A PROJECT REPORT ON

Cash Management In State Bank of India

SUBMITTED BY

MISS MANALI. RAMCHAND. GODHIA,

ROLL NO: 166011

M.Com. SEM- III

(ADVANCE ACCOUNTANCY)

ACADEMIC YEAR: 2016-17

Under the guidance of PROJECT GUIDE

PROF. Vinaya Marathe.

SUBMITTED TO UNIVERSITY OF MUMBAI

MULUND COLLEGE OF COMMERCE

S N ROAD, MULUND (WEST)

MUMBAI - 400080

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 Declaration from the Student

I, MANALI GODHIA ROLL. No. 166011 Student of Mulund College Of Commerce, S. N.

Road, Mulund (West) 400080, studying in M.Com Part- II hereby declare that I have
completed the project on Cash Management In State Bank of India under the guidance of
project guide Prof. Vinaya Marathe during the academic year 2016-17. The information
submitted is true to the best of my knowledge.

Date:

Signature:

Place:

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 CERTIFICATE

I, Prof. Vianaya Marathe, hereby certify that Miss MANALI GODHIA. ROLL. No. 166011
of Mulund College of Commerce, S. N. Road,Mulund (West), Mumbai -400080 of M.com
Part II (Advanced Accountancy) has completed her project on Cash Management In State
Bank of India during the academic year 2016-17. The information submitted is true and
original to the best of my knowledge.

____________________ ___________________

Project Guide External guide

_____________________ ___________________

Co-coordinator Principal

Date:

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 ACKNOWLEDGEMENT

I would like to express my sincere gratitude to Principal of Mulund College of

Commerce DR. (Mrs.) Parvathi Venkatesh, Course - Coordinator Prof. Rane and our
project guide Prof. Vinaya Marathe. , for providing me an opportunity to do my project
work on titled Cash Management In State Bank of India.. I also wish to express my
sincere gratitude to the non - teaching staff of our college. I sincerely thank to all of
them in helping me to carrying out this project work. Last but not the least, I wish to
avail myself of this opportunity, to express a sense of gratitude and love to my
friends and my beloved parents for their mutual support, strength, help and for
everything.

PLACE: Signature

DATE:

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 INDEX
Sr. CONTENT PAGE
No. NO.
1 Chapter-1 06
Introduction
2 Chapter-2 21
Company Profile
3 Chapter-3 24
Research Methodology
4 Chapter-4 27
Data Analysis & Interpretation
5 Chapter-5 30
Suggestions & Recommendations
6 Chapter-6 31
Findings, Conclusion & Bibliography

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 Chapter 1
1.1 Introduction

Cash is the important current asset for the operations of the business. Cash is the basic input
needed to keep the business running on a continuous basis; it is also the ultimate output
expected to be realized by selling the service or product manufactured by the firm. The firm
should keep sufficient cash, neither more nor less. Cash shortage will disrupt the firms
manufacturing operations while excessive cash will simply remain idle, without contributing
anything towards the firms profitability. Thus, a major function of the financial manager is
to maintain a sound cash position.

Cash is the money which a firm can disburse immediately without any restriction. The term
cash includes coins, currency and cheques held by the firm, and balances in its bank
accounts. Sometimes near-cash items, such as marketable securities or bank times deposits,
are also included in cash. The basic characteristic of near-cash assets is that they can readily
be converted into cash. Generally, when a firm has excess cash, it invests it in marketable
securities. This kind of investment contributes some profit to the firm

MOTIVES FOR HOLDING CASH

The firms need to hold cash may be attributed to the following the motives:
The transactions motive
The precautionary motive
The speculative motive

CASH MANAGEMENT

Cash management is a broad term that refers to the collection, concentration, and
disbursement of cash. It encompasses a companys level of liquidity, its management of cash
balance, and its short-term investment strategies. In some ways, managing cash flow is the
most important job of business managers. For some time now, technology has been the key
driving force behind every successful bank. In such an environment, the ability to recognize
and capture market share depends entirely on the banks competence to evolve technically

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and offer the customer a seamless process flow. The objective of a cash management system
is to improve revenue, maximize profits, minimize costs and establish efficient management
systems to assist and accelerate growth.

FACTS OF CASH MANAGEMENT

Optimum Utilization of Operating Cash

Implementation of a sound cash management programme is based on rapid generation,

efficient utilization and effective conversation of its cash resources. Cash flow is a circle. The
quantum and speed of the flow can be regulated through prudent financial planning
facilitating the running of business with the minimum cash balance. This can be achieved by
making a proper analysis of operative cash flow cycle along with efficient management of
working capital.
Cash Forecasting

Cash forecasting is backbone of cash planning. It forewarns a business regarding expected

cash problems, which it may encounter, thus assisting it to regulate further cash flow
movements. Lack of cash planning results in spasmodic cash flows.
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. There are techniques in
the cash management which a business to achieve this objective.
Liquidity Analysis:
The importance of liquidity in a business cannot be over emphasized. If one does the
autopsies of the businesses that failed, he would find that the major reason for the failure was
their inability to remain liquid. Liquidity has an intimate relationship with efficient utilization
of cash. It helps in the attainment of optimum level of liquidity.
Cash Management Services generally offered
The following is a list of services generally offered by banks and utilized by larger businesses
and corporations:

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1. Account Reconcilement Services: Balancing a checkbook can be a difficult
process for a very large business, since it issues so many checks it can take a lot of
humanmonitoring to understand which checks have not cleared and therefore what th
ecompany's true balance is. To address this, banks have developed a system which
allows companies to upload a list of all the checks that they issue on a daily basis, so
that at the end of the month the bank statement will show not only which checks have
cleared, but also which have not. More recently, banks have used this system to
prevent checks from being fraudulently cashed if they are not on the list, a process
known as positive pay.
2. Advanced Web Services: Most banks have an Internet-based system which is
more advanced than the one available to consumers. This enables managers to create
and authorize special internal logon credentials, allowing employees to send wires
and access other cash management features normally not found on the consumer web
site.
3. Armored Car Services: Large retailers who collect a great deal of cash may have
the bank pick this cash up via an armored car company, instead of asking its
employees to deposit the cash.
4. Automated Clearing House: services are usually offered by the cash managem
ent division of a bank. The Automated Clearing House is an electronic system used to
transfer funds between banks. Companies use this to pay others, especially
employees(this is how direct deposit works). Certain companies also use it to collect
fundsfromcustomers (this is generally how automatic payment plans work). This syst-
em is criticized by some consumer advocacy groups, because under this system banks
assume that the company initiating the debit is correct until proven otherwise.
5. Balance Reporting Services: Corporate clients who actively manage their cash
balanceusually subscribe to secure webbased reporting of their account and transactio
n information at their lead bank. These sophisticated compilations of banking activity
may include balances in foreign currencies, as well as those at other banks. They
include information on cash positions as well as 'float' (e.g., checks in the process of
collection).Finally, they offer transaction-specific details on all forms of payment

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 activity, including deposits, checks, wire transfers in and out, ACH (automated
clearinghouse debits and credits), investments, etc.

6. Cash Concentration Services: Large or national chain retailers often are in

areas where their primary bank does not have branches. Therefore, they open bank
accounts at various local banks in the area. To prevent funds in these accounts from
being idle and not earning sufficient interest, many of these companies have an
agreement set with their primary bank,
whereby their primary bank uses the Automated Clearing House to electronically
"pull" the money from these banks into a single interest-bearing bank account.

Purpose of Cash Management

Cash management is the stewardship or proper use of an entitys cash resources. It serves as
the means to keep an organization functioning by making the best use of cash or liquid
resources of the organization.
The function of cash management at the U.S. Treasury is threefold:
1. To eliminate idle cash balances. Every dollar held as cash rather than used to augment
revenues or decrease expenditures represents a lost opportunity. 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 Treasurys account. Minimizing idle cash balances
requires accurate information about expected receipts and likely disbursements.
2. To deposit collections timely. Having funds in-hand is better than having accounts
receivable. The cash is easier to convert immediately into value or goods. A
receivable, an item to be converted in the future, often is subject to a transaction delay
or a depreciation of value. Once funds are due to the Government, they should be
converted to cash-in-hand immediately and deposited in the Treasury's account as
soon as possible.
3. To properly time disbursements. Some payments must be made on a specified or legal
date, such as Social Security payments. For such payments, there is no cash
management decision. For other payments, such as vendor payments, discretion in
timing is possible. Government vendors face the same cash management needs as the

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 Government. They want to accelerate collections. One way vendors can do this is to
offer discount terms for timely payment for goods sold.

The Importance of Cash Management

Cash is crucial for every business. Every company has to have cash on hand or at
least access to cash in order to be able to pay for the goods and services it uses, and
consequently, to stay in business. By ensuring the company with the necessary funds
for supporting its everyday operations, cash management becomes a vital function for
the company.
Proper cash management can avoid the costs of additional funding and can provide
the opportunity for more favorable terms of payment (Dropkin & Hayden, 2001, p.
3). In the worst case scenario, if the liquidity shortage continues for the longer term,
the company might face no access to external resources, ending into insolvency
(Coyle, 2000, p. 3). Therefore, once again, it follows that cash management has a
critical importance for the life of every company.
5 another benefit of cash management to the company is that it makes the company
financially flexible. Ready access to cash enables the company to undertake
expenditure decisions if and whenever it wishes, without the trouble and constraint of
finding new financial support (Coyle, 2000, p. 3).
The ultimate goal of every company is maximizing shareholder value, i.e.
maximizing the net present value of future cash flows. Cash management contributes
to attaining that goal as well. If a firm keeps high levels of cash, it increases its net
working capital and the costs of holding cash, both of which decrease the value of the
firm.
Cash management influences the value of the firm by limiting cash levels so that an
optimal balance between the costs of holding cash and the costs of inadequate cash is
achieved. In addition, cash management influences firm value, because its cash
investment levels entail the rise of alternative costs, which are affected by net
working capital levels. Both the rise and fall of net working capital levels require the
balancing of future free cash flows, and in turn, result in firm valuation changes
(Michalski, 2006, p. 180).

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CASH MANAGEMENT AT STATE BANK OF INDIA

Cash Management As part of State Bank's global transaction solutions to Corporates and
Institutions, State Bank provides Cash Management, Securities Services and Trade Services
through their strong market networks in Asia. They are committed to providing you with

Integrated, superior cross-border and local services

Efficient transaction processing

Reliable financial information

Innovative products

World-class clearing services thus ensuring a full suite of transactional products for
your needs.

Cash Management Services for Corporates

STATE BANK OF INDIA provides cash management services to Corporate Clients under
the brand name SBI FAST (Funds Available in Shortest Time). SBI FAST ensures
optimization of collections and payouts while ensuring predictability in the cash flows.
It ensures getting Funds in time, quick transfers, account reconciliation, easy disbursements,
controlled processes and customized MIS. SBI FAST eliminates the inherent delays of the
traditional funds transfer mechanism and enhances liquidity to ensure optimum planning and
utilization of funds. It also offers File upload facility on our web based portal and are in the
process of providing complete Host to Host facility

SBI FAST Cash Management Services Offerings:

1. COLLECTIONS:

a. Local Collections: (Cheques/drafts etc)

Collection of instruments tendered at various CMP collection centers. Depending on

the clearing practices prevailing at the various centers (i.e. Day-0, Day-1, or Day-2),

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 credit is afforded, as mandated, to the client's main account at the pooling center the
same day as the proceeds are cleared.

Convenient collecting locations across the country with pooling facility at any of our
branches as per clients choice, which are physically connected to our central hub at
Mumbai.

Instruments can be deposited at the collection centers either by their dealers/

distributors/representatives or through couriers as per the arrangement.

b. Outstation Cheques Collection:

Outstation Cheques can also be deposited at our CMP Cell branches and we afford
Guaranteed Credit facility with credit available on Day 0 to Day 7.

Outstation Cheques drawn on our own branches are paid the same day at very
concessional charges.

c. Cash Collection:

We also offer the facility of Cash Deposit at our CMP Cell branches on CMP software
which facilitates automatic pooling of funds with MIS.

We are arranging for Cash Pick up at select centres shortly.

d. Uncleared Funds:

Option of credit against Uncleared Instruments presented in General/MICR or High

Value clearing offered selectively at Bank's discretion.

A nominal limit is required to be set up to take care of returns.

e. Balance Sweep:

Transfer of day-end-balances in collection accounts maintained at various CMP

centers across the country to the pooling account.

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 Clients can use the account for crediting local and outstation collections as well as for
meeting payments and the residual balance at the end of the day swept to the main
account.

f. Debit Transfers:

Debit Balances in operating accounts, where drawls are permitted up to a pre-fixed

daylight limit, maintained at CMP centers transferred to the main account at the end
of the day.

The facility dispenses the use of allocated limits and thereby ensures better control,
for the client over debits.

g. Customized MIS:

Daily presentation/credit/return reports provided to the representative/dealer at the

local center.

Daily location-wise/product-wise presentation/credit/return reports provided to the

Corporate Office through E-mails.

h. Electronic Collections:

1) Direct Debit

For Collection of invoice payment from Dealers, SIP/Premium etc.

Payment can be pulled from any account at any of our CBS (12,500).

Mandate of Account holders required, which is validated by us.

2) RTGS/NEFT Receipts

Dealer quotes are set up by the corporate.

Funds received through RTGS/NEFT modes are credited to the Corporate pooling
Account.

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 MIS is generated giving Dealer Name, Invoice no and amount received.

PRICING

The pricing of the product is competitive but volume driven and depends on the location,
type of facilities and amount of individual instruments.

2. PAYMENTS

a. Real Time Gross Settlement

Inter Bank Product - Settlement through RBI.

Minimum Transaction Amount Rs.2.0 lac.

Settlement on the day of transaction.

Competitive market related rates

Payment file upload facility available through SBI CMP Portal /Host to Host
Connectivity

b. National Electronic Fund Transfer

Inter Bank Product - Settlement through RBI.

Used for amount less than Rs.2.0 lac.

c. Electronic Clearing Scheme

Electronic mode of payment at all 72 ECS centers.

Useful for payment of interest, dividend, salary, pension to a large number of

investors/ shareholders/ employees/ ex-employees.

Payment file upload facility available through SBI CMP Portal /Host to Host
Connectivity

d. Direct Credit

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 Intra-Bank of SBI for electronic payment that uses ' Core Power '.

Settlement online & available between CBS branches (Over 12,500 & growing).

e. Drafts

Meets Bulk Drafts requirement on day '0'.

Facsimile signed up to Rs.5.0 lacs.

f. Multi City Cheques

Client's facsimile signatures affixed for amount upto Rs.5 lacs.

Printed with customized forwarding letter.

Payment file upload facility available through SBI CMP Portal /Host to Host
Connectivity

g. Dividend Warrants

All electronic and paper modes handled with widest reach.

ECS? Across all 68 RBI/SBI/Other Bank Centers.

RTGS/NEFT? Across all RTGS/NEFT enabled banks branches.

Payment Services in State Bank of India

Global payments solution for efficient transaction processing looking to outsource

customers payments to enable:

Efficient processing of all customers payables in the most cost effective way

Straight through processing both at customers end as well as their bank's back-end

Efficient payables reconciliation with minimal effort and delay

Solution

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State Bank's Straight Through Services (STS) Payments Solution can be tailored to the
different payment needs of companies, whatever industry, size or country they may be in.
With a comprehensive End-to-end Payment Processing Cycle, STS allows companies to
process a variety of payment types, whether they be domestic or international, local or central
in different countries, all in a single system file. To realize the benefits of STS, please contact
your local Relationship Manager or Cash Management representative.

Coverage

They are the foreign bank having the largest geographical representation in the country. They
are the only bank which provides draft status to their customers on the website.

Collection Services

Comprehensive receivables management solution State Bank understands that operating and
sustaining a profitable business these days is extremely tough. In an environment of constant
changes and uncertainties, most businesses face challenges of costs and efficiency. Key
concerns include:

Solution

The State Bank Collections Solution leverages the Bank's extensive regional knowledge and
widespread branch network across our key markets to specially tailor solutions for your
regional and local collection needs. This Collections Solution, delivered through a
standardized international platform, has the flexibility to cater to customers local needs, thus
enabling them to meet their objectives of reducing costs and increasing efficiency and
profitability
through better receivables and risk management. The key components of SBIs solution inclu
de the following:

Extensive Clearing Network

Guaranteed Credit

Comprehensive MIS

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 System Integration

Outsourcing of Collection

Liquidity Management in SBI

Measuring and managing the liquidity needs are vital for effective operation of
commercial banks. By assuring a bank's ability to meet its liabilities as they become due, liqu
iditymanagement can reduce the probability of an adverse situation developing. The
importance of liquidity transcends individual institutions, as liquidity
shortfall in one institution can have repercussions on the entire system. Bank managements
should measure, not only the liquidity positions of banks on an ongoing basis, but also
examine how liquidity requirements are likely to evolve under different conditions. Banks are
in the business of maturity transformation. They lend for longer time periods, as borrowers
normally prefer a longer time frame. But their liabilities are typically short term in nature, as
lenders normally prefer a shorter time frame (liquidity preference). This results in long-term
interest rates typically exceeding short-term rates. Hence, the incentive for banks
for performing the function of financial intermediation is the difference between interest
receipt and interest cost which is called the interest spread. It is implicit, therefore, that banks
will have a mismatched balance sheet, with liabilities greater than assets in short term, and
with assets greater than liabilities in the medium and long term. These mismatches, which
represent liquidity risk, are with respect to various time horizons. Hence, the overwhelming
concern of a bank is to maintain adequate liquidity. Liquidity has been defined as the ability
of an institution to replace liability run off and fund asset growth promptly and at a
reasonable price. Maintenance of superfluous liquidity will, however, impact profitability
adversely. It can also be defined as the comprehensive ability of a bank to meet liabilities
exactly when they fall due or when depositors want their money back. This is a heart of the
banking operations and distinguishes a bank from other entities.

Cash Reserve Ratio

A scheduled bank is under the obligation to keep a cash reserve called the Statutory Cash
Reserve, with the Reserve Bank of India (RBI) under Section 42 of the Reserve Bank of

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India Act, 1934. Every scheduled bank is required to maintain with the Reserve Bank an
average daily balance equal to least 3% of its net demand and time liabilities. Average daily
balances mean the average of balances held at the close of business on each day of the
fortnight. The Reserve Bank is empowered to increase the rate of Statutory Cash Reserve
from 3% to 20% of the Net Demand and Time Liabilities (NDTL).

Statutory Liquidity Ratio

Section 24(2A) of Banking Regulation Act, 1949, requires every banking company to
maintain in India in Cash, Gold or Unencumbered Approved Securities or in the form of net
balance in current accounts maintained in India by the bank with a nationalized bank,
equivalent to an amount which shall not at the close of the business on any day be less than
25% or such other percentage not exceeding 40% as the RBI may from time to time, by
notification in the Gazette of India, specify, of the total of its demand and time liabilities in
India as on the last Friday of the second preceding fortnight, which is known as SLR. At
present, all Scheduled Commercial Banks are required to maintain a uniform SLR of 25% of
the total of their demand and time liabilities in India as on the last Friday of the second
preceding fortnight which is stipulated under Section 24 of the RBI Act, 1949.RBI can
enhance the stipulation of SLR (not exceeding 40%) and advise the banks to keep a large
portion of the funds mobilized by them in liquid assets, particularly government and
other approved securities.

A Framework for Measuring and Managing Liquidity

Measuring and managing liquidity needs are vital for effective operation of commercial
banks. By assuring a bank's ability to meet its liabilities as they become due, liquidity
management can reduce the probability of an adverse situation developing. The importance
of liquidity transcends individual institutions, as liquidity shortfall in one institution can have
repercussions on the entire system. The framework for assessing and managing bank liquidity
has three dimensions:

Measuring and managing net funding requirements

Managing market access and

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 Contingency planning

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1.2 OBJECTIVE OF THE PROJECT

Objectives of a project tell us why project has been taken under study. It helps us to know
more about the topic that is being undertaken and helps us to explore future prospects of that
organization. Basically it tells what all have been studied while making the project.

1. To understand how cash is being managed by STATE BANK OF INDIA

2. To gain knowledge about the system prevailing in Banks.
3. To suggest methods for improving cash management in Banks.
4. To analyze in detail, the way Banks currently manage their finances and make
decisions to achieve tradeoff between profitability and liquidity

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1.3 LITERATURE REVIEW

Davidson (1992) defined cash management as a term which refers to the collection
concentration and disbursement of cash. It encompasses a companys level of liquidity,
management of cash balance and short term strategies. Weak cash flow makes it difficult to
hire and retain good employees (Beranek, 2000). Ross (2000) says that, it is only natural that
major business expenses are incurred in the production of goods or the provision of services.
In most cases, a business incurs such expenses before the corresponding payment is received
from customers. In addition, employee salaries and other expenses drain considerable funds
from most business. These make effective cash management an essential part of the business
financial planning. Vanhorne (2001) says that, a common cash management tool found in
companies is a cash budget. Most companies prepare budgets on the departmental level and
roll these individual budgets into one master budget. Creating several smaller budgets, can
help managers determine which operations use more cash and struggle to stay on the
projected budget amounts. This discovery gives managers an idea of when improvements
needed to correct the companys cash flow problems. Therefore, cash budgeting is another
aid to an effective cash management. Pindado (2004) also defines cash management as part
of working capital that makes up the optimal level needed by a company. Bort (2004) noted
that, cash management is of importance for both new and growing businesses. Companies
may suffer from cash flow problems because of lack of margin of safety in case of
anticipated expenses such that they experience problems in finding the funds for innovation
or expansion According to Bort (2004) cash is the lifeblood of the business. The key to
successful cash management lies in tabulating realistic projections, monitoring collections
and disbursements, establishing effective billing and collection measures, and adhering to
budgetary parameters because cash flow can be a problem to the business organization.
According to Moffet (2004), postponing capital expenditure is one method that can ease cash
shortage hence, suggests efficient cash management.

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 Chapter 2
Company Profile
Brief Introduction of State Bank of India

The evolution of State Bank of India can be traced back to the first decade of the 19th
century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806.
The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was
the first ever joint-stock bank of the British India, established under the sponsorship of the
Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840)
and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. These
three banks received the exclusive right to issue paper currency in 1861 with the Paper
Currency Act, a right they retained until the formation of the Reserve Bank of India. The
Presidency banks amalgamated on 27 January 1921, and the re-organized banking entity took
as its name Imperial Bank of India. The Imperial Bank of India remained a joint stock
company.

Products and Services Provided by State Bank of India

Products

Khata

Khata Plus

Saral

Vyapaar

Vistaar

Electronic Vendor Finance

Electronic Dealer Finance

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 Direct Debit

E-Collection

Services

RTGS/NEFT

SERVICE CHARGES & FEES OTHER THAN PERSONAL BANKING SEGMENT

W.E.F. 11.02.2008

ATM SERVICES

INTERNET BANKING

E-RAIL

RBIEFT

E-PAY

SAFE DEPOSIT LOCKER

BROKING SERVICES

MAGNETIC INK CHARACTER RECOGNITION (MICR)

FOREIGN INWARD REMITTANCE

STATE BANK MOBICASH

MISSION STATEMENT:

To retain the Banks position as premiere Indian Financial Service Group, with world class
standards and significant global committed to excellence in customer, shareholder and
employee satisfaction and to play a leading role in expanding and diversifying financial
service sectors while containing emphasis on its development banking rule.

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VISION STATEMENT:

Premier Indian Financial Service Group with prospective world-class Standards of eff
iciency and professionalism and institutional values
Retain its position in the country as pioneers in Development banking.
Maximize the shareholders value through high-sustained earnings per Share.
An institution with cultural mutual care and commitment, satisfying and
Good work environment and continues learning opportunities.

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 Chapter 3
Research Methodology
Research Methodology
Research is a logical and systematic search for new and useful information on a particular
topic. It is an investigation of nding solutions to scientic and social problems through
objective and systematic analysis. Its a search for knowledge, that is, a discovery of hidden
truths. Here knowledge means information about matters. The information might be collected
from different sources like experience, human beings, books, journals, nature, etc. A research
can lead to new contributions to the existing knowledge. Only through research is it possible
to make progress in a eld. Research is done with the help of study, experiment, observation,
analysis, comparison and reasoning.

3.1 Purpose of the study

1. The purpose of study the topic Cash Management in State Bank of India was to
establish the effect of cash management on the profitability of financial institutions
with specific emphasis on establishing the various cash management techniques, the
level of profitability and the relationship between cash management and profitability
of Bank
2. The study will help to get the knowledge about cash management policy of Banks as
particularly in co-operative sector
3. The mounting pressure from competitors forces the Banks to look for an Information
Technology vendor who can offer better solutions and services in Cash Management
and Internet Banking. Hence, the study will lead to analysis of polices and procedure
for managing cash inflow and outflow.

3.2 RESEARCH OBJECTIVE:

The first & foremost step in any research work is to identify the problems or objectives on
which the researcher has to work on. The objectives met in this study, as explained below:
1. To understand how cash is being managed by State Bank of India.

25
 2. To gain knowledge about the system prevailing in Banks.
3. To analyze in detail, the way Bank currently manage their finances and make
decisions to achieve tradeoff between profitability and liquidity.

3.3 METHODOLOGY OF STUDY

Research methodology is considered as the nerve of the project. Without a proper well-
organized research plan, it is impossible to complete the project and reach to any
conclusion. Therefore, research methodology is the way to systematically solve the research
problem. Research methodology not only talks of the methods but also logic behind the
methods used in the context of a research study and it explains why a particular method has
been used in the preference of the other methods

3. 3.1 Research design:

Research design is considered as a "blueprint" for research, dealing with at least four
problems: which questions to study, which data are relevant, what data to collect, and how to
analyze the results. According to Kerlinger, Research Design is a plan, conceptual structure,
and strategy of investigation conceived as to obtain answers to research questions and to
control variance.
The Research design used in this project is descriptive research design

3.3.2 Data collection and Techniques

There are two types of data used. They are primary and secondary data.
Primary data is defined as data that is collected from original sources for a specific purpose.
Secondary data is data collected from indirect sources. These include the survey or
questionnaire method, as well as the personal interview methods of data collection.

3.3.2 Sample Design

Sample Size 20
Population - 100

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3.3.4 Methods of Data collection
The primary data is collected by various approaches so as to give a precise, accurate,
realistic and relevant data. The main goal in the mind while gathering primary data was
investigation and observation. The heads and ends were thus achieved by a direct approach
and personal investigations and observation from the officials of the company. The other staff
members and the employees were interviewed for the sake of maintaining reasonable
standard of accuracy
The secondary data as it has always been important for the completion of any report
provides a reliable, suitable equate and specific knowledge. These include books, the
internet, company brochures, the company website, competitors websites, newspapers
articles, magazines etc.

3.3.5 Limitations of the study

Following are the limitations faced by me during this project:
The allotted time period of 8 weeks for the study was relatively insufficient, keeping
in mind the long duration it can take at times, to close a particular corporate deal.
The study might not produce absolutely accurate results as it was based on a sample
taken from the population.
It was difficult getting time and access to senior level Finance/HR managers (who had
to be talked to, to get required information) due to their busy schedules
and prior commitments.
A few of the managers refrained from giving the required information as he
considered me to be from their confidential domains

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 Chapter 4
Data Analysis & Interpretation
In this chapter, we analyze the Cash Management Services provided by State Bank of India
by asking different questions to many people and depicted their answers graphically.

Q.1 On which bank you depend for your regular transaction?

SBI 65% (65)

ICICI 23% (23)

HDFC 7% (7)

Other Banks 5% (5)

Total No. of People 100

Analysis of the above

It has been observed that approximately 65% correspondents are using the service of SBI
for their daily transaction, around 23% of people are using ICICI Bank for their transaction
and only7% & 5% of people are using HDFC & other Bank services respectively. It also
shows that SBI have the highest market position.

Q2. Are you aware of products & services provided by SBI?

Yes 82% (82)

No 18% (18)

Total No. of People 100

Analysis of the above

From the above data it is clear that most of the customers (around 82%) have the idea about
the product & services of SBI, the rest 18% have the idea about the product they are using.

Q3. Are you aware of SBIs straight to bank services?

Yes 65% (65)

No 35% (35)

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Total No. of People 100

Analysis of the above

Its very good for SBI as most of the companies are aware of the cash management
services provided by the bank. The bank can look into companies as to propose its services to
the concerned company personals

Q4. Are you satisfied with your company services?

Yes 75% (75)

No 25% (25)

Total No. of People 100

Analysis of the above

From the above analysis it can be interpreted that most of the companies were satisfied by
their CMS provider but still they found few areas of improvement, SBI can give solutions for
those areas

Q.5. What are your main modes of premium collection?

Cash 25% (25)

Cheques 68% (68)

Demand Drafts 7% (7)

Total No. of People 100

Analysis of the above

Most of the companies accept premium in the form of cheque as its a safer instrument than
cash and is easily handled as compared to demand draft SBI can provide various cheque
collections options to the companies.

Q6. What are your main modes making payments?

Cash 20% (20)

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Cheques 75% (75)

Demand Drafts 5% (5)

Total No. of People 100

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.

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 Chapter 5
Suggestions & Recommendations
Suggestions & Recommendations

We suggest following measures, which State Bank could take so as to take on heavy
competition from HSBC Bank and ABN AMRO Bank:

1. Try to reduce cost, so that benefits can be passed on to customers. Senior managers at
SBI keep on telling that it is difficult to reduce cost, because of services we provide.
But the fact is, India being a price sensitive market; people at times go for
monetary benefits rather than for long-term non- monetary benefits. If charges cant
bereduced because of costs involved, make the services customized, so that services a
re provided to only those customers who are willing to pay the price for services they
are getting and let the other customers enjoy costs benefits without getting services.
2. SBI should provide competitive prices as nowadays a lot business is
being acquired by AXIS bank and HSBC bank and SBI is facing a lot competition
from these banks
3. SBI should contact with their clients regularly for knowing the problems faced by
them. This will help SBI in providing best services to customers. This will result in
additional customer base by getting further references from satisfied clients.
4. SBI should focus on getting the business other business clients other than its existing
customers as it would help them to increase their business opportunities.

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 Chapter-6
Findings, Conclusion & Bibliography

FINDINGS:
These are some key points which analyzed while studying this project which reflects some
major factors about cash management of SBI as follows:
1. SBI manages its daily requirement of CRR as per guidelines of RBI every day.
2. Every day it calculate its CRR requirement and try to maintain this requirement as per
norms of RBI , if there is shortfall of cash it borrow through CBLO and vice versa.
3. It doesnt maintain more cash as CRR, it try to avoid cash remain ideal.
4. SBI purchase government securities according to the availability of funds, prevailing
market condition and SLR requirement
5. By using CBLO, SBI can take arbitrage opportunity as all security on CBLO are
pledged with CCIL
6. For NON-SLR option SBI invest mainly in
Government securities
Interbank exposure- not more than 5% of deposits of previous FY
PSU bonds
IDBI, IFCI bonds
Commercial Papers
7 SBI invest more in government securities as compare to call money market or CBLO
instrument because of risk purpose.
8 SBI doesnt invest much in money market mutual fund instrument as it not offers
higher return as compared to government securities.

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Conclusions

The study allowed us to get answers regarding the service awareness

among people and the problems it faces. The key findings and analysis of the survey showed
the following

1. A large number of clients and customers call the branch frequently to handle banking
issues; this shows the keenness of the customers to call the branch for almost every
small issue. The service Straight2bank does provide an answer to the problem of the
customers. The service provided by staright2bank does offer the main requirements of
the customers for which they visit or call the branch
2. All the respondents wanted to carry out the banking needs at their convenience. 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, thereby
proving that the service does have the potential usage
3. 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.
4. 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.
5. 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.

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BIBLIOGRAPHY

Internet: Websites

http://en.wikipedia.org/wiki/Cash_management
http://www.google.co.in/url?sa=t&rct=j&q=cash
%20management&source=web&cd=4&cad=rja&sqi=2&ved=0CEoQFjAD&url=http
%3A%2F%2Fwww.nucleussoftware.com%2Fimages
%2FCashManagementTrendsInIndia_GT_NVedwa.pdf&ei=eDy9UJmgFYXxrQf8u4
G4Bg&usg=AFQjCNHfOhBugAhVG6QSVohFptNwgbidFQ
http://www.google.co.in/#q=cash+management&hl=en&safe=active&tbo=d&ei=Oz2
9UNj_JIPnrAeQvYAQ&start=0&sa=N&bav=on.2,or.r_gc.r_pw.r_qf.&fp=44e5536d1
e9b189d&bpcl=39314241&biw=1366&bih=677
https://www.sbi.co.in/
http://economictimes.indiatimes.com/state-bank-of-india/stocks/companyid-
11984.cms
http://www.zeepedia.com/read.php?miller-
orr_model_of_cash_management_inventory_management_inventory_costs_economi
c_order_quantity_reorder_level_discounts_and_eoq_corporate_finance&b=22&c=29
https://www.sbicmp.co.in/sbicmp/docs/AboutUs.html
http://www.rbi.org.in/SCRIPTS/PublicationsView.aspx?id=7250

Books:

1- Introduction of operation Research By J.K.Sharma

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2- Learning operation Research By S.K Jaiswal

35