ESAF Small Finance Bank Treasury Analyst Interview: Rounds, Questions and Preparation

What the job involves

A Treasury Analyst in banking or small finance banking supports day-to-day cash and liquidity management, monitors fund flows, and helps manage interest rate and foreign exchange risks within set limits. The role involves preparing reports on liquidity ratios, investment portfolios, and regulatory compliance, often working with ALM, risk, and finance teams. In fast-growing institutions, you may also assist with fund-raising, asset-liability matching, and maintaining relationships with banks and regulators.

Role and Technical Knowledge

1. 1

   What are the key functions of a treasury department in a small finance bank?

   Cover cash management, liquidity planning, investment of surplus funds, risk monitoring (interest rate and FX), and regulatory reporting. Mention how treasury supports lending and deposit-taking activities.

2. 2

   Explain the difference between CRR and SLR. How do they affect a bank's liquidity?

   CRR is the cash reserve banks must keep with RBI, earning no interest; SLR is the minimum investment in liquid assets like government securities. Both reduce lendable funds and influence liquidity and profitability.

3. 3

   What is the Liquidity Coverage Ratio (LCR) and why is it important?

   LCR requires banks to hold high-quality liquid assets to cover 30-day net cash outflows under stress. It ensures short-term resilience and is a key Basel III metric monitored by RBI.

4. 4

   What are some common money market instruments a treasury analyst deals with?

   Mention Treasury Bills, Commercial Papers, Certificates of Deposit, Call Money, and Repos. Briefly state their typical maturity and issuer profile.

Practical Scenarios

1. 5

   If you notice a sudden spike in deposit withdrawals, how would you assess and respond to the liquidity impact?

   Outline steps: quantify outflow, check available liquid assets and borrowing lines, monitor LCR, and coordinate with ALM and risk teams. Suggest short-term funding options like repo or MSF.

2. 6

   How would you build a simple cash flow forecast for the next 30 days for a bank branch network?

   Describe using historical deposit and loan data, seasonal patterns, and scheduled payments. Mention categorising inflows and outflows, and updating the forecast regularly with actuals.

3. 7

   Suppose interest rates are expected to rise. How might that affect the bank's investment portfolio and what actions could treasury take?

   Explain that bond prices fall when rates rise, so portfolio value may decline. Treasury might shorten duration, hold to maturity, or use hedging. Mention monitoring of AFS and HTM categories.

4. 8

   You need to invest a short-term surplus of Rs. 10 crore for 15 days. What factors would you consider?

   Consider safety, liquidity, and return. Compare instruments like T-bills, CDs, and repos. Ensure compliance with RBI and internal investment policy, and match maturity with expected needs.

Behavioural and HR Questions

1. 9

   Why do you want to work in treasury, especially in a small finance bank?

   Show interest in hands-on exposure, learning across liquidity and risk, and contributing to financial inclusion. Avoid generic answers; link to the bank's growth and your analytical strengths.

2. 10

   Describe a time you worked with a team under a tight deadline. What was your role?

   Use STAR format: situation, task, action, result. Highlight coordination, prioritisation, and any tool (like Excel) you used to deliver accurately.

3. 11

   How do you handle pressure when multiple reports are due at the same time?

   Mention planning, breaking tasks into steps, communicating with stakeholders, and double-checking numbers. Give a brief example from college projects or internships.

4. 12

   Where do you see yourself in three years in this role?

   Express desire to deepen treasury knowledge, gain certifications like FRM or CFA, and take on more responsibility in ALM or risk. Align with the bank's growth path.

Regulatory and Risk Awareness

1. 13

   What are the key RBI guidelines a treasury analyst should be aware of?

   Mention CRR, SLR, LCR, NSFR, and norms on investment classification (HTM, AFS, HFT). Also refer to guidelines on call money, repo, and foreign exchange exposure limits.

2. 14

   What is interest rate risk in the banking book (IRRBB) and how is it managed?

   Explain that it arises from mismatches in asset-liability repricing. Management includes gap analysis, duration matching, and using derivatives like interest rate swaps.

3. 15

   How would you ensure data accuracy in treasury reports?

   Talk about reconciliation with core banking systems, maker-checker controls, automated checks, and documenting assumptions. Mention attention to detail and regular audits.