In an exclusive interaction with Adlin Pertishya Jebaraj, correspondent of Finance Outlook, Rajeev Pawar, Head of Treasury at Ujjivan Small Finance Bank shares insights on navigating the current volatility in emerging markets and how treasury leaders can build resilience against market shocks through strategic hedging, technology adoption, and dynamic cash management. He explains how fintech and AI are transforming treasury operations by enabling real-time cash visibility, predictive forecasting, and faster risk detection in an increasingly complex regulatory environment. 

How would you characterize the current volatility in emerging markets, and what are the primary macroeconomic factors contributing to these conditions?

Markets today, especially in India are a bit like a 90s masala movie. There is action – we had an actual war and an ongoing trade war. There is drama – GST cuts, rate cuts, Russian oil, inflation and growth see saw. There is romance – or rather a fading bromance between world leaders!

The moving parts are many and ever changing.

Monetary policy suspense: The Oct policy spoke of lower inflation and slowing growth yet shied away from a rate cut. It did however announce a myriad of measures focused on boosting credit growth. But when or even if rates will be cut is anyone’s guess.

External shocks: A new day brings a new tariff. Goods, H1B, Pharma, even Movies! Linked to this is the push to reduce Russian oil purchases. Does the price impact of cheaper crude offset the tariff hit on exports to the US? Can one actually weigh a price-inflationary impact against rupee depreciating on account of falling FX inflows.

Domestic drama: Growth fears have had the positive fallout of GST rates being finally cut. Can a festival consumer driven demand revive the economy remains to be seen. The fact remains that capital formation is still low. No large infra structure or greenfield projects have been sighted either in the public or private space. Ironically, the Sparsh driven increase in government efficiency in cash management has actually led to free float in the banking system falling and to some extent has subdued growth. Government with one eye on the fiscal has also kept spending low. All this impacts growth.

Geopolitics: Political affiliations are fickler today than teenage romances. We have had our dalliances from the US eagle to the Chinese dragon and finally going back to the familiar Russian bear hug.

For a treasurer this uncertainty provides opportunity but also increases costs. The stakes become very high. Higher rates overseas and a weaker currency onshore lead to dollar outflows increasing hedging costs. Double guessing the RBI on the growth-inflation conundrum only increases borrowing costs.

Could you provide some examples of strategies to mitigate risk during rudimentary market disruption?

Risk mitigation is an always on exercise. Many strategies can be used.

Layered hedging: Combine vanilla forwards with options so you don’t lose sleep when USD/INR gaps overnight. 70-80% hedge ratio is like an umbrella, it’s boring until it starts pouring.

Natural offsets: Match foreign currency revenues with costs—classic desi jugaad to keep exposures balanced.

Liquidity buffers: Maintain a “rainy-season” cash cushion. Very apt when the monsoon itself is misbehaving or tax outflows cause a sudden drop in system liquidity. Diversifying borrowing sources is also a must.

Dynamic investment policy: Shorten duration on debt portfolios ahead of rate cuts to capture reinvestment upside, but stay nimble if the MPC springs a surprise.

How is technology reshaping treasury operations in emerging markets in cash management, risk vigilance, and forecasting?

Fintech and AI aren't buzzword words anymore. It's the problem solver for treasurers. Real time cash visibility via API driven banking links beats yesterday's spreadsheets. AI driven risk engines are available that flag INR volatility or crude oil spikes faster than you can say "repo rate." Predictive forecasting harnessing RBI data releases, weather models, and even social chatter are super useful for timing borrowings and reducing interest costs.

Also Read: Future of Corporate Finance: Emerging Trends in Treasury Solutions and Cash Management for MNCs

How do cross-border regulations and compliance factors influence treasury planning in emerging markets?

Compliance and regulations are your friends. Never fight them. Follow the RBI rulebook always. ECB borrowings, LRS flows, and hedging limits can change with one circular. Stay informed. Global guardrails are important. FATF, sanctions, and tariffs mean even a make in India export champion must think like a multinational. Transfer Pricing, GST and custom duties matter because the taxman cometh for every cross-border transaction. Robust documentation and proactive localization policies are non negotiable in today's market.

What advice would you give to future treasury leaders to instill resilience against market shocks?

Be data crazy. Inflation prints, MPC minutes, and crude price charts should be your morning masala. Scenario planning is key. Weather shocks, tariff hikes, or a sudden equity slump should all be thrown in your AI gaming mix so you can stay two steps ahead. Cultivate central bank EQ by reading RBI signals and market sentiment and acting on them. Understand the Real Economy, including what a poor monsoon means for rural demand, how a GST cut impacts supply chains and why the middle class buying gold is an economic indicator. Context is everything. Be the calm voice in the C-suite during chaos. The ability to communicate risk clearly, succinctly and without panic to the board is crucial when markets start going berserk.

In short, India's treasury landscape is a high energy marketplace where volatility is the only constant. Keep your hedges sharp, your tech sharper and your liquidity high.

About the Author

Rajeev Pawar is the Head of Treasury at Ujjivan Small Finance Bank. He is one of the country’s leading Fixed Income investors and writes extensively on markets. He is a Banker with more than three decades of experience and has held leadership positions with domestic and international banks across Southeast Asia, India, Middle East, and Africa. He has a deep interest in and understanding of Rates, Credit and FX Markets.