A hospital group holds a Rs 400 crore surplus in bank deposits. It needs Rs 150 crore in 18 months and the rest is long-term. What would you recommend, and what are the risks and benefits?

Split the surplus by job: Rs 150 crore in a ladder of high-quality instruments maturing by month 18, and Rs 250 crore in a long-term sleeve of Rs 175 crore bonds and Rs 75 crore equity. Expected income rises from Rs 27.2 crore to about Rs 32.6 crore a year, Rs 5.4 crore more. The hospital money stays safe. The cost is volatility: in a bad year with a 30% equity fall and rates up 1 point, the portfolio would lose about Rs 7.0 crore.

A family saving for a wedding next year and for retirement in twenty keeps the two in different places, even if they sit in the same bank. Money with a date must be there on the date; money without one can accept swings in exchange for a higher return. Bhoomika's surplus is two pots. The Rs 150 crore for the hospital is a liability-matchedInvested so that the money matures when it is needed, removing the risk of having to sell at a bad price. sleeve; the Rs 250 crore is long-term money. Keeping both in 6.8% deposits is safe but pays the same low rate for two very different jobs.

Sleeve A: Rs 150 crore in treasury bills, certificates of deposit and top-rated short paper maturing at months 6, 12 and 18, yielding about 7.1%. Held to maturity, it cannot miss the payment; even a 1 point rise in rates dents its value by only about Rs 1.1 crore on the way. Sleeve B: Rs 175 crore of high-quality bonds at 7.4% and Rs 75 crore in equity index funds, a 30% equity share of the long-term money that a board can defend and that can sit through a bad year.

The benefit is about Rs 5.4 crore a year of expected extra return, with the hospital money as safe as it was in deposits. The risks sit almost entirely in sleeve B. Equity can fall 30% in a year, Rs 22.5 crore, and bonds lose about Rs 7 crore if rates rise 1 point. Because Bhoomika is listed, those swings may pass through its reported profit, and a hospital company reporting a treasury loss invites questions that deposit interest never does.

Name the conditions that make the recommendation safe to adopt. The board should approve a written treasury policy with limits on credit quality, issuer concentration and equity share; confirm the accounting and tax treatment of each instrument with the auditors, since both differ between deposits, bonds and funds; and agree that sleeve B is judged over five years, not quarter by quarter. If the board cannot accept a loss year in reported profit, the equity share should be lower or zero, and the recommendation still stands on the split.