Financial Services
Analysis and recommendations on the Funds transfer pricing (FTP) framework
20 Apr 2023
A private sector bank wanted to understand the role of FTP, evaluate its existing FTP framework, incentivize businesses for sound and sustainable pricing, charge/ allocate statutory costs in a transparent and fair manner, and identify policy improvement areas that align with their scale and business profile.

Our approach
  • Conducted a comprehensive analysis of the client’s current FTP framework to identify its strengths, weaknesses, and opportunities for improvement
  • Examined the transfer pricing (bid/offer rates) of different asset and liability items to identify the likely causes necessitating a revision of the FTP framework
  • Conducted discussions with key stakeholders from various departments such as treasury, finance, branch banking, corporate banking, retail assets, etc. to understand gaps and pain points in the current framework
  • Benchmarked FTP framework used by the client against those of peer and leading banks to understand the industry-wide best practices
  • Incorporated the incentivization scheme of various products and factors such as LCR adjustments and PSL requirements into the FTP framework to streamline pricing structures at the product & customer segment level
  • Proposed appropriate liquidity premiums to be applied for floating rate loans in order to mitigate potential liquidity risks
  • Suggested and ranked multiple approaches to compute fund transfer price in accordance with the client’s unique context and growth prospects keeping in consideration the scalability of computation effort
  • Identified the various capabilities required to ensure the resilience of the FTP framework 
  • Proposed a governance framework with provisions for periodic review and audit of computational methodology
Praxis value delivered
  • Relevant framework adjustments: The new framework successfully aligned with the client’s unique nature and scalability requirements leading to better risk management and decision-making
  • Increased transparency: The transparency of the FTP framework was enhanced by periodically publishing it to all internal stakeholders and conducting regular checks to ensure stakeholder satisfaction
Do you want to turbocharge your business using digital technologies and processes? Write to us below.

Ready to talk?

I want to talk to your experts in:

We work with ambitious leaders and transformative clients who are defining the future. Together, we achieve extraordinary outcomes.

I have read the privacy policy and I agree to its terms.