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Domestic and Mid-Office operations of the Treasury Department of Union bank of India

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UNIVERSITY OF MUMBAI A PROJECT ON: Domestic and Mid-Office operations of the Treasury Department of Union bank of India SUBMITTED BY: Mr. BHAVIN. SHETHIA PROJECT GUIDE: Mr. VIVEK MHATRE MASTER OF MANAGEMENT STUDIES YEAR 2008 - 2010 Vivekanand Education Society's Institute of Management Studies & Research, Chembur, Mumbai DECLARATION I, Student of MMS , hereby declare that I have completed the Project on in the academic year The information submitted is true and original to the best of my knowledge. Signature of the Student ACKNOWLEDGEMENTS I express my sincere thanks to our project guide Shri. Vivek Mhatre of Treasury Department of Union Bank of India for giving me the opportunity to work in his department. I am grateful for the technical guidance, help, motivation, suggestion, resources & facilities provided to me for successful completion of my project work in time. I am thankful to Shri. Hemant Joshi, Director of Vivekanand Education Societies Institute of Management Studies and Research for providing me with valuable guidance with regards to project. I am grateful to my parents, without whose support this would not have been possible. I owe special thanks to Mr. Telang for helping me.I would also like to thank Mr S.S. Dixit Mr. A.G Surti Mr Ashutosh Mr. Ajit Hirlekar Mr Omprakash Mr Sandip Mrs Mahrukh Nariman Mr Chandrakumar For the help, guidance and suggestions that helped me to complete my project. ABBREVIATIONS HTM: Held To Maturity AFS: Available For Sale HFT: Held For Trading MTM: Mark to Market SGL: Subsidiary General Ledger RSA: RTGS Settlement Account CBLO: Collateralised Borrowing and Lending Obligation TB: Treasury Bills VaR: Value at Risk CCIL: Clearing Corporation of India Limited RTGS: Real Time Gross Settlement UBI: Union Bank of India OMO: Open Market Operations NDS: Negotiated Dealing System SGL: Subsidiary General Ledger ABSTRACT Treasury is a platform for generating bulk of banks non-interest income by way of dealing in different financial instruments. ...read more.


As the bonds issued are backed by the government of India they are highly secure and considered as risk free. Hence the coupon rates attached to them are low compared to other securities. Instrument features are: 1. Maturity 2. Coupon 3. Principal In the bond markets, the terms maturity and term-to-maturity, are used frequently. Maturity of a bond refers to the date on which the bond matures, or the date on which the borrower i.e. the state or central government has agreed to repay (redeem) the principal amount to the lender. The borrowing is extinguished with redemption, and the bond ceases to exist after that date. Term to maturity, on the other hand, refers to the number of years remaining for the bond to mature. Term to maturity of a bond changes every day, from the date of issue of the bond until its maturity. Coupon Rate refers to the periodic interest payments that are made by the borrower (the issuer of the bond) to the lender (the subscriber of the bond) and the coupons are stated upfront either directly specifying the number (e.g.8%) Coupon rate is the rate at which interest is paid, and is usually represented as a percentage of the par value of a bond. Principal is the amount that has been borrowed, and is also called the par value or face value of the bond. The coupon is the product of the principal and the coupon rate. Typical face values in the bond market are Rs. 100. The bonds can be purchased at premium (at price higher than the par value) or at discount (at price lower the par value) In case of G.Sec the coupon is paid semi-annually. For eg. 6% GS2019Feb This means the coupon rate is 6% and the security will redeem in February 2019. And as the coupons are paid semi-annually the 1st payment of the coupon i.e. ...read more.


It also includes the profit/ loss associated with sale of each security. The report also provides the holding price and the selling price associated with each security sold/ purchased. It also provides the yield of the corresponding deals. The report also gives category vise the total profit/ loss associated with the sales of securities. 9. Dealings in Forex: The report gives the details of the forex operations and the value of Indian Rupee in different currencies. The report also compares the current performance of the treasury branch with the last year's performance and it also gives the forecasted values of for the month. Conclusion/ Recommendations 1. The study gave me an overview of the functioning of a bank's treasury. I learnt about the significance of a treasury department, the objective of a treasury department and its function in the new evolving banking sector. I also learnt about the risk management department and the various kinds of risks that a bank faces. I gained insight into the daily functioning of a treasury department. 2. In addition to the above, I learnt the dynamics of debt markets in India. The reason for issue of securities by the government, the trend in the debt markets, the process of issuance of the various SLR securities etc. In addition I got an insight into the operations of the markets- the auctioning process, allotment of securities, the clearing process etc as well. Overall the study project added to my knowledge about the banking sector considerably. The opportunities and insights I got from being a part of the bank's activities and interacting with the personnel were immense. The recommendations to UBI would be: 1. Integration between the different departments. Because of this the paper work will reduce and it would also avoid multiple entry of same data or operation at different departments. 2. The department was completely dependent on few employees for the some of its integral operations hence absence of such employees affects the treasury operations. ...read more.

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