[sbinews] SBI group draws up uniform treasury operations policy (Business Standard)

  • From: "Rajendra S. Pai" <rs.pai@xxxxxxxxx>
  • To: <sbinews@xxxxxxxxxxxxx>
  • Date: Tue, 11 Jan 2005 09:32:21 +0530

SBI group draws up uniform treasury operations policy
(Business Standard)
Anindita Dey & Poornima Mohandas / Mumbai January 11, 2005

The State Bank of India (SBI) group is learnt to have worked out a uniform
investment policy for its domestic treasury operations.

According to banking sources, the policy - worked out by the SBI and its
seven associate banks - will take care of investments in equity and debt

Among other things, the newly formed guidelines pertain to uniform risk
adjusted return on the investment portfolio across banks, credit to
investment ratio, equity to investment ratio, debt to investment ratio, cut
off limits in trading either in profit or loss etc.

Earlier, each associate bank used to take its own investment decision based
on the approval of its board.

However, as the State bank group is moving towards an integrated treasury,
an uniform policy will leave enough resources at its disposal so as to take
advantage of the scale and opportunities, said sources.

Sources clarified that details of types and categories of equity or debt or
any other instruments will, however, be the exclusive purview of individual
board and a Chinese wall will be maintained in respective investment
decisions. The objective of uniformity in investment limits and decisions is
to increase the profitability of the entire state bank group.

Sources added that going forward, the group is likely to lay down uniform
financial criteria for credit sanctioning and disbursement. This could be
seen as a precursor to the merger of associate banks with State Bank of
India, they added.

As collated from the annual reports, the total investment portfolio of seven
associate banks and State Bank of India put together comes to around Rs
2,47,773 crore while total advances figure at around Rs 2,20,349 crore.

"With the uniform investment policy, the synergy of the total investment
portfolio will definitely boost returns," said a banking source.

State Bank of India (SBI) and its seven Associate Banks, viz., State Bank of
Bikaner & Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Indore
(SBInd), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank
of Saurashtra (SBS) and State Bank of Travancore (SBT), as a group, are in
the process of putting in place state of the art integrated treasury
solution at its office in Bandra Kurla complex.

The integrated treasury will provide for straight through processing of
front office and back office operations and settlement of transactions,
accounting system based on Indian GAAP and US GAAP, capability of processing
all kinds of transactions in equity, forex, debt, money market and
derivatives market instruments.

Basel II norms as well as statutory compliance, risk weight for capital
adequacy for different treasury products should also be possible, among
other facilities.

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