A Project report On (Study of cash MANAGEMENT wITH icici bank

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Submitted in the partial fulfillment of Post Graduate Diploma in Business Management

ABSTRACT
In a business done financially affects cash eventually. Cash is to a business is what blood is to a living body. A business cannot operate without its life-blood cash, and without cash management, there may remain no cash to operate. Cash movement in a business is two-way traffic. It keeps on moving in and out of business. The inflow and outflow of cash never coincides. Important aspect which is unique to cash management is time dimension associated with the movement of cash. Due to non-synchronicity of cash inflow and outflow, the inflow may be more than the outflow or the outflow is more than the inflow at a particular point of time. Left to shift cash flow is apart to follow monotonic pattern, and showers of cash may be heavy, scanty or just normal. Hence there is a dire need to control its movement through skillful cash management. The primary aim of cash management is to ensure that there should be enough cash availability when the needs arise, not too much, but never too little.

CONTENTS
SL. NO. PARTICULARS

1 CERTIFICATE FROM THE CORPORATE GUIDE 2 CERTIFICATE FROM THE FACULTY GUIDE 3 DECLARATION 4 ACKNOWLEDGEMENT 5 EXECUTIVE SUMMERY 6 ON JOB TRAINING 7 7 P’s OF BANKING SECTOR 8 CORPORATE PROFILE  Overview  History  Board Members  Board Committees  Graphical Representation  Financial position  Competitors 9 CASH MANAGEMENT SERVICE Introduction CMS Services Purpose of CMS Types of CSM in ICICI Bank

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CSM

Benefits from Ele.Payment  about Mutilated Currency Notes  Mgt  Cash mgt: Empirical Analysis 10 RESEARCH METHODOLOGY 11 RESULT AND ANALYSIS 12 CASE STUDY  Case Study  Analysis of the Case Study 13 LIMITATIONS OF THE REPORT 14 CONCLUSIONS AND RECOMMENDATIONS  Conclusions  Recommendations 15 REFERENCES 16 APPENDIXES  Questionnaire Treasury Mgt Vs Cash Details

The matter embodied in this project work has been submitted earlier for the award of any degree to the best of my knowledge and belief. .CERTIFICATE FROM THE CORPORATE GUIDE This is to certify that the summer training project entitled “Study of cash management at ICICI Bank” done by student of has worked under my guidance.

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ACKNOWLEDGEMENT I sincerely thank my corporate guide Mr. ICICI Bank) for giving me this opportunity to work in their esteemed organization and helping me for completing the project in a successful manner. I am thankful to for her cooperation to complete my project and giving me the best of her job experience. Without their encouragement and help. Bhubaneswar) and Ms. Nayapalli. this project would have been incomplete. . Last but not the least I am thankful to almighty God. Sanjeeb Ganguly (Manager of ICICI Bank.Lipsa Mohanty (Senior Officer. my family and my friends for their love and moral support.

EXECUTIVE SUMMARY Title of the project:- “Cash Management System” Name of the organization:- ICICI Bank Name of the institute:MANAGEMENT NSB SCHOOL OF BUSINESS Project period:- 27th April 2009 to 08th June 2009 .

And also how safety the cash manage in bank. ➢ To explore the future prospects of ICICI cash management. CONCLUSION: My OJT has given me a good experience in learning how to manage cash. It helps us to know more about the topic that is being undertaken and helps us to explore future prospects of that organization. 7 P’S of BANKING SECTOR . I learn a lot from this training and I faced a lot of problem and also I can solve the problems easily.OBJECTIVES: Objectives of a project tell us why project has been taken under study. how to receive & payments etc. ➢ To learn about various aspects of ICICI BANK cash management. ➢ To analyze the history of ICICI bank. in bank. Basically it tells what all have been studied while making the project. ➢ To gain insights about functioning of ICICI cash management. how to handle cash.

PROCESS 7. PRICE MIX 3. PRODUCT MIX 2. PROMOTION 5. PLACE 4. The 7 P’s are: 1. PHYSICAL EVIDENCE CORPORATE PROFILE OVERVIEW . PEOPLE 6.It is very important for any bank to identify the 7 P’s of services so was understands their customers better and provide them with best of service.

Singapore.ICICI Bank is India's second-largest bank with total assets of Rs. 2009. South Africa. 2009 and profit after tax Rs. The Bank has a network of 1. Thailand. Sri Lanka.58 billion for the year ended March 31. Bangladesh. Bahrain.443 branches and about 4. Hong Kong.793. Russia and Canada. branches in United States. . 3. life and non-life insurance. Malaysia and Indonesia. The ICICI Bank currently has subsidiaries in the United Kingdom. 37.01 billion (US$ 75 billion) at March 31. Our UK subsidiary has established branches in Belgium and Germany.721 ATMs in India and presence in 18 countries. China. Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking. venture capital and asset management.

Hong Kong and Sri Lanka. South Africa. Russia and the UK (the subsidiary through which the hisave savings brand is operated). branches and representatives offices in 18 countries.712. The bank's current and savings account (CASA) ratio increased to 28% in 2008 from 25% in 2007. Overseas. including an offshore unit in Mumbai. 1. offshore banking units in Bahrain and Singapore.31 crore in Q2 September 2008 over Q2 September 2007. the Bank is targeting the NRI (Non-Resident Indian) population in particular. an advisory branch in Dubai. 9.29% increase in total income to Rs. ICICI Bank now has wholly-owned subsidiaries.014.ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). branches in Belgium. HISTORY . Thailand. ICICI reported a 1. Malaysia. The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. and representative offices in Bangladesh. Indonesia.21 crore on a 1. the United Arab Emirates and USA. This includes wholly owned subsidiaries in Canada. China.15% rise in net profit to Rs.

 2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that 2005 ICICI acquired Investitsionno-Kreditny Bank (IKB). ICICI integrated the group's financing and banking operations. and in the UK it established an alliance with Lloyds TSB. 1955 The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank. car loans etc. After receiving all necessary regulatory approvals. formerly Industrial Credit and Investment Corporation of India. the Government of India and representatives of Indian industry. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai. ICICI Personal Financial Services Limited and ICICI Capital Services Limited. to undertake normal banking operations . and in the UK it established an alliance with Lloyds TSB. Bank of Madura was a Chettiar bank. head office in Balabanovo in the Kaluga region. into ICICI Bank.  2002 The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI. and had acquired Chettinad Mercantile Bank (est.  1994 ICICI established Banking Corporation as a banking subsidiary. Later. credit cards. 1933) and Illanji Bank (established 1904) in the 1960s.  2001 ICICI acquired Bank of Madura (est. both wholesale and retail. 1943). ICICI founded a separate legal entity.  2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK). and with a branch in Moscow. ICICI Banking Corporation was renamed as 'ICICI Bank Limited'. India and South Africa.taking deposits. with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. a Russia bank with about country. Also in 2002. ICICI renamed the bank ICICI Bank Eurasia. into a single entity. . ICICI Bank.  US$4mn in assets. ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank. 2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK). ICICI started its international expansion by opening representative offices in New York and London.

Also. BOARD MEMBER OF ICICI BANK . ICICI established a branch in Dubai International Financial Centre and in Hong Kong.  in Maharashtra State. Petersburg. which was headquartered in Sangli. ICICI opened 2007 ICICI amalgamated Sangli Bank. in Belgium. Jakarta. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. representative offices in Bangkok. ICICI also received permission from the government of Qatar to open a branch in Doha. this time in St. 2008 The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch.  2006 ICICI Bank UK opened a branch in Antwerp. and Kuala Lumpur. and which had 158 branches in Maharashtra and another 31 in Karnataka State. ICICI Bank Eurasia opened a second branch.

Prem Watsa Ms. Executive Director & CEO Mr. Sridar Lyengar Mr. M. K. Anup K.Ramachandran Mr. Mittal Mr. N.S. V. Kamath. Sonjoy Chatterjee. Executive Director BOARD COMMITTEES . Vijayan Mr.S.Sinha Prof. T. Chanda Kochhar. Pujari Mr.V. Lakshmi N. Subrahmanyam Mr.K. Chairman Mr. Narendra Murkumbi Dr. K. Deputy Managing Director Mr. M. Managing Director & CEO Mr.S. Sandeep Bakhshi. Executive Director Mr. Ramkumar. Marti G. Kannan.• • • • • • • • • • • • • • • Mr.

Anupam Puri Mr.K. K. P. Prem Watsa Ms. S. Sinha Prof. Chanda Kochhar Fraud Monitoring Committee Mr. K. N. V. M. Marti G. Narendra Murkumbi Mr. Chanda Kochhar Customer Service Committee Mr. Kamath. Narendra Murkumbi Ms. Sharma. N. Kannan Risk Committee Mr. V. Ramkumar Mr. M. Chairman Mr. Marti G. K. Alternate Chairman Mr. Kamath. Narendra Murkumbi Mr.K. M. Chanda Kochhar. Chairman Mr. Sandeep Bakhshi Share Transfer & Shareholders'/ Investors' Grievance Committee Mr. K. Narendra Murkumbi Mr. Chairman Mr. K. Sharma Mr. Sinha Ms. Kamath. V. Sridar Iyengar Prof. Sharma. P. M. K. M . K. K. Sharma Mr. P. Sandeep Bakhshi Mr. M. Kamath Mr. Sharma. Subrahmanyam Mr. Chairperson Mr. Narendra Murkumbi Board Governance & Remuneration Committee Mr. Chairman Mr. Chairman Mr. V. V. Chanda Kochhar Mr.Audit Committee Mr. Kannan Mr. S. Chairman Mr. Kamath Mr. K. M. Sridar Iyengar. M. Subrahmanyam Credit Committee Mr. Sonjoy Chatterjee GRAPHICAL REPRESENTATION OF ICICI GROUP AND SOME GROWTH REPORT OF ICICI BANK . Chanda Kochhar Committee of Directors Ms. Sharma. Sinha Ms.M. Chairman Mr. K. V.

ICICI GROUP FINANCIAL POSITION Profit & loss Account .

587.537.862.30 759.156.45 623.22 3.793.50 544.60 6.28 -2.18 4.45 3.55 22.43 23.95 7.741.403.727.110.60 84.358.79 3.467.29 632.570.10 1.29 840.058.41 601.02 3.750.36 2.95 984.517.78 3.112.73 4.69 8.43 2.00 115.50 1.22 .63 4.89 590.73 16.24 578.50 16.70 149.305.679.33 106.88 522.082.61 4.10 4.96 9.92 28.22 3.484.53 2.55 28.557.31 17.52 11.07 3.128.532.05 0.728.706.98 2.08 1.71 1.13 17.995.17 4.67 3.31 2.63 1.12 65.46 3.39 1.650.457.735.946.58 5.51 0.102.92 4.17 556.194.078.10 2.51 16.00 2.49 0.00 1.611.90 1.157.78 448.73 5.82 5.540.092.25 6.597.73 4.96 90.007.12 2.838.227.31 39.83 11.248.56 309.32 10.07 2.269.772.78 2.25 2.08 2.17 153.46 737.616.35 5.60 23.349.66 901.005.75 1.276.447.20 2.35 28.Mar ' 96 Income: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 135.94 466.335.778.85 65.

83 350.34 350.02 350.75 0.68 350.112.00 889.00 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 .00 616.Balance Sheet Sources of funds Owner's fund Equity share capital Share application money Preference share capital 1.00 736.00 899.40 350.

547.114.64 -14.487.551.65 1.818.87.639.20 7.298.357.78 80.16 1.116.62 23.78 68.66 91.107.227.694.85 3.24 7367.108.525.38 -11.94 71.99 1.228.394.30 5.16 6130.469.15 15.67 8898.090.17 99.316.033.14 3.85 38.58 2.12.77 42.62 1.13 8992.11.91.79 25.30.99 50.585.115.71 147.57 1.911.968.257.61 4.26 - - - - 2.108.019.55.487.676.49 -9.34 6.39 5.038.35 42.99 9.00 2.895.45 1.280.987.454.38 1.84 5.510.19 1.16 18.86 21.642.89 66.34.Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds 45.129.56 2.742.396.03.813.923.75 76.99.92 21.16 11.341.91 11126.927.09 -10.981.21 .44.42 189.920.41 93.14 Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets.04 96.79 4.413.251.375.65.20 1.17 -8.07.980.311.52 37.53 23.083.173.46 82.16 2.771.05 2.11 4. loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs) 4.765.797.718.61 7.41 1.88 11.96 - 44.090.431.036.056.87 31.01.90 1.

06 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 .37 26.56 26.26 27.78 41.22 35.00 42.48 28.30 39.37 42.29 33.50 36.75 27.50 34.59 40.64 10.51 7.Ratios Mar ' 08 Per share ratios Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) 36.19 28.50 36.36 34.56 11.23 8.97 37.55 35.56 8.25 35.47 35.00 51.76 35.71 35.

94 0.33 11.12 29.98 11.22 270.55 249.79 82.84 64.64 417.35 70.08 6.08 66.47 20.45 199.32 21.39 38.72 0.17 37.64 - 0.62 0.08 6.01 5.61 0.43 1.47 2.04 - 0.42 - 0.99 10.55 11.30 1.02 7.46 18.67 18.80 70.12 1.44 13.85 63.51 11.05 27.63 17.04 8.40 11.14 0.43 106.85 52.14 15.48 31.81 12.66 15.37 270.95 5.94 62.41 10.80 8.50 9.71 346.13 2.64 354.24 22.20 20.99 15.58 36.36 65.50 0.98 - 0.54 18.55 10.67 130.67 187.18 - 33.) Net operating income per share (Rs) Free reserves per share (Rs) Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) Leverage ratios Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio Liquidity ratios Current ratio Current ratio (inc.90 66.26 0.01 9.10 4.69 0.25 65.83 2.89 28.10 6.43 56.45 12.52 249.61 0.25 52.69 110.51 0.Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.52 4.31 12.34 1.12 17.52 0.35 160.82 72.70 130.98 72.10 14.64 16.51 33.38 14.25 1.09 4.01 7.36 .49 28.97 70.27 15.24 170.35 170.55 196.37 316.08 27.22 34.81 8.34 13.87 193. st loans) Quick ratio Inventory turnover ratio Payout ratios Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio Coverage ratios Adjusted cash flow time total debt Financial charges coverage ratio 417.45 11.30 12.12 13.19 62.59 71.

20 1.83 - 0. in raw mat. risk management.80 - 4. The banking sector has improved manifolds in terms of capital adequacy. etc.000 domestic and 70 foreign offices and . charges cov.33 1. profitability. Sum of the competitors of ICICI bank from last few years are State Bank of India.08 0.43 0. exposure limits.83 COMPETITORS The financial sector in India has become stronger in terms of capital and the number of customers.78 - 6. It has network of more than 14.ratio (post tax) Component ratios Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp.22 1. asset classification. Canara Bank and HDFC Bank. Exposure to worldwide competition and deregulation in Indian financial sector has led to the emergence of better quality products and services.82 - 5. income recognition. Reforms have changed the face of Indian banking and finance. consumed Long term assets / total Assets Bonus component in equity capital (%) 1.12 0. Citibank. at higher productivity and efficiency.59 0.Fin.80 0. It has become globally competitive and diverse aiming. investment fluctuation reserve. provisioning.40 1. The details of the competitors are as follows: • State Bank of India was established in the year 1806.31 4.

1. loans.5 billion in assets and approximately 120.500re in the United States. Net Profit for the year ended March 31. ATM network. cash management. maintains product quality and has set global standards for itself. . Debit Cards. • HDFC Bank Limited was incorporated in August 1994. Credit cards. The products and services offered by the bank are Loans.000 new customers in the state. Online services.branches. Private Banking. It is an International bank with its operations spreading across many countries.400 offices and ATMs are over 5. Wealth management bank has a Pan India network of 758 branches in 325 cities and over 1716 ATMs. foreign exchange. The new infrastructure serves as the bank's backbone. Payment Services. It has more than 100 branches all over the countries and territories around the world. mergers. Loans. The new infrastructure has enabled the bank to further grow its ATM network with plans to add another 3. when a group of New York merchants came together to found it. It provides various strategic financial advisory services including acquisitions. 2006 was Rs. etc. Investment & Insurance. Internet Banking etc. The bank has corporate governance and aims to attain fairness for the stakeholders.000 by the end of 2007 raising the total number to 8. financial restructurings. where half of its 1. Forex Services. Citibusiness.600 but it has 7236 numbers of ATMs. NRI services. etc. It has $3. Prepaid Cards.saving.141 crores. such as the IP telephone network. Some of the products & services offered by the bank are Accounts & Deposits .Credit Cards. Investment. The Banking. • The Citibank was incorporated in the year 1812. Cards . It has technical expertise. carrying all applications. Internet banking and internal e-mail. Insurance services. current & fixed deposits.

CUSTOMERS This is a common believe among the customers that.• Canara Bank was established in 1906 . 2 trillion. along with 13 other major commercial banks of India. without waiting for the bank to approve the . It has a network of 2542 branches. However. Its head office is located in Bangalore. especially in the small and medium sector. was nationalized on 19th July. spread over 25 States/4 Union Territories of India. The bank. by the Government of India. with a total business of about Rs. In terms of business it is one of the largest nationalized commercial banks in India. Typically. this business segment operates by availing themselves of overdraft facility against current accounts to meet the credit requirements. 1969. India. credit cards are no longer tools of personal finance. ICICI's credit card offers them credit for short periods. They provide an alternative means of raising working capital for companies.

e. • Similarly many customers say they have been paying annual fee on different companies like Citibank and Standard Chartered bank credit cards for eight years. When we approach them or create an awareness of future card of ICICI Bank. It is a life time free card. who can use the card in all the retail stores of future group. they try to give some reasons like they don’t have time or they are busy.overdraft. This card provides lots of benefits and facilities to the customer. Due to which the customers have some of the follows reactions: • Most of the customers say that when they took a home loan from ICICI Bank. These customers have the impression that the products of this bank must be having several hidden charges which are reveled later on. Due to recent controversy with ICICI bank the customers have lost faith upon this bank. Future card is more beneficial then other credit cards. But they also have been waiving their fee for the last two years. at the time of your survey we found that people where more interested to know about this card. They have got an SBI credit card free. the credit card which is recently launched by ICICI Bank i. got a credit card free shortly thereafter. • The customers believe that. without asking for it or having to fill any form. even without asking for it. But this facility is not possible in case of ICICI bank credit card. CASH MANAGEMENT SERVICE Introduction: .

a process known as positive pay. allowing employees to send wires and access other cash management features normally not found on the consumer web site. since it issues so many checks it can take a lot of human monitoring to understand which checks have not cleared and therefore what the company's true balance is. but also which have not.Cash management is a marketing term for certain services offered primarily to larger business customers. zero balance accounting. but it is more often used to describe specific services such as cash concentration. The following is a list of services generally offered by banks and utilized by larger businesses and corporations:  Account Reconcilement Services: Balancing a checkbook can be a difficult process for a very large business. banks have developed a system which allows companies to upload a list of all the checks that they issue on a daily basis. Cash Management Services offered. . It may be used to describe all bank accounts (such as checking accounts) provided to businesses of a certain size. and automated clearing house facilities. private banking customers are given cash management services. More recently. To address this. banks have used this system to prevent checks from being fraudulently cashed if they are not on the list. instead of asking its employees to deposit the cash. so that at the end of the month the bank statement will show not only which checks have cleared. This enables managers to create and authorize special internal login credentials. Sometimes.  Armoured Car Services: Large retailers who collect a great deal of cash may have the bank pick this cash up via an armored car company.  Advanced Web Services: Most banks have an Internet-based system which is more advanced than the one available to consumers.

To help correct this problem. etc. and wire transfers in and out. checks. they offer transaction-specific details on all forms of payment activity. This is the primary use of money market mutual funds. investments. as well as those at other banks. payee. banks developed a system where each store is given their own bank . with exactly the same specifications as listed in the register (amount.g.  Sweep accounts: are typically offered by the cash management division of a bank. it would be impossible to know which deposits were from which stores without seeking to view images of those deposits. serial number. This allows them to earn interest overnight. Companies with large numbers of stores or locations can very often be confused if all those stores are depositing into a single bank account. They include information on cash positions as well as 'float' (e. ACH (automated clearinghouse debits and credits). The bank therefore will only pay checks listed in that register. Balance Reporting Services: Corporate clients who actively manage their cash balances usually subscribe to secure web-based reporting of their account and transaction information at their lead bank. Traditionally.. checks in the process of collection). including deposits. excess funds from a company's bank accounts are automatically moved into a money market mutual fund overnight. These sophisticated compilations of banking activity may include balances in foreign currencies.  Zero Balance Accounting: can be thought of as somewhat of a hack. etc.  Positive Pay: Positive pay is a service whereby the company electronically shares its check register of all written checks with the bank.). This system dramatically reduces check fraud. and then moved back the next morning. Finally. Under this system.

where payments are issued through a remote branch of a bank and customer is able to delay the payment due to increased float time. requiring no longer for transmission than a telephone call. U.account. A bank wire transfer is a message to the receiving bank requesting them to effect payment in accordance with the instructions given. or by a transfer of cash at a cash office. This early knowledge of daily funds requirement allows the customer to invest any surplus in intraday investment opportunities. Therefore. Bank wire transfers are often the most expedient method for transferring funds between bank accounts. This is different from delayed disbursements. This allows the company to look at individual statements for each store. typically money market investments. but all the money deposited into the individual store accounts are automatically moved or swept into the company's main bank account. typically early in the day. The message also includes settlement instructions.S. The actual wire transfer itself is virtually instantaneous.  Wire Transfer: A wire transfer is an electronic transfer of funds.  Optimum Utilization of Operating Cash: .  Controlled Disbursement: This is another product offered by banks under Cash Management Services. Wire transfers can be done by a simple bank account transfer. The bank provides a daily report. banks are almost all converting their systems so that companies can tell which store made a particular deposit. zero balance accounting is being used less frequently. that provides the amount of disbursements that will be charged to the customer's account. even if these deposits are all deposited into a single account.

If one does the autopsies of the businesses that failed. which it may encounter. he would find that the major reason for the failure was their usability to remain liquid. thus assisting it to regulate further cash flow movements.  Economical Borrowings . Cash flow is a circle. This can be achieved by making a proper analysis of operative cash flow cycle along with efficient management of working capital. If this cash surplus is deployed judiciously cash management will itself become a profit centre. Lack of cash planning results in spasmodic cash flow. efficient utilization and effective conversation of its cash resources.  Cash Management Techniques: Every business is interested in accelerating its cash collections and decelerating cash payments so as to exploit its scarce cash resources to the maximum. It helps in the attainment of optimum level of liquidity.Implementation of a sound cash management programme is based on rapid generation. There are techniques in the cash management which a business to achieve this objective. Liquidity has an intimate relationship with efficient utilization of cash.  Profitable Deployment of Surplus Funds Due to non-synchronization of ash inflows and cash outflows the surplus cash may arise at certain points of time. much depends on the quantum of cash surplus and acceptability of market for its short-term investments. The quantum and speed of the flow can be regulated through prudent financial planning facilitating the running of business with the minimum cash balance.  Cash Forecasting: Cash forecasting is backbone of cash planning. It forewarns a business regarding expected cash problems.  Liquidity Analysis: The importance of liquidity in a business cannot be over emphasized. However.

.Another product of non-synchronization of cash inflows and cash outflows is emergence of deficits at various points of time. Rising of funds at minimum cost is one of the important facets of cash management. A business has to raise funds to the extent and for the period of deficits.

3. Having funds in-hand is better than having accounts receivable. To properly time disbursements. A receivable. Funds that are not needed to cover expected transactions can be used to buy back outstanding debt (and cease a flow of funds out of the Treasury for interest payments) or can be invested to generate a flow of funds into the Treasury’s account. For other payments. The cash is easier to convert immediately into value or goods. such as vendor payments. there is no cash management decision. such as Social Security payments. discretion in timing is possible. Treasury is threefold: 1. Once funds are due to the Government.S. Minimizing idle cash balances requires accurate information about expected receipts and likely disbursements. It serves as the means to keep an organization functioning by making the best use of cash or liquid resources of the organization. 2. Every dollar held as cash rather than used to augment revenues or decrease expenditures represents a lost opportunity. To deposit collections timely. an item to be converted in the future. Some payments must be made on a specified or legal date.Purpose of Cash Management Cash management is the stewardship or proper use of an entity’s cash resources. The function of cash management at the U. For such payments. they should be converted to cash-in-hand immediately and deposited in the Treasury's account as soon as possible. . often is subject to a transaction delay or a depreciation of value. To eliminate idle cash balances.

4. leveraging the float between faster collections and just-in-time payments. TYPES OF CASH MANAGEMENT SERVICES IN ICICI BANK There are two types of Cash Management Services they are as:  COLLECTIONS :ICICI Bank's Cash Management Services helps you make optimum use of your working capital. . CMS solutions are customized to your specific needs for the most productive use of your cash flow. One way vendors can do this is to offer discount terms for timely payment for goods sold. They want to accelerate collections.Local cheque collections(LCC) and 2. You get customized daily transaction reports and online reports. efficient collections. The collection services are of two types: 1.Upcountry cheque collection (UCC). Local Cheque Collections (LCC) – Internet Clear Collect & Internet Swift Collect. ICICI Bank’s vast network across the length and breadth of the country uses superior technology based solutions to deliver speedy.Government vendors face the same cash management needs as the Government.

per instrument.Rs 10/. competitive pricing and customized MIS.to Rs 30/.maximum of Rs 500/. flexible day arrangement. 5.maximum of Rs 50/. This service includes location wise MIS.  PAYMENTS:ICICI Bank's Cash Management Services helps you make optimum use of your working capital. Processing Fees & Other Charges Processing Fees for CMS(cash management system) Facilities : 3% Other Charges: Charges would be subject to volumes & value of collections / disbursements & Locations for pickup with a maximum limit of Rs.per instrument. Upcountry cheque collection (UCC) – Internet smart Collect. we offer collection facility for local cheques from more than 340 own branch locations apart from over 315 tie-up locations and providing funds centrally on guaranteed basis. we offer flexible day arrangement. Under UCC. competitive pricing and customized MIS. which is available online too. which a customer can draw on any location in India and deposit at more than 340 ICICI Bank centers. 10/. We offer courier pick-up facility. We offer a huge network of more than 4.per ‘000 subject to minimum charges per instrument. Under this product. Minimum Charges . This network includes our own branch network at more than 340 locations apart from our tie-up locations.Under LCC. Internet quick Collect & Internet Anywhere Collect. leveraging the float between faster collections and just-in- .900 locations covering the length and breadth of the country.per instrument Cheque Return Charges . we offer collection facility for upcountry cheques. Courier Charges .

fund transfers. So you can leave the burden of bulk demand drafts and pay orders. Benefiiciry advices. Our vast network across the length and breadth of the country uses superior technology based solutions to deliver speedy. At Par Payments – Internet Safe Pay Make payments through dividend warrants. Fund Transfers. interest warrants. etc. These warrants are payable at par at the centers/locations selected by you. dividend and interest warrants. You get monthly reconciliation statement .time payments. A secure technology platform to meet bulk payment requests ERP integration. from client quickly. Cheque writing. You also get customized daily transaction reports and online reports for complete MIS. DDs can be issued payable at more than 540 locations in India. efficient payments. Payments/Internet Multi Pay:Under payments. Our solution is customized to your needs. redemption warrants. refund orders. who offers the following services? • • • • • • • • Bulk DD/PO printing. Remote printing of pay orders at 46 major centers. You can avail of this service through over 340 ICICI Bank locations and 200 correspondent bank locations. cheque writing and more to ICICI Bank.

I-Safe Pay offers you a complete solution for executing your payments through different modes including Warrants. and allow companies to limit access to these funds to authorized . Electronic Funds Transfer (EFT) and card payments. Several of the trends in cash flow forecasting favor the use of electronic payment products like RTGS. ECS. The new forecasting techniques also suggest use of electronic payments. Cash Management to benefit from Electronic Payments The new electronic payment products and services offer the corporate clients an improved bottom line by helping manage cash requirements. Swift Remittances and Foreign DD.showing the account status and unpaid list of warrants on a monthly basis. It helps corporate to make the best use of their funds and provides an effective means of managing their financial requirements. Electronic payments and cards provide control over incoming funds. because they offer disaggregated revenue and spending data that can easily be categorized and studied. Improved technology and systems integration makes it more attractive to use electronic payment products because these methods of payment can be incorporated into firm-wide computing systems. Direct Credit. Demand Drafts / PO.

From the perspective of a Corporate. Banknet Fourth Annual Conference on Payment Systems in Mumbai. materials. because these payments are easier to document and provide an audit trail. better management of cash flow. EFT. NEFT. limiting corporate purchases to electronic payments makes it easier for firms to monitor cash outflows and prevent unauthorized expenditures. Linking of electronic payment systems like RTGS.parties. India on 16 January 2008will discuss on topics like: How innovations in the payments world could shape cash management. Also it gives a great deal of freedom from more costly labor. and financial planning due to swift bank payments. Banknet will also release results of “Bank Customer Survey on Payment Systems” at the conference. the electronic payment systems ensure speed and security of the transaction processing chain. In addition. SWIFT etc in cash management etc. inventory. . from verification and authorization to clearing and settlement. and accounting services that are required in paper-based processing. How can banks and corporate facilitate one another's business.

The Mumbai-based BoI has its cash management service available at 29 operating branches and 11 polling branches. BoI expects a Rs 2.000 branches for the latter’s cash management services.BANK OF INDIA(BoI) & ICICI Bank Tie Up For Cash Management The state-owned Bank of India (BoI) has entered into a strategic correspondent banking arrangement with ICICI Bank for making use of the former’s wide branch network covering 1. . More centres are being set up to provide wider coverage to corporates.000-crore turnover through the arrangement which will generate fee-based income for it.

The bank is also in the advanced stage of covering another 80 branches within the network. Meanwhile. The bank has already commissioned 48 ATMs (both on-site and off-site) and another 102 ATMs are at various stages of implementation through an outsourcing model.ICICI Bank. BoI has a tie-up with ICICI Prudential Life Insurance — the insurance subsidiary of ICICI Bank — to provide reference of its customers to the life risk firm. The second largest bank in the country is also one of the top 12 internet banks in the world. . Recently. BoI charges a referral fee for the service. it took over two branches of StanChart Grindlays in Shimla and Darjeeling with a deposit base of over Rs 100 crore. Bank of India has been constantly exploring uncharted viable and profitable business opportunities. Multi-branch banking project of the bank has been extended to cover around 194 branches in five cities which will give the operational flexibility to the customers. which will be expanded to other centers in a phased manner. covering 70 branches. with its network of 409 branches and extension counters. The bank has taken several initiatives in providing value additon through various products and services to satisfy the needs of the customers using technology to its full advantage.000 ATMS. Well distributed branch network and wide customer base are the bank’s strength. The scheme is being piloted at seven centers. These are being leveraged for generating new business to augment fee income. BoI has entered into a strategic tie-up with the Securities Trading Corporation of India in facilitating secondary market sale of government securities to retail investors through the bank’s branches. is making efforts to spread into larger part of the country via correspondent-banking relationship with more public sector banks to implement its retail focus. (another 100 ICICI centres will be converted into branches in the future) and over 1.

1975. Refund value of such notes in exchange is. however.SOILED AND MUTILATED CURRENCY NOTES Members of public are hereby informed that the Reserve Bank of India (RBI) has authorized all branches of public sector banks and all currency chest branches of private sector banks to accept and exchange all types of soiled/mutilated notes of all denominations. With a view to render better service to the public the exchange facility for mutilated notes is also offered by RBI through TLR (Triple Lock Receptacle) covers. paid as per RBI (note Refund) Rules. Members of public can obtain from the Enquiry Counter of all the Regional offices of RBI such TLR .

mutilated etc. Soiled Notes Soiled notes are those which have become dirty and slightly cut. are also treated as soiled note. Mutilated notes can also be sent to any of the RBI Offices by registered/insured post.10 and above which are in two pieces. i. Persons holding such notes may approach the Officer-in-Charge of the Claims Section. . not have passed through the number panels. Issue Department of the Reserve Bank for this purpose.e. This box is kept at the Enquiry counter at each Issue Office of RBI. The admissible exchange value of the mutilated notes will be remitted by means of a bank draft or a pay order. There is no need to fill any form for doing this. any currency chest branch of a private sector bank or any Issue Office of the Reserve Bank of India. The cut in such notes.cover and put their notes in the cover with particulars and deposit them in the respective RBI office against a paper token. brittle or burnt and therefore cannot withstand normal handling can be tendered only at Issue Office of the RBI. should. All these notes can be exchanged at the counters of any public sector bank branch. Notes which have numbers on two ends. The facilities provided to the members of public for exchange of their soiled. Notes which have become excessively soiled. however. notes in the denomination of Rs. notes are as under.

These can also be exchanged at the counters of any public sector bank branch. Refund value of these notes is. Ashoka Pillar emblem/portrait of Mahatma Gandhi. paid as per RBI (Note Refund) Rules. any currency chest branch of a private sector bank or any Issue Office of the RBI without filling any form. Essential portions in a currency note are name of issuing authority. guarantee. . promise clause. signature. however.Mutilated Notes Notes which are in pieces and/or of which the essential portions are missing can also be exchanged. water mark.

GUIDELINES FOR ASSESSMENT OF MUTILATED NOTES There are three categories of redemption value of a mutilated note as follows :(i) Full value should be awarded to any piece of note which is more than two-thirds (2/3) in size of the original note or. . (iii) No value should be awarded to any piece of note which is less than half (1/2) in size of the original note. (ii) Half value should be awarded to any piece of note which is more than half (1/2) but less than two-thirds (2/3) in size of the original note.

Mutilated notes can also be sent to any of the RBI offices by registered/insured post. therefore. The coins are issued for circulation only through the Reserve Bank in terms of the RBI Act. The responsibility for coinage vests with the Government of India in terms of the Coinage Act. This box is kept at the Enquiry counter at each Issue Office of the Reserve Bank. Denominations . Members of public can obtain from the Enquiry Counter of the Reserve Bank a TLR cover and put their notes in the cover with particulars. The designing and minting of coins in various denominations is also the responsibility of the Government of India. address. Cherlapally (Hyderabad) and NOIDA (UP). Saifabad(Hyderabad). filled in the columns provided on the cover. Minting & Issue The Government of India has the sole right to mint coins. name. denominations of notes deposited. the exchange facility for mutilated notes is also offered through TLR(Triple Lock Receptacle) covers. Persons holding such notes may approach the Officer-in-charge of the Claims Section. close it and deposit it in a box called Triple Lock Receptacle against issue of a paper token. etc. The admissible exchange value of the mutilated notes will be remitted by means of a bank draft or a pay order. brittle. cannot withstand normal handling can be exchanged only at Issue Office of the RBI. such as. Issue Department of the Reserve Bank for this purpose.Other facilities for exchange To suit public convenience. burnt notes Notes which have become excessively soiled. Coins are minted at the four India Government Mints at Mumbai. Alipore(Kolkata). Excessively soiled. 1906 as amended from time to time. brittle or are burnt and.

Jammu. 20 paisa.1000 as per the Coinage Act. Patna and Thiruvananthapuram. two rupees and five rupees. 1906. Guwahati. one rupee. Bangalore. Hyderabad. Chandigarh. Mumbai. Nagpur. Lucknow. The RBI Issue Offices/sub-offices are located at Ahmedabad. Coins can be issued up to the denomination of Rs. customers and other bank branches in their . 50 paisa. Distribution Coins are received from the Mints and issued into circulation through its Regional Issue offices/sub-offices of the Reserve Bank and a wide network of currency chests and coin depots maintained by banks and Government treasuries spread across the country. Kolkata. Kanpur. Chennai. Belapur (Navi Mumbai). Bhopal. Bhubaneshwar. These offices issue coins to the public directly through their counters and also send coin remittances to the currency chests and small coin depots. Coins upto 50 paisa are called 'small coins' and coins of Rupee one and above are called 'Rupee Coins'.Coins in India are presently being issued in denominations of 10 paisa. The currency chests and small coin depots distribute coins to the public. Jaipur. New Delhi. 25 paisa. There are 4422 currency chest branches and 3784 small coin depots spread throughout the country.

Dedicated Single-window counters have been opened in several of the Reserve Bank's offices for issuing coins of different denominations packed in pouches. The mission cannot be successful without . Mobile counters are being organized by the Reserve Bank in commercial and other important areas of the town where soiled notes can be exchanged for coins. Measures to improve the supply of coins • The various Mints in the country have been modernized and upgraded to enhance their production capacities. Notes in denomination of Rs. with active co-operation from various agencies. imported coins to augment the indigenous production. has been endeavoring to distribute the coins in an equitable manner to all parts of the country.5 have been reintroduced to supplement the supply of coins. The members of the public can approach the RBI offices or the above agencies for requirement of coins. Government has in the recent past. • • New initiatives for distribution • Coin Dispensing Machines have been installed at select Regional Offices of the Reserve Bank on pilot basis.area of operation. • • Appeal to the Public • The Bank.

unstinting support from the people at large and the various voluntary agencies. Members of public are requested to avoid holding on to coins and instead, use them freely for transactions to ensure that there is a smooth circulation of coins. Voluntary agencies are requested to educate the public about the various facilities available in their areas for distribution of coins, exchange of soiled notes and proper handling of notes.

TREASURY MANAGEMENT VERSUS CASH MANAGEMENT
Introduction:

Major changes of corporate treasury management policies have been in the past few decades. Treasury management has gradually taken up more and more responsibilities. In the 1960s treasury-related tasks entailed purely routine work in what was no more than an ancillary function as a centralizing cash management unit linked to administrative tasks. In the 1970s the first significant changes began to take place as the economic environment was hit by recession, which favored the emergence of new short-term monetary policy instruments and the first hints of deregulation of financial markets, but treasury management was still restricted to the obtaining of funding, the management of payments and collections and the maintenance of bank balance positions. It was not until the

1980s that it became integrated into general corporate management and finally outgrew its purely administrative function linked to the accounting department. Treasury functions began to be based essentially on a financial cash management or liquidity management perspective. More recent advances (development of new information and communication technologies, emergence and use of new financial instruments and an approach to business focused on increasing the value of organizations in all areas) have favored the development of new treasury management functions, and increased the importance of treasury departments within companies. In this way, now the techniques and instruments required for optimum development are available (Fernández, 2001).

The functions now linked to treasury management extend beyond the mere control of monetary flows and positions. Exchange-rate and interest-rate volatility in the wake of the internationalization and deregulation of currency markets, the need to increase control of credit risk in increasingly competitive markets and the appearance of new financial instruments have forced treasury management to become more forecast-based in its actions, with more emphasis on the management of investments, treasury deficits and different financial risks. Basic responsibilities of treasury departments will be those tasks that enable companies to use the techniques and information needed to minimize the financial costs of resources and maximize returns on cash surpluses, thus providing them with the necessary treasury funding in the desired currency at the appropriate time, as argued by López (2003), and others. In the terminology of ash management literature this term brings together various functions associated with short-term financial flow management: liquidity management, banking management, management of treasury surpluses and deficits and financial risk management; it is a broader concept than the mere management of payments and collections (treasury management). In this context, our objective is to provide empirical evidence for the definition of cash management by drawing up an explanatory model. The following pages present a cash management model obtained using the technique of structural equations, which has never been used before in research analysing the factors linked to treasury management. A salient result of our model is that the management of payments and collections and treasury forecasts are the functions to which the companies surveyed attach most importance. These are the functions that have traditionally been most closely linked with treasury management,

though others which have been incorporated more recently, such as management of bank balances at value date, management of relationships with banks, management of treasury deficit funding and management of treasury surpluses, are all also highly rated by companies.

The paper is structured as follows. Following the Introduction, the second section introduces the topic of cash management, highlighting features and issues of significance for the focus of this paper and reviewing some of the arguments in favour of the advanced cash management. The third section then describes the data and the analysis procedure used in the empirical study. The results of the investigation are shown in the fourth section. The final section presents the conclusions, and the paper ends with a list of bibliographical references.

Treasury Management:
1. Introduction:
Cash management can be seen from two different perspectives depending on how many responsibilities it includes: treasury management (or basic cash management) and advanced cash management. Specifically, treasury management handles actual cash management at companies, and one of its main functions is to establish the optimum cash level so that payments can be made and received as necessary for the proper operation of the company. The second concept includes not only treasury management per se but also other tasks such as treasury forecasting, negotiation and establishment of relationships with financial institutions and financial risk management. Pindado (2001) argues that basic cash management refers to that part of the working capital that makes up the optimal level needed by a company treasury. However, if the profit opportunities available in the process of cash flow creation are to be maximized, this scope must be broadened to take in more operational decisions, since optimum cash levels are influenced by other factors outside the restrictive concept of "treasury". Linking these concepts with the concepts of

monetary theory reveals that the initial reasons for cash management were transaction and precaution, and those reasons were then joined by speculation, taking it closer to the overall concept of treasury management in the broad sense of the term (Maseda & Iturralde, 2001).

2. Basic cash management:

Treasury management or basic cash management propitiates the development of administrative techniques conducive to optimizing the level of disposable assets to be maintained by a company (Myers & Mjluf, 1984; Chastain, 1986; Harford, 1999). To prevent breaks or gaps in the trading cycle due to lack of cash, administrators must calculate the cash amount best suited to their level of activity, plan the timing of the relevant payments and collections and draw up a policy of investment in assets with high liquidity that can be converted to cash at a low transactional cost to serve as support for the treasury funds maintained by the company (Kamath et al., 1985; Srinivasan & Kim, 1986). It is therefore essential to establish the right level of disposable assets to short-term financial investments at companies. Holding the wrong amount in cash or cash equivalent may interrupt the normal flow of business activities. Moreover, the wrong safety margin may result in financial difficulties, with firms unable to meet needs that may arise at any given time or unable to take advantage of unexpected investment opportunities. Maintaining a cash surplus thus has a number of advantages. On the one hand it enables companies to carry on the normal transactions that arise in the course of their activities and avoid any treasury gaps. On the other hand it helps them cover any unexpected needs for cash by acting as a preventive balance. However, there are also disadvantages in being too conservative, as reflected in the opportunity costs entailed by assets with little or no profitability (Awan, 2001)2. Having liquid assets available constitutes an opportunity cost for a company, as the return on those assets is lower then the return on productive investments, but there may still be transaction costs arising from the sale or purchase of financial assets, and disadvantages in terms of taxation. The particular importance of disposable asset management as a responsibility of the company treasurer should lead companies to conduct an overall analysis of this point, covering management of the collections circuit, cash and payment circuit (Palom & Prat, 1984). This overall analysis should strive to shorten collection periods, lengthen payment periods and avoid idle resources that do not generate returns (Masson et al., 1995). Casanovas & Fernández (2001) defend the idea put forward by Palom & Prat (1984), and indicate that

risk reduction and cash-management efficiencies are critical to corporate success (Platt. The management of interest-exchange rate risk and the management of contractual relationships with financial institutions are other functions that have been added to cash management. Therefore. taking basic treasury principles as their reference. 2002. collections and cash holding). This specific notion of treasury management in a broad and in technological point of view has been for decades in theory. study and review of the three circuits indicated (payments. it includes a set of strategic and organizational measures concerned with working capital. Bort. although they stress the essence of treasury management. Advanced cash management Torre (1997) defines treasury management as a set of techniques that act on the short-term liquidity of a company. They mention advanced cash management. which are considered as characteristic of cash management. and others. which is considered to include the management of short-term investments. In this sense cash management as an overall. which groups availability. which they also integrate into treasury management. these authors identify and determine more complex techniques. 1. However. entailing chiefly the analysis. profitability. So far we have considered in this way the cash management or the treasury management in a broad sense. planning and financial risk with liquidity management as argued Von Eije & Westerman. 2003). and at the same time affect those factors and processes that translate immediately into cash. it began to acquire true significance in today's difficult global economic environment. they analyses and set out more advanced management techniques and tools. However. integrated service of which the customer takes that part that best suits him or that he needs at any given time. instruments and functions. 1999. 2004. risk management. served basically by a computer or another online solution.treasury management is seen as “administration of the treasury circuit”. Mulligan. . with the purpose of increasing profitability with the minimum risk and in the best conditions (Welch. Moreover. 2001). short-term financing and bank relationships. with the ultimate aim of increasing the profitability of the company and improving working capital management.

payment and collection management (Driscoll. 2001). These beliefs give rise to rules of conduct (norms) that powerfully shape the conduct of the individuals and groups in the organization and thus distinguish it from other organizations” (Leal. In short. in short. Torre.. 1983. help attain the general goals of those firms. expectations and basic principles shared by the members of an organization. 1995. 1997. 1996. as shown in the following figure: . 2001) and financial risk management (Masson et al. a strategy for investing surpluses to obtain maximum profitability and finance deficits with minimum costs.. 2004). Torre. finally. Driscoll. Torre. 2003). 2003). or advanced cash management. Treasury management in a broad sense. 1991). Buckley. Pindado.. Palom & Prat. Cash management brings together actions concerned with liquidity management (Kirkman. treasury forecasts (Pindado. 2001). 1995. 1983. This vision of treasury management from a broad perspective covers three fundamental aspects. López. 1984. banking management (Torre. 1997. Masson et al. López. not only involves financial tools and techniques for managing liquidity but entails an entire corporate culture. All these responsibilities are interconnected. 1977. 1997. “Corporate culture” means “the set of beliefs. management of interest-rate and exchange-rate risks and. liquidity management and banking management which has now taken on a broader perspective that includes the planning of disposable treasury assets and their subsequent monitoring. investment of treasury surpluses and deficit and financing management functions (Masson et al. 1995. banking management (Charro & Ortiz. which generates an overall model of cash management with a policy aimed at obtaining profits or reducing costs to generate value for firms and.banking relationships and planning that affect both the cash flows and the financial results of firms. treasury management is based on payment and collection management. 1997). Casanovas & Fernández.

In this regard. The second attribute is working capital management. 1984. These two cash flows -payments and collections. the planning of short-term financing and investment sources and relationships with financial institutions. which handles the disposable assets obtained from sales and collections. Gordon.The basic attribute is liquidity management. 1985. at the minimum possible cost. . numerous authors have considered culture as a critical factor for organizations (Gordon. through which the necessary disposable assets are obtained when required. they are so closely related to treasury matters that they can be subsumed into treasury management in the broad sense. and risk management. 1985). 1990). 2000) and have drawn links between corporate culture and corporate financial management (Denison. and purchases and payments. Although larger companies may have a specific department to manage these concepts. Parker. though other authors reviewing their work have failed to find hard evidence of such links (Siehl & Martin. in the sense of the set of shared beliefs and values as to the way in which the above functions are carried out. The development of all these functions depends on the corporate culture of the firm. This responsibility requires the forecasting of liquid asset flows.are the principal source of financing and investment for business activity.

borrowing required to cover treasury deficits (4. short-term treasury forecasts.267). Treasurers or treasury managers undertake various tasks in all areas of cash management.517) and exchange-rate risk (3.468) obtains the second highest score on average. management of treasury peaks and management of interest and exchange rate risks. In general. None of them stands out from the rest. management of treasury deficit funding. establishment of an optimum cash level (4.Cash Management: Empirical Analysis 1. optimization of liquidity (4. Other responsibilities include minimization of costs of short-term .272). monitoring of liquidity of banking operations.282) and maximization of returns on treasury surpluses (3. such as management of payments made and received. mainly because proper treasury management must be based on knowledge of future positions. possibly because it brings together management functions concerned with the main payments received by firms. and monitoring and optimization of the purchase-payment circuit (4. The responsibilities which obtained the lowest score are coverage of interest rate risk (3.338). but some firms are unaware of these functions and others find them of little relevance due to the low degree of influence of such risks on their financial activities. Monitoring and optimization of the circuit of payments received is the variable that cores highest among the firms surveyed (4.097).495). on which their survival depends. monitoring of banking positions at value date (4. . Descriptive Analysis. negotiation with banks.308). the remaining responsibilities obtain high scores (above four in almost all cases). management of account balances at value dates.285). The responsibilities in question are day-to-day control of banking position (4. The preparation of treasury forecasts (4.992).

Explanatory Model Factor analysis was used to develop a model capable of explaining cash management and showing the results arising from its use. all treasury management responsibilities obtain high scores except coverage of financial risks. which cannot be observed directly in actual businesses. KMO (Kaiser-Meyer & Olkin) and Bartlett’s sphericity test. To define the construct used in the explanatory model. An examination of this table reveals that the correlations between the variables used are still sufficiently high to justify the application of a factorial analysis of principal components. 2. exploratory factor analysis was used first on a subsample. to make the model more robust. due to its importance for the survival of firms. followed by confirmatory analysis on another. The results of the exploratory analysis show that the eleven variables concerned with treasury management responsibilities can be grouped into two components with only minimal information loss. . and by management of treasury forecasts as a way of obtaining advanced information on movements of available liquid assets. Exploratory Factorial Analysis Exploratory factorial analysis is applied to a randomly selected subsample.In short. different subsample. The following table shows determinant values of the correlation matrix. Particularly high scores are obtained by management of payments for payments received.

at least monthly. . establishment of an optimum cash level. coverage of exchange-rate risk). operational management (monitoring and optimization of the purchase-payment Circuit. and risk management (coverage of interest-rate risk. optimization of Liquidity). Fig. day-to-day control of banking positions).• Basic cash management. financial management (minimization of costs of short-term borrowing). • Advanced cash management. and banking management (monitoring of banking positions at the value date. which includes three levels: liquidity management (short-term Treasury forecasts. monitoring and optimization of the sales-cash circuit). which also includes three levels: investment management (maximization of returns on treasury surpluses). Explanatory Factorial Analysis of Treasury Management.

reliable scale for measuring this factor. Using statistical techniques from a convergent .Confirmatory Factorial Analysis Confirmatory factor analysis is then applied to different subsamples to produce a valid.

Basic cash management includes the constructs for liquidity management. financial management and management of financial risk coverage. GFI.6 (Bagozzi & Yi.05 (see Figure 5). because this statistic is substantially affected by the size of the sample (Hair et al. the present study aims to provide evidence of the existence of a single underlying concept that can explain cash management sufficiently well to bring together the variables in the scale considered overall. The theoretical concept underlying this model is supported by the opinions of the treasury managers surveyed. The path diagram in the following figure also shows that the weight of each item in each factor in the solution is close to or higher than the figure of 0. operational management and banking management. so it is necessary to analyse the rest of the indices to determine whether the measurement model is valid. convergent validity and discriminant validity of actors.5 (Fornell & Larcker. 1994) and the extracted variance reaches the recommended figure of 0. since the Cronbach’s alpha obtained for each factor is high. reliable scale capable of expressing the concept of treasury management. AGFI.square does not attain the recommended figure of 0. and all factors are distinct from one another. To obtain a valid.perspective. the internal consistency of the model is checked using reliability techniques (Cronbach’s alpha. However. TLI and CFI are close to or higher than 0. Advanced cash management includes those for investment management. Furthermore.7 established.05. this does not necessarily mean that the proposed model fails to reproduce faithfully the data observed. The root mean square error of approximation (RMSEA) also indicates a good fit at 0. IFI. who understand cash management as including not just liquidity management tasks but also others such as management of payments made and received. the discriminate validity of the scale is ratified. . the composite reliability is close to or higher than 0. composite reliability and extracted variance). determining that the results and the coefficients of causal analyses will not be modified by problems of co linearity. It is observed that the p-value of the chi. Convergent validity is checked by the overall model fit measures. indicating a good model fit. NFI. The factors meet the reliability requirements.. The model reflects the idea that treasury management comprises basic cash management and advanced cash management. 1981).9. 1998).

banking management. which is frequently called research methodology. the resolution of a problem.forecast management. financial management and financial risk management. This process. or a greater understanding of a phenomenon. investment management. Research Methodology Research is a process through which we attempt to achieve systematically and with the support of data the answer to a question. has eight distinct characteristics: .

question. MODE OF DATA COLLECTION  Primary Data: . helical. This is the most popular type of research technique. Research is.1. Research requires a clear articulation of a goal. cyclical. 6.The sources of Primary data were questionnaires and personal interviews. 4. Research requires the collection and interpretation of data in attempting to resolve the problem that initiated the research. or more exactly. by its nature. 3. Research accepts certain critical assumptions. Research usually divides the principal problem into more manageable sub problems. The methods used were following:  Questionnaire method  Direct Interaction with the clients. or hypothesis. 5. Research is guided by the specific research problem. . 7. Research follows a specific plan of procedure. Research originates with a question or problem. 2. 8. generally used in survey research design and most useful in describing the characteristics of consumer behavior. Descriptive research is used in this project report in order to know about cash management services to clients and determining their level of satisfaction.

RESULT AND ANALYSIS Are you aware of ICICI bank straight to bank services? (a) Yes (b) No . books and newspaper articles.the sources of secondary data were internet. Secondary data: .

2. (a) (b) (c) (d) In which company bank do you have your account? Axis Bank ICICI Bank HSBC Bank standard chartered Bank . The bank can look into companies as to propose its services to the concerned company personals.Analysis of the above diagram It’s very good for the ICICI bank as most of the companies are aware of the cash management services provided by the bank.

(a) (b) Does the financial crisis in US affecting your functioning here in INDIA? Yes No .Analysis of the above diagram From the above diagram it can be easily inferred that ICICI bank is facing neck to neck competition from HSBC Bank and it should keep on improving to remain at the top position. 3.

Analysis of the above diagram From the pie chart its quite evident that the financial crisis in US are affecting people globally and even insurance companies are gravely affected by the crisis. 4. (a) (b) Are you satisfy with your company services? Yes No .

Analysis of the above diagram From the above analysis it can be interpreted that most of the companies were satisfied by there CMS provider but still they found few areas of improvement ICICI Bank can give solutions for those areas So as to attain business rom these companies. (a) (b) (c) What are your main modes of premium collection? Cash Cheque Demand Draft . 5.

(a) (b) Do you have centralized or decentralized? Centralized Decentralized .Analysis of the above diagram Most of the companies accept premium in the form of cheque as it’s a safer instrument than cash and is easily handled as compared to demand draft ICICI Bank can provide various cheque collections options to the companies. 6.

Analysis of the above diagram Most of the companies aspire to become centralized as they want to have all the cash balances at there main branch at the end of the day as it saves a lot of time and money ICICI Bank can offer the services of there new E-banking software so as to suffice a company’s all needs. (a) (b) Do you accept premium through credit cards Yes No . 7.

8.Analysis of the above diagram Most of the insurance companies are planning to introduce this new facility as of now not many companies have started with this concept but sure are panning in near future. (a) (b) (c) What are your main modes making payments? Cheque Cash DD .

Analysis of the above diagram Like premium most of the companies distribute their payments through cheques only DD and cash are made out under special circumstances 9. (a) (b) Do you reinsure your polices? Yes No .

Analysis of the above diagram Most of the companies re-insure themselves from one another or by a re-insurer it helps them to reduce risk on there part ICICI Bank can look into to the opportunity to become the reinsuring bank as its quite rewarding CASE STUDY (ICICI BANK) GROUND REALITIES: The ABC Ltd. The company has presence in more than 15 cities and has its head quarter in Mumbai. Of retailers in each cities are as follows: . is a FMCG Company. The company has Depots at these cities. the monthly turns over of the each depots and no. And each depot has some turnover every month. The name of Cities.

a/c at New Delhi.50 0.10 200 180 175 180 150 160 155 140 150 120 130 120 110 115 135 140 The requirements of the ABC Ltd.25 1.00 0. No.Sr.10 0.75 0.00 0.75 0. 3.75 0.50 0. of cheques deposited • Cheque number • Cheque amount • Date of deposit • Clearing date • Retailer name/code . All money should be ABC Ltd. All money should on the next day basis.5 1.40 0.10 0.70 1.60 0. 2. of Retailers 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Mumbai New Delhi Calcutta Madras Ahmedabad Banglore Hyderabad Pune Jaipur Indore Cochin Agra Jalandhar Jammu Nagpur Lucknow 1. Details of cheques deposited at different location on daily basis: • Location • No. are as follows: 1.50 0. Cities Monthly Turnover (Rs. In Crore) No.

5. the bank has no presence as well as no tie-up with any other bank.• Returned cheques  Date  Reason  Location  Amount 4. what the bank will do? I have taken the case of ICICI BANK CMS. has sixteen locations in the country. • In 2 locations of the company. Now. the bank has its own presence. The ABC Ltd. How the bank makes allocation of the different instruments? The bank broadly categorized the instruments into two types: . the bank has tie-up with correspondent bank And in remaining 4 locations. In this case. collection. This is not always possible to have the branches at each location of the client for the banks. The ICICI BANK will analyses the location of the company. Courier pick-up service at each location. 6. Other MIS reports ANALYZING PROCESS: These are the conditions and facts of the organization. This is regarding how the bank makes deal with the company. we are taking the assumptions as follows: • In 10 locations of the company. expenditures etc. Monthly reports of each location about sales.

2) LCC COR: A local Cheque which is drawn and deposited at the same location where the bank doesn’t have its own presence but has tie up with correspondent Bank. Local Cheque Collections (LCC) LCC are the cheques. which are drawn and deposited at different locations. Eg. 3) UCC ONW: . which are drawn and deposited at the same location. A Cheque drawn at Jaipur and deposited at Jaipur only. Upcountry Cheque Collections (UCC) The UCC are the cheques. The UCC is again categorised into three types: 1) UCC BRN: A upcountry Cheque which is drawn at one location and deposited at another location where the bank has its own presence. A Cheque drawn at Jaipur and deposited at Delhi. The LCC is again categorised into two types: 1) LCC BRN: A local Cheque which is drawn and deposited at the same location where the bank has its own presence. II.I. 2) UCC COR: A upcountry Cheque which is drawn at one location and deposited at another location where the bank has tie-up with correspondent Bank. Eg.

A upcountry Cheque which is drawn at one location and deposited at another location where the bank neither have its own presence nor have tie-up with correspondent bank. The ICICI BANK has to debit its customer’s account on the next day basis irrespective of days to clear. In India. Other cities where clearing house is not there. Normally. varies from centre to center. the ICICI bank takes into account the following factors while going for pricing: 1) Bank In Funds/ Out of Funds & Correspondent Bank Charges: When Cheque is deposited in the bank it passes through the clearing house. clearing is done through RBI. then the time taken by the clearing houses to debit the bank account would be different. Day Cheque credited Day1 when will the Clearing Bank be Days for which Bank In Fund/Out of bank fund is out Fund RBI 0 Not out of funds . mostly these are PNB Banks or Co-operative Banks. Suppose I deposit the Cheque on day 0. SBI and PNB banks. The pricing part of the CMS is very complex. PRICING: Pricing is competitive. the clearing is done through Correspondent Bank. The RBI has presence in 15 cities in India while SBI has 938 locations in India including its associates. Special pricing can be worked out taking into account the volume of funds & the centres. It also varies from instruments to instruments.

Day2 Day3 SBI Correspondent Bank 1 1 1 Day out of funds 1 Day out of funds In this case. 3) Margin: After including the transaction and other o/hs charges. The o/hs charges include salary. When it comes to the Correspondent bank. other elements like courier charges return cheques etc. the bank has to pay extra charges to these banks. the bank charges interest on the money which it gives in form of “ Credit Against Uncleared Cheque”. which it occurs in the process. It depends upon the Banks. maintenance etc. On this the bank adds its margin for being in the business. to the company. administration charges. 2) Overheads: The bank takes into account the o/hs charges. also considered. In pricing. the bank gets the cost of transaction. Pricing in CMS in generally negotiable between the company and the Bank. Features of ICICI Bank CMS: .

• Exclusive CMP desks with infrastructure • Debit Transfers • Courier pick-up at branches • No collection a/cs needed at branches • Customized Reports • Transmission of data through Internal LAN system • Direct credit to accounts Benefits to Customers: • • • • • • • • Centralized Control of cash Cost reduction Enhanced Liquidity Interchange of Information between treasury & operating units Reduced excess cash balance Cash forecasting & scheduling Effective control over disbursements Timely & effective investments .

The study might not produce absolutely accurate results as it was based on a sample taken from the population. The allotted time period of 6 weeks for the study was relatively insufficient.LIMITATIONS OF THE REPORT Following are the limitations faced by me during this project: 1. to get required information) due to their busy schedules and prior commitments. 4. It was difficult getting time and access to senior level Finance/HR managers (who had to be talked to. A few of the managers refrained from giving the required information as he considered me to be from their confidential domains. keeping in mind the long duration it can take at times. to close a particular corporate deal. . 2. 3.

thereby proving that the service does have the potential usage. This means the service caters the banking needs that customers generally require and its main benefit of banking while sitting at office is desired by one and all. • The service provided by straight TO bank does offer the main requirements of the customers for which they visit or call the branch • All the respondents wanted to carry out the banking needs at their convenience. The service Straight2bank does provide an answer to the problem of the customers.CONCLUSION The study allowed us get answers regarding the service awareness among people and the problems it faces. • Few of the respondents were aware about the service which was desired by 100% respondents clearly showing that there has been a falter in its promotion and awareness strategies. . • A large number of clients and customers call the branch frequently to handle banking issues. The key findings and analysis of the survey showed the following. this shows the keenness of the customers to call the branch for almost every small issue.

. ICICI BANK must look into the policies of installing the drop box. Many clients who enrolled for the straight TO bank service would have problems using it as the drop boxes are not strategically placed many areas do not even have drop box facility. however the branch cannot provide them with the facility as they cannot install the boxes in that area and it is the duty of the local branch of that area to put up boxes which is not happening they hardly know where customers of the other branch are located. They should assign it to the regional office or allow branches to put up boxes where the branch thinks it would be optimally utilized no matter which area of the city as of now that branches are allowed to put up drop boxes in a radius which falls in close by areas to the branch. A customer who lives close by to the branch would not use this service whereas customers who are far of require the service.• Customers were not aware that the service was a free one. this is clear that almost all the attributes of the services are favorable to the customers still customers are not using the service and are not even aware of it. • Almost all customers once educated about the service readily enrolled for it whereas a mere portion did not trust the bank and thought that the bank would have some hidden charges that they are not putting forward.

SBI.RECOMMENDATIONS We suggest following measures. • ICICI Bank should focus on getting the business other business clients other than its existing customers as it would help them to increase their business opportunities. AXIS bank and HSBC bank and ICICI is facing a lot competition from these banks. • ICICI Bank should contact with their clients regularly for knowing the problems faced by them. which ICICI Bank could take so as to take on heavy competition from HSBC Bank. so that benefits can be passed on to customers. Senior managers at ICICI Bank agree to reduce cost. This will help ICICI Bank in providing best services to customers. Zikmund . • ICICI Bank should provide competitive prices as now-a-days a lot business is being acquired by SBI. REFERENCES Book • Business Research Methods – William G. PNB and SCB Banks: • Try to reduce cost. because of services we provide. This will result in additional customer base by getting further references from satisfied clients.

com • www.icicibank.• Managerial Decision Modeling with spreadsheets – Nagraj Balakrishnan.com • www.ml.N. Appa Iyer Sivakumar.com • www.treasurymanagement.business.hdfcbank.google.K. Barry Render & Ralph M.inc.com Magazine and newspaper • • • Business Today’s The times of India The Economic times APPENDIXES QUESTIONNAIRE Dear Respondent.com www. . M. Stair • • Summer Internship Simplified – Prof. Mathirajan Website • • www. Krishnaswamy.com • www. Anil Mishra Management research Methodology.

What are your main modes of premium collection? . I am doing this research to compare different charges and services provided by trading firm to its clients. (a) (c) (e) In which company bank do you have your account? Axis bank HSBC Bank HDFC Bank (b) (d) ICICI Bank SBI Bank 3. (a) (b) Does the financial crisis in US affecting your functioning here in INDIA? Yes No Are you satisfy with your company services? Yes No 4.I am student of NSB School of Business Management. (a) (b) 5. (a) (b) Are you aware of ICICI bank straight to bank services? Yes No 2. 1. New Delhi.

(a) (b) Do you accept premium through credit cards Yes No 8. (a) (b) (c) What are your main modes making payments? Cheque Cash DD . (a) (b) Do you have centralized or decentralized? Centralized Decentralized 7.(a) (b) (c) Cash Cheque Demand Draft 6.

9. (a) (b) Do you reinsure your polices? Yes No Personal Information Name: Age: Sex: ( ) Male ( ) Female Phone No: Occupation: .

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