Shifting Treasury Operations from Mumbai to Srinagar: Dawn of new era in J&K Bank

The Treasury Operations of the J&K Bank historically would cater to maintenance of CRR/SLR and the first forex dealing room of the bank was set up in 1981. In mid 90s, investments functions were conducted partly from Delhi and partly from Srinagar. As a step towards integration of Forex and Investment functions, Treasury Operations was established in the year 1999 at Mumbai. However full integrations of operations was achieved only in 2006 when other investment desks at Srinagar and Delhi were amalgamated with Treasury Operations Mumbai.

The Treasury Operations of the bank are guided bycomprehensive investment and trading policies. In accordance with thesepolicies, J&K Bank maintains a portfolio of about Rs 24,000 crores (rangesfrom 30-40 percent of deposits), investing in a variety of instruments as perregulatory norms, including: Securities issued by both the Central Governmentand state governments; Treasury bills and CMBs; Bonds & debentures issuedby NBFCs, corporations, AIFIs and PSUs, and other banks; Units of mutual fundsand venture capital funds; Commercial paper, certificate of deposits &other money market instruments; Call, Notice, and Term Money; Security Receiptsissued by securitization and reconstruction companies registered with the RBI;and Equity and other approved securities.

   

The treasury operations of the bank also play a role, director indirect, in almost every aspect of the balance sheet management, includingraising resources for funding purposes, liquidity management or investment ofsurplus liquidity. The bank has over the years integrated the domestic treasuryfunction with the foreign exchange treasury management under one roof, with theobjectives like physical proximity enables dealers to exchange informationabout developments in other markets;

timely recognition of arbitrage opportunities due totemporary displacements in money and forex markets; and opportunities to deployresources at the best yields without regard to artificial divisions amongfunctions.

A strong treasury function requires an active presence inthe inter-bank and money, gilt, bond, equity, foreign exchange and derivativesmarkets.

As a part of consolidation, strategy and vision, beingJ&K State specific; with an eye on development of skills, making availablethe best of human resource the bank has shifted Treasury Operations from Mumbaito Srinagar. The human resource at Treasury has to be proficient and highlyskilled which knowledge gets toned through experience and a five year tenure isan established normal. Hitherto, after gaining expertise these human resourceswould get transferred from Mumbai to their home town in J&K, gettingabsorbed in general banking operations and would gradually lose their expertisewith passage of time. However now, the bank will be able to create a pool ofresources, which is a pillar to effect effective transformation and evolutionof treasury into a vibrant profit making centre matching the growth of thebalance sheet of the bank.

It also being a fact that the technological advancement hasprovided seamless connectivity and the convergence of telecommunication,broadcasting and multimedia has made the geographies irrelevant.  For robust functioning of the bank it hadalso become imperative that the investment decisions by the bank are takenaptly, on real time basis with continuous interaction with other departments ofthe Asset Liability Management, Integrated Risk Management, Compliance, Creditand Finance and in consultation with top management of the bank with eye onprofit maximisation. The speed is essence for timely investment decisions atTreasury and the committee members who were till now located at differentgeographies, hampered the decision making. With Executive President as Head ofInvestment Committee and Treasury functioning at banks Corporate Headquartersthe committee can meet more frequently, facilitating decision making within desirabletime frame, and the top management will have direct oversight over theoperations, which will lead to better control and compliance.

The key role of the treasury function is to advise the Boardand Management on business decisions and financial considerations that arefundamental to corporate strategy. Investment approach, liquiditymaintenanceand management of risks are essential treasury skills that enable the executionof that strategy. The dynamic nature of treasury is challenging those responsiblefor it. With its emphasis on reward after weighing in risks, treasury differsfrom other finance activities and the skills needed for treasury arespecialized.Having undertaken this paradigm shift, rather than relying on alimited few the bank intends to create a pool of human resource making theTreasury as vibrant as other vertical of the bank.

Shifting Treasury from Mumbai to Srinagar is a significantevent in the history of the bank and its J&K State centric strategicshift.  This decision will create a lotof job opportunities in the bank, as the Treasury work force is envisioned tobe doubled in next two years, where the number of dealers manning the debt,equity, money market and forex desks would increase manifold.

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