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D-mat accounts are maintained by depository participants to hold securities in electronic form.
Integrated treasury refers to integration of money market, Securities market and Foreign Exchange operations.
The treasury’s transactions with customers is known as merchant business.
Foreign currency position at the end of the day is known as open position. Open position is also called Proprietary position or Trading position.
Forward Rate Agreement (FRA) is entered to fix interest rates in future.
SWAP is offered to convert one currency into another currency.
Allocation of costs to various departments or branches of the bank on a rational basis is called transfer pricing.
Minimum marketable investment is Rs. 5.00 Crores.
RBI is allowing banks to borrow and invest through their overseas correspondents, in foreign currency upto 25% of their Tier – I capital or USD 10Million which amounts higher.
ARBITRAGE: is the benefit accruing to traders, who play in different markets simultaneously.
DERIVATIVES are financial contracts to buy or sell or to exchange a cash flow in any manner at a future date, the price of which is based on market price of an underlying assets which may be financial or a real asset with or without an obligation to exercise the contract.
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Spot settlement takes place two working days from the trade date i.e. on third day.
Nostro accounts are current accounts maintained in Foreign Currency by the banks with their correspondent banks in the home currency of the country. Balance held in Nostro accounts do not earn any interest.
Inter bank market is subdivided into Call Money, Notice Money & Term Money.
Call Money refers to overnight placement.
Notice Money refers to placement beyond overnight for periods not exceeding 14 days.
Term Money refers placement beyond 14 days but not exceeding one year.
Inter bank market carries lowest risk next to Sovereign risk.
The payment of T-bills is made and received through Clearing Corporation of India Limited ( CCIL )
Commercial paper is short term debt market paper. The Commercial Paper issuing company should have minimum P2 credit rating. Certificate of Deposit attracts stamp duty.
Infusion of liquidity is effected through lending to banks under Repo transactions.
Absorption of liquidity is done by accepting deposits from banks known as Reverse Repo.
Money market products include T-bills, Commercial paper, Certificate of Deposit and Repo.
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