Every year Indian corporates, family offices and trusts park tens of thousands of crores in bank fixed deposits and liquid funds. The logic is sound: safety first, liquidity second, returns third.

Amit Singla's argument is that in chasing the first two, most treasuries never connect two things sitting right next to each other — the portfolio they already own, and what that portfolio is allowed to do.

The part that is straightforwardly true

Most treasuries already hold a mix: debt funds, equity funds, listed stocks, ETFs. Each is there for a reason — preservation, growth, liquidity.

Debt mutual funds carry structural advantages over an FD that are often overlooked. They mark to market, so a falling rate cycle shows up as gain rather than being invisible until maturity. There is no TDS on accruals. And the tax event is deferred to redemption rather than accruing annually.

Beyond that, holdings meeting SEBI's approved-securities criteria can be pledged as margin collateral without being sold. No liquidation, no disruption to the existing allocation, no fresh capital.

Where it becomes a judgement call

What Singla proposes building on that collateral is a conservative derivatives overlay, which he puts at 4–6% additional annual return. His own caveat is the useful part: anyone promising 20–30% as alpha on a conservative treasury strategy should, in his words, be shown the door.

We would add one of our own. An overlay is a strategy with a manager, an execution risk and a fee, and 4–6% is a projection rather than a track record you can look up. The collateral point stands on its own; the alpha claim is the author's.

By Amit Singla, founder and editor of MF Times. A version of this piece first appeared on Moneycontrol. Educational content only; not personalised investment advice. Derivatives carry risk of loss.