NAV-Margin Trade Finance Presented By : Sreedhar V
NAV Margin Trade Finance An end to end integrated solution with an ERP platform of Microsoft Dynamics NAVISION o A single platform that provides overall visibility across different financial products a client has subscribed for o Volume and financial implications of trade transactions including rejections and shortfall o Facility to perform parameter based risk analysis on specific clients including portfolio liquidation o Various MIS reports and analysis patterns for making effective decisions
Typical Financial Platform Process Layer Input Layer Loan Application Kit Central Data Repository KYC & Income dtls Broker Back Office Depository Participant Third Party Vendor Trade Details Stock Collateral Corporate Action Info Banks Bank Statement Stock Exchange Trading ID Price & Volume feeds Output Layer Finance Trade Credit Appraisal Sanctioned Credit Disbursement Accept/Reject Client Trades Trade Settlement Stock Holding Movement Accounting Interest Calc Books of Account Risk Management Data Interface Channel Portfolio Liquidation Risk and RBI repots
Key Focus Areas To cover the back office process starting from capturing customer portfolio information to setting up of customer KYC and approval of limits towards trade processing and management of risk and liquidation Effectively manage, and control the risk on portfolios towards various types of transactions done by its customers Detailed KYC and Client approval process Funding of poor quality of Trades
Key Focus Areas v Honoring un-qualified Fund/Security withdrawal. v Delay in client’s net worth monitoring. v Delay in corrective action/ recovery. v Non detection of client’s abnormal operational behavior
Process Flow Credit Appraisal Credit Disbursement Trade Settlement Accounting Risk Management Multi level Credit Approval Task Assignment to RMs Sanction/Welcome Letter Generation Auto Mail Alerts Trade Acceptance Trade Rejection Securities Payin/Payout Funds Payin/Payout DP Reconciliation Shortage/Auction Marking Corporate Action Handling DP Slip (Physical/Soft copy) Margin Receipt Funds Withdrawal (Normal/Fn. O) Tax Deducted At Source Profit and Loss Statement Portfolio Liquidation Client Categorization Scrip Categorization House/Client Level Restrictions
Credit Department v Loan Request entry v Loan approval with help of multilevel approval hierarchy v After approval, customer creation for on-going transaction v Mailers to customer at various stage of loan activation v v Sanction letter Welcome letter Rejection letter Closure letter v Interest rate reduction letter v Interest rate increase letter
Credit Department v Daily EOD status mailers to customers and respective braches v Client KYC v DSA Master v DSA Referral Pay out v Document attachments v Po. A DP and Bank Mapping
Settlement Department v Scrip master update v Customer DP account maintenance v POA/ Pledge status update v Daily reconciliation of POA/pledge account v Trade process acceptance as per customer exposure
Settlement Department v Slip generation at various stages in POA and pledge v Pay-in slip v Off-market transfer slip v Pledge confirmation slip v Pledge closure slip v Pledge invocation slip v Scrip withdrawal request creation and approval process v Auction Handling v Corporate Action upload v Daily NAV upload
Accounts Department v Customer bank account maintenance v In case of trade transfer letters for bank as per bank format v Pay-in letter v Pay-out letter v Amount withdrawal request and approval process v Interest calculation on daily basis v Interest posting as per agreement (Monthly/quarterly/half-yearly/yearly)
Accounts Department v Interest on interest or interest only on net loan choose facility per client wise v Various bank letters as per transaction type v RTGS letter v NEFT letter v Transfer letter v Cheque printing
Risk Management Department v Category differentiation for scrip v Scrip valuation on basis of scrip category v Client category to decide max benefit v Liquidation process v Liquidation of client in case of shortfall: v Liquidation trade in pro-client’s account v Transfer of scrip/ pledge invocation as per liquidation quantity v Distribution of liquidated amount as per client liquidation after trade acceptance v Allow special privileges for specific clients to help discounting features
Risk Management Department House level restriction to restrict all client to more excess quantity Client level restriction effective, which will decide quantity to be part of net value calculation Scrip & Cash release approval mechanism Shortfall reports and mailers Risk categorization and auto mailers on status.
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