पाठशाला Pathshala · धन Dhan, Money · Lesson 29 · Scale

Treasury: making the raised money work without risking it

The money from a round is runway, not an investment portfolio. Put it in three tiers by when you will need it, spread it across banks, and let the board approve the rules.

Pathshala, The Founder Library · 11 October 2026 · 7 min read

A row of steel safe doors with wheel handles and keys in their locks. — Photograph: cottonbro studio · Pexels

A company that has just raised ₹30 crore holds more cash than most of its founders have seen in one place. The temptation is to make it earn. The duty is to make sure it is all there, in reach, on the day each rupee is needed.

This lesson sets the purpose of treasury, divides the money into three tiers, compares the instruments and what can go wrong with each, shows what bank concentration did to startups in March 2023, gives a figure to allocate a round, and ends with the policy and the monthly report.

What treasury is for

For a startup, treasury has one job: to turn a lump of equity into a dependable stream of monthly cash for the length of the [runway](/library/runway-how-many-months-you-really-have). Its order of priorities is safety, then liquidity, then yield, and it is not close. A company burning ₹1.25 crore a month that earns an extra half a percentage point on ₹30 crore gains about ₹15 lakh a year, under four days of runway. A company that loses five per cent of the same money in a credit event loses five weeks. The arithmetic says to give up the last basis point for certainty every time.

That rules out most of what a wealth manager will offer. No equity or equity-oriented funds, no credit-risk or lower-rated debt, no long-duration bonds whose prices fall when rates rise, no structured products, no deposits with unrated companies, no lending to related parties. The money belongs to the plan the investors funded, not to a market view.

The three tiers: operating, reserve and strategic

Divide the cash by when it will be spent. Operating: the next three months of burn, in the main current account, with a sweep into deposits if the bank offers one, so salaries, GST and vendor payments never wait. Reserve: the next nine months, in instruments that can be turned into cash within a working day without loss: liquid and overnight mutual funds, and deposits maturing month by month. Strategic: everything beyond twelve months, in fixed deposits laddered to mature in the quarter each tranche will be needed, spread across banks.

The stepped walls of the Chand Baori stepwell in Rajasthan descending towards the water. — A stepwell kept water within reach at every level as the dry season went on. A treasury ladder does the same for runway. Photograph: Abhinav Sharma · Pexels

Take ₹30 crore and a burn of ₹1.25 crore a month, two years of runway. Operating holds ₹3.75 crore. Reserve holds about ₹11 crore, split between a liquid fund and deposits maturing from month four to month twelve. Strategic holds about ₹15 crore in deposits of six to twelve months at three banks, rolled over as each matures. Every quarter one deposit matures into the reserve tier and the reserve refills the operating account. The ladder is the plan, written in maturities.

The instruments, and what can go wrong with each

Bank deposits. Fixed rate, simple, and the obligation of one bank. Breaking a deposit early usually costs a penalty on the rate. Liquid and overnight funds. Mutual funds that hold very short money-market instruments; units are usually redeemed by the next working day. Since SEBI’s 2019 changes, Value Research reports, liquid funds must keep at least twenty per cent of their assets in liquid assets such as cash and government securities and charge a graded exit load on money withdrawn within seven days, and debt instruments are valued at market. They are not deposits: a fund’s value can fall if an issuer it holds defaults, which is why overnight funds, holding the shortest and safest paper, suit the most cautious part of the reserve. Government securities and treasury bills. The safest credit, but prices move with rates and selling before maturity takes time and an account; useful for a large strategic tier with a finance head to run it.

Read each fund’s portfolio before investing and every quarter after. Prefer large funds from established managers, avoid funds chasing yield with lower-rated paper, and spread the reserve across at least two funds.

Expect to be sold something cleverer. A relationship manager who learns a company has raised will offer arbitrage funds, corporate bond funds, market-linked debentures and portfolio management services, each with a slightly higher expected yield. Ask four questions of any product: how quickly can every rupee come back, what has to go wrong for the company to lose money, what happened to this product in the worst month of the last ten years, and who is paid how much for selling it. If the answers are not a day, a bank failure, nothing and nobody, it belongs outside the policy. Founders who say no to these offers are not being naive about returns. They are being precise about what the money is for.

Concentration: the lesson of March 2023

When Silicon Valley Bank failed in March 2023, the Minister of State for Electronics and IT said that Indian startups had held over a billion dollars of deposits there, about $200 million of which had moved to GIFT City within days. Those companies had done nothing reckless. They had kept the round where the investors banked, at one institution, and for a weekend nobody knew whether payroll would clear.

A wall of vintage safe deposit boxes with one door open. — Many boxes in one vault are still one vault. Spread the round across institutions and not just accounts. Photograph: Berna · Pexels

Indian deposit insurance offers little protection at a company’s scale. DICGC insures each depositor up to ₹5 lakh per bank, principal and interest together; deposits in different branches of one bank are aggregated, and deposits in different banks are insured separately. Everything above that at a given bank depends on the bank. So set a limit: no more than forty per cent of the company’s cash at any one bank once there is more than a few crore, at least two banks from the start, and only large scheduled commercial banks for the strategic tier. Keep a second operating account live and tested, with payroll able to run from it, so that a failure is an inconvenience rather than a crisis.

Allocate the round

Use the figure with your own cash, burn and rates. The tests are in the readouts: at least three months payable the same day, at least twelve months reachable by the next working day, and deposits spread so that no single bank failure takes a large part of the runway. Then look at the income line. It is real money but small against the runway, and no change in mix will alter that. That is the point.

Treasury is not where a startup makes money. It is where a startup makes sure the money it raised is still there in month nineteen.

Write the policy and get it approved

Investing the company’s funds is a board power. Section 179(3)(e) of the Companies Act lists it among the powers the board exercises by resolution at a meeting, and the section lets the board delegate it by resolution to a committee, the managing director or a principal officer, on the conditions it sets. So write a one-page treasury policy and have the board approve it: the purpose and the order of priorities; the three tiers and their sizes in months of burn; the permitted instruments and the forbidden ones; limits per bank and per fund; who may move money, with two signatories above a threshold and the maker-checker rule from [the controls lesson](/library/internal-controls-and-fraud-you-did-not-expect); and what is reported to the board.

Write the triggers in advance as well, so nobody improvises under pressure. If a bank’s rating is downgraded or it appears in the news for the wrong reasons, move new deposits elsewhere at once and let existing ones run off at maturity unless the board decides otherwise. If a fund holds paper that is downgraded, redeem within a week. If runway falls below the twelve months the reserve tier assumes, collapse the strategic tier into the reserve and tell the board. Rules written in a calm month are the only ones that work in a bad one.

Then delegate within it. The CEO or finance head should be able to roll a deposit or redeem a fund inside the policy without calling a board meeting, and should need the board for anything outside it. Investors will ask for the policy in diligence; many will have a template in their own portfolio guidelines worth borrowing.

The treasury report, every month

Add one page to the [monthly close](/library/monthly-close-and-mis-report). List every account, deposit and fund with its balance, rate, maturity and institution. Show months of burn in each tier against the policy, the share at each bank against the limit, and income earned. Flag any deposit maturing in the next ninety days and say where it will go. Read each fund’s latest portfolio for downgrades. Send the page to the board with the investor update each quarter, and redo the ladder whenever the burn plan changes by more than ten per cent.

Nothing here is legal, tax or investment advice. Deposit insurance and fund rules were checked on 11 October 2026; confirm rates, exit loads and tax treatment with your bank, fund house and chartered accountant before investing.