit rating agency
•
relations
The treasury staff shows the quick responds to
information requests from the credit agency’s review
team.
 Management
Advice
• Treasury staffs monitors the market conditions
and provide the necessary advice to the
company.
 Bank Relations
The treasurers meets with the representatives of bank that the company uses, to:
discuss the company’s financial condition, the bank ’ s fee structure, any debt granted
to the company by the bank, and foreign exchange transactions, hedges, wire
transfers, cash pooling, and so on.
 Fund Raising

• It maintains excellent relation with the investment

community for fund raising purposes that is important—from
the
(a) brokers and investment bankers who sell the company’s debt
and equity offerings; to the
(b)the investors, pension funds, and other sources of cash, who
buy the company’s debt and equity.
 Credit Granting
• The treasury department grants credit to the customer
to manage the cash.
 Principle of Security
• Banks should invest the investable funds in
safe or secure areas in which default risk will
be minimum.
 Principle of Liquidity
• Maintain adequate level of liquidity to meet
borrower and depositor’s demand
 Principle of Profitability
• Investment made by banks should provide the
maximum returns possible.
 Principle of Portfolio
• Invest in the portfolio of various assets with
the objectives of the risk mitigation.
What Is Wealth Management?

Wealth management aims to help high-net-worth clients continue to

protect their assets, reduce their financial risks and potentially grow
their wealth over time. This specialized form of financial advising
involves more than just choosing investments. It is a premium service
designed to meet the unique needs of wealthy individuals. Examples of
wealth management services include financial planning, estate
planning, investment management, legal planning, tax and accounting
services and retirement planning.
Components of Wealth Management

1. This Is A Marathon, Not A Sprint

2. Choose Goals
3. Keeping An Eye Toward Retirement: No matter a business
leader's age, a good wealth manager will always have
retirement in mind.
4. Wealth Management Is Evolving: professionals here are
highly skilled and know exactly what they're doing.
5. Advice Is Gold: Advice is the oft-forgotten crucial piece of
the puzzle.
Wealth management = investment consulting +
advanced planning + relationship management
(or WM = IC + AP + RM)
 Wealth Management Process?
1. Establish Financial Goals and Objectives
The first step in the wealth management process involves establishing
financial goals and objectives. It is important to have a clear vision for
achieving various financial goals relating to education, career,
retirement and other personal and business goals. A wealth management
firm must have a strong understanding of what their client is trying to
achieve when making recommendations. A client’s goals play a direct
role in what type of wealth management plan is offered and how each
strategy will play out.
2. Evaluate Current Financial Assets
The second step of the wealth management process is an in-depth
evaluation of a client’s current financial assets. This may include bank
deposits, stocks and bonds, as well as real estate holdings and
investment accounts. An asset evaluation can help clients better
understand where they stand currently and predict where a client could
be in the next 5, 10 or 20 years if they follow a specific financial
strategy. A wealth management advisor may also perform a gap analysis
to determine what steps need to be taken to potentially achieve goals.
Topics such as asset allocation, cash flow management, tax strategies,
investment plan options and risk tolerance will be covered.
3. Process and Analyze Information
The next stage in the wealth management process involves the
processing and analyzing of the client’s financial information. A wealth
management advisor will analyze the client’s total investment and
wealth situation to understand better what steps need to be taken to
reach established objectives. This aspect of wealth management is
partially based on science and academic research, which helps advisors
provide investment advice backed by market data and insights.

4. Provide Options and Recommendations

Once both the wealth management advisor and client have a solid
understanding of where the client stands and their desired goals, an
advisor will create a detailed financial plan that outlines investment
options. A wealth management advisor develops strategic
recommendations based on the client’s unique portfolio and goals. The
advisor and client will meet to ensure that no aspects of the plan have
been overlooked before it is implemented.
5. Implement a Wealth Management Plan
Proper implementation of a wealth management plan is critical to
ensure its long-term success. An advisor will work with a client each
step of the way when putting the plan into action. During this stage, the
client will be given as much information as possible to understand the
strategies risks and rewards. Clients are also free to ask questions that
they may have at any point in the wealth management process. A
portfolio plan is activated through wealth management services like tax
planning, asset allocation and estate planning.

6. Continuously Monitor the Plan

The wealth management process does not end when the custom
financial plan is implemented.. A wealth management advisor will
continue to monitor the client’s process and if any circumstances
change, the financial plan may need to be modified or updated.
Advisors will also conduct periodic account performance evaluations
and provide clients with the results. Regular meetings may also be
scheduled to discuss the progress of the plan.
 Significance of wealth management

1. It helps create a financial plan

2. It helps eliminate your financial stress
3. Personalized Services
4. Relationship-based approach
5. Financial Security
6. Steady Cash flow
7. Managing the revenue
8. Right Investments
Relationship between Treasury Management
and Financial Management
Need for Financial planning and
Wealth Management
Education Phase:
In the Education Phase, we do not have wealth which is
required to be managed. However, financial planning is
required to manage our expenses, income if you have taken
an educational loan, planning is required to repay it
smoothly.
Accumulation Phase:
In the next phase of life, we accumulate wealth and this is
when financial planning is crucial to make every penny
count. Wealth management is not required at this phase as
well, however, if you inherit some wealth that you want to
invest and grow wealth management can help in that.
Retirement Phase:
Finally, in the retirement phase of life, you want to preserve
the wealth you have accumulated till now and want to see it
grow to provide your family with a financially secure and
affluent life. Here Wealth management plays the key role.
Relation between Wealth Management and
Financial Management
1. Wealth management is mainly for the people who are having a
sufficient amount of wealth or to be specific for the HNls. It is opted for
making the existing wealth grow multiple times and also for the
preservation of the wealth. On the other hand, financial planning and
analysis are for all. It is for all income groups including (lower income
groups, HNl's, etc. The objectives of financial planning are to save the
hard-earned money and achieve the financial goals of an individual.
2. The financial planning process involves managing income and
expenses. It does not require accumulated wealth which is existing in
your bank account or in other assets. Wealth management differs here
from a financial plan and requires accumulated and existing wealth
which can be invested in various financial instruments for growth.
3. Personal financial planning revolves around your day-to-day expenses,
monthly income, savings, tax savings, and tax planning. The factors
affecting financial planning do not include the amount of wealth you
already have in hand or the assets you have. However, in wealth
management, the basis of the process is the amount of wealth you have.

4. Financial planning does not require the constant participation of the

individual. The financial planner can plan the ways and the individual
needs to follow the same. In wealth management, the client needs to be
actively participating with the wealth manager to optimize his or her
wealth accumulation and preservation process.
5. The fees for financial planners and the wealth managers are
completely poles apart. In India, the financial planner's charges within
the range of Rs. 5000 for managing your portfolio. However, if it
includes complexities then accordingly the price can go up. On the other
hand, the wealth managers charge as per a percentage of the portfolio
they are handling. Most often they charge 1 % to 2% of the portfolio they
manage and it is on a yearly basis
 Role and Responsibilities of Chief Finance
Officer

The primary job responsibility of the Chief Financial Officer (CFO) is

to optimize the financial performance of a company, including its
reporting, liquidity, and return on investment.
1. Reporting
Reporting takes up a lot of a CFO’s time, and this responsibility typically
resides in the Controller’s group. This team of professionals prepares all of
the company’s historical financial reports required for shareholders,
employees, lenders, research analysts, governments, and regulatory bodies.
This group is responsible for ensuring all reporting is prepared in an
accurate and timely manner.

2. Liquidity
The CFO needs to ensure the company is able to meet its financial
commitments and manage cash flow in the most efficient way. These
responsibilities are usually carried out by the treasury group, which is often
smaller than the reporting team. This group is tasked with managing the
company’s cash balance and working capital, such as accounts payable,
accounts receivable, and inventory. They also carry out the issuing of any
debt, managing investments, and handle other liquidity-related decisions.
3. Return on Investment

The third thing a CFO does is help earn the company earn the highest
possible risk-adjusted return on assets and return on capital (or return
on equity). This is where the financial planning and analysis – FP&A
team – comes in to help the CFO forecast future cash flow of the
business and then compare actual results to what was budgeted. The
FP&A team plays a critical role in analytics and decision making in the
business.
there are other duties that include
• leadership,
• communication with the board,
• negotiating with suppliers and vendors, and
• supporting the company’s mission, vision, values, and culture.

Other groups that might report to the CFO include

• supply chain,
• procurement,
• information technology (IT), and
• almost any other department, depending on the organization and the
skill set of the CFO.
 Tools of Treasury Management
Liquidity Manager
One of the CFO’s most important tasks is to ensure the financial security of the
company. TO achieve this, they must have a 360 overview of the cash available.
Luckily, there are tools available that allows the CFO to determine the
company’s net liquidity situation. The biggest obstacle for this, however, lies in
connecting all of the data sources and consistently handling the information that
flows from them. If this information isn’t managed correctly, your company can
face many problems such as experience overdraft. Overall, these liquidity
management tools can help your business in many ways, such as secure better
terms, optimizations through cash pooling, and avoiding bank charges.
Foreign Exchange and Interest Rates
Acting on liquidity isn’t the only tool you can use to optimize your cash
management. Many businesses operate on an international environment through
the use of various currencies, meaning that they are exposed to foreign
exchange risks. In these situations, companies can leverage software solutions
which accounts for cash receipts and currency fluctuations. Though foreign
exchange and interest rates, companies can optimize their debts by leveraging
Cloud Computing
Cloud computing solutions are one of the biggest trends in this digital
world. Cash and treasury management has many tools that can help you
optimize your finances and work within the cloud. This approach makes
it easier for businesses to deploy, manage, and update their data in a
more seamless manner. Through the use of configurations, cloud-based
solutions can be customized to better meet the user’s needs and
circumstances. With a cloud-based solution, businesses also reap the
benefit of not needing to invest in servers to host these tools.
Monitoring Other Financial Entities
In today’s business world, everything is connected. Companies are
highly dependent on their partners, meaning that assessing their
reliability is a huge concern for financial departments. For example,
banks are now being monitored by companies, especially after the Great
Recession. There are software tools available that take into account the
changes of a financial institution’s health status. These tools, known as
supply chain finance, allow businesses to check the financial credibility
of their customers as well, to ensure that they are not at any risk doing
business with them.
 Tools Based on technology
Spreadsheets
xcel is still used by 33 percent of treasury professionals. Although spreadsheets
re easy to use and adapt, treasurers should consider the shortfalls of managing
ash and risk with these simple tools. In general, spreadsheets are error-prone
nd not scalable. They provide little transparency and limited analytical
apabilities. Still, finance professionals seem to stick to spreadsheets, keeping
hem from fulfilling their new, strategic responsibilities.
Combination of Specialist Tools
nother 20 percent of survey respondents rely on a combination of specialist
ools. They choose different solutions for cash, payments, risk, hedge
ccounting or commodities to maximise their benefits. What looks like good
pproach, turns into a challenge when it comes to gaining global cash visibility
r netting FX exposures across different asset classes. Treasurers who do not
want to copy data from one system to the other or go back to spreadsheets, will
ave to invest a huge amount of time and money in system connectivity to
vercome the pitfalls of their disparate system landscape.
ERP Systems
The treasury modules of Enterprise Resource Planning (ERP) systems
are used by 7 percent of finance professionals. However, ERP systems
are not built for treasury´s specific requirements. In addition, they
lack flexibility and integration with third party solutions is a
challenge.
Treasury Systems
The survey shows that 38 percent of finance professionals are already
leveraging professional treasury software: Treasury Management
Systems (TMS) and their successors,
Treasury and Risk Management (TRM) solutions. TRM solutions are
the next generation TMS, combining cash, liquidity and risk
management in one single cloud platform. With sophisticated
analyses and integrated reporting tools TRM solutions satisfy
treasury´s increased risk and compliance requirements.
 Wealth Management Needs
Wealth management is the consultative process of meeting the
wants and needs of high-net worth clients by providing them
with the appropriate financial services and products. It is a
high-level professional service that combines several financial
services together into one approach. Wealth management offers
more complete financial planning than portfolio management.
This includes both financial planning and investment management
services. It includes
• comprehensive guidance on a client's
financial situation
• investment management
• estate and tax planning
• accounting
• retirement planning and
• legal guidance in some cases.
 Expectations of the Client
• They want you to understand their needs
• They expect to have multiple options when contacting
you
• They need you to respond quickly
• They crave a personalized experience
• They want you to solve their problems
• They wish you would listen to them
• They like you to be proactive
• They love to be surprised
• They prefer saving time over money
• They want you to give them consistent answers
 Points to consider while managing your
client’s expectations
Understand the client's requirements: Before working on execution,
you must first completely understand the client's requirements. He can be
an ideal equity client considering his age, income level and other
demographics, but he may not have the appetite to take risk or he may
have some other commitments like funding his sister's wedding and is
therefore not in a position to risk the principal. So, the advisor must do an
exhaustive study of the client's needs and responsibilities and then start
working on his financial plan.
Be Honest: The basic rule of financial advisory is, "Always be true to
your Clients". Do not ever give them false hopes and never promise what's
not certain. So, if there is no guarantee by the investment provider, do not
give a personal guarantee that "Sir, it is a master product, I can guarantee,
you'll double your money in 3 years". When it doesn't actualize,
expectations are shattered, you will not only lose that client but also many
future clients because the victim will make sure that you are not getting
any business from any of his acquaintances in future.
Do not overcommit & underperform: In fact, try the other way round
"Undercommit & overperform". When you overcommit, higher
expectations are set, and when you are not able to perform to that level, it
results in dissatisfaction. But when you do not commit and the client's
portfolio performs beyond his expectations, it yields contentment.

Ask & gauge what's not said: The client doesn't express and that
expectation is left unmet. Your client may or may not specify all his
expectations and needs. As a financial advisor, you must ask questions
because there are a lot of important points that he may omit. Further he
may not explicitly express a lot of things, and you have to carefully
observe your client's behaviour and gauge what might be important for
him. This will require time and experience, but it really works.

Keep in touch: Keep your client in the loop always. Send your client
regular updates with respect to his investments and other important
market updates, which may impact his investment. Make it a habit to
meet him once in a while. Do not "not respond to his calls or mails" ever,
the client must never get a feeling that he is being ignored.
Doctrine of substitution: Empathy is another basic rule of a successful
financial advisory business. The advisor has to step into the client's
shoes and understand his position. You understand that in volatile
markets the investment is bound to fall, but your client doesn't. He only
knows one thing; his hard-earned money is vanishing. Your job as an
advisor is to place yourself in his position and explain the reason
behind the loss and help him believe in his portfolio.