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

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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 by comprehensive investment and trading policies. In accordance with these policies, J&K Bank maintains a portfolio of about Rs 24,000 crores (ranges from 30-40 percent of deposits), investing in a variety of instruments as per regulatory norms, including: Securities issued by both the Central Government and state governments; Treasury bills and CMBs; Bonds & debentures issued by NBFCs, corporations, AIFIs and PSUs, and other banks; Units of mutual funds and venture capital funds; Commercial paper, certificate of deposits & other money market instruments; Call, Notice, and Term Money; Security Receipts issued 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, direct or indirect, in almost every aspect of the balance sheet management, including raising resources for funding purposes, liquidity management or investment of surplus liquidity. The bank has over the years integrated the domestic treasury function with the foreign exchange treasury management under one roof, with the objectives like physical proximity enables dealers to exchange information about developments in other markets;

timely recognition of arbitrage opportunities due to temporary displacements in money and forex markets; and opportunities to deploy resources at the best yields without regard to artificial divisions among functions.

A strong treasury function requires an active presence in the inter-bank and money, gilt, bond, equity, foreign exchange and derivatives markets.

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

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

The key role of the treasury function is to advise the Board and Management on business decisions and financial considerations that are fundamental to corporate strategy. Investment approach, liquiditymaintenance and management of risks are essential treasury skills that enable the execution of that strategy. The dynamic nature of treasury is challenging those responsible for it. With its emphasis on reward after weighing in risks, treasury differs from other finance activities and the skills needed for treasury are specialized.Having undertaken this paradigm shift, rather than relying on a limited few the bank intends to create a pool of human resource making the Treasury as vibrant as other vertical of the bank.

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