Treasury
The Treasury division of NDB Bank is designed to offer innovative products, services and solutions to cater your needs by way of providing an advanced technical and a solution driven approach. Adapting to Global best standards, the NDB bank treasury engages in Foreign exchange, Money and Fixed income markets to facilitate your requirements at fingertips.
At NDB bank treasury, we provide products and solutions related to savings, Fixed/ Term deposits, Loans and advances, Import and sale of foreign exchange transactions, Export and Purchase of foreign exchange transactions, Treasury Bill / Bond and Repo / Reverse Repo related transactions, foreign exchange hedging and risk management solutions coupled with many other investment options.
Some of the key products and their features are detailed below for further information.
1. Spot Foreign Currency Transactions
A widely used product by individuals and corporates manage their foreign exchange receivables and payables.
In simple terms, this reflects converting one currency into another currency based on prevailing spot exchange rate in the market with settlement after two working days from the transaction date.
2. Forward Foreign Currency Transactions
A perfect product that could be used to minimize the foreign exchange rate risk, due to volatile market conditions. In Forward foreign currency transactions there is a binding obligation to buy or sell a specific amount of foreign currency at a predetermined exchange rate on an agreed date in future.
• More useful for clients who are expecting future foreign exchange payables and receipts and a forward contract could be used as a hedging tool.
• The forward rate reflects the interest rate differential of two currencies involved in the forward exchange transaction.
• Most of the corporates and institutions use Forward rate quoted in the forward contract as an input in the budgeting mechanism.
• A client with a proper underlying transaction can apply for a forward contract by way of completing any documentation requirements to execute the transaction.
3. Treasury Bonds
A Treasury bond is a type of a government security issued by Central bank of Sri Lanka through primary auctions. These are considered as medium and long term investment instruments with a maturity period that spans more than one year. Usually the investment in treasury bonds is one of the safest investments since the maturity proceeds are guaranteed by the government.
Rate of investment will be consistent throughout the period of the investment and any further buying or selling of the security could be done based on the prevailing market rate. Treasury bonds carry semiannual coupon payments and the principal is repaid at maturity.
4. Treasury bills
A Treasury bill is the other type of a government security issued by Central bank of Sri Lanka through primary auctions which is a risk free, transferrable instrument, where the ownership can be transferred at any time. These are considered short term investment instruments with a maturity period less than one year. As the treasury bonds, treasury bills are also considered as safest investment instruments since the maturity proceeds are guaranteed by the government.
Treasury bills are issued at a discount and the face value is paid at maturity with interest paid up front.
Treasury bills are issued with three, six and twelve month maturity periods.
Rate of investment will be consistent throughout the period of the investment and any further buying or selling of the security could be done based on the prevailing market rate
5. Repurchase Agreement (Repo)
A risk free investment option for the customer where the investment will be backed by the government securities as collateral. Corporates and Institutions can use this product to manage their excess funds in an efficient manner. Usually considered as one of the safest investments.
This is an agreement between the NDB Bank and you as an investor, where the NDB Bank agrees to borrow funds against Treasury Bills or Bonds from you for a specific period, at an agreed rate of interest. You will be assigned Treasury Bills or Bonds as collateral for your investment.
6. Reverse Repurchase Agreement (Reverse Repo)
Once you have an invested portion of government securities you could borrow funds on a short term basis against those securities by way of entering into a reverse repo transaction with NDB bank.
An agreement is reached when there is a commitment by the seller or dealer to buy a security from the purchaser or customer at a specified price at a specified future date. When this agreement is made from the customer’s perspective, it is referred to as a Reverse Repo.
This is a useful product for corporates and institutions that could be used to manage the day to day liquidity requirements. Further compared to an overdraft facility, a client who uses the reverse repo product to finance their cash requirements could enjoy more favorable rates for borrowing short term funds.
7. Terms & conditions apply
Product information and terms & conditions are subject to change from time to time. Therefore, it is advisable to contact the branch nearest to you for the latest information and prevailing terms & conditions.