INTRODUCTION

Cash is the important current asset for the operation of the business. Cash is the basic

Input need to keep the business running on the continuous basis; it is also the ultimate output

expected to the realized by the bank or service provided by the bank. The bank Should keep

sufficient cash, neither more nor less. Cash shortage will disrupt the bank operations while

excessive cash will simple remain idle, without contributing anything towards the bank

profitability. Thus, a major function of the financial manager is to maintain a sound cash position.

Cash is the money which a bank can disburse immediately without any restriction. The term cash

include coins, currency and cheques held by the bank, and balance in its bank account sometime

near-cash items, such as marketable securities or bank time deposit, are also include in cash. The

basic characteristic of near -cash assets is that they can readily be converted in the cash.

Generally, when a bank has excess cash, it invests it in marketable securities. This kind of

investment contributes some profit to the bank.

Cash management is concerned with the managing of (!) Cash flows into and out of the bank

(!!) Cash flows within the bank (!!!) Cash balance held by the firm at the point of time by financing

deficit or investing surplus cash. it can be represented by the cash management cycle. sale

generate cash which has to be disbursed out. the surplus cash has to be invested while deficit

this cycle at a minimum cost. At the same time, it also seeks to achieve liquidity and control. Cash

management assumes more importance that other current assets because cash is the most

significant and the least productive asset that a firm holds .it is significant because it is use to pay

the bank obligation. Therefore, the aim of cash management is to maintain adequate control
over cash position to keep the bank sufficient liquid and to use excess cash in same profitable

way

Cash management is also important because it is difficult to predict cash flows accurately,

particularly the inflow, and there is no prefect coincidence between the inflow and the outflow

of the cash. During same periods, cash outflow will exceed cash inflow, because payment for

taxes, dividend, or seasonal inventory buildup. At other time, cash inflow will be more than cash

payment because there may be large cash sale and debtors may be realized in large sums

promptly. further, cash management is significant because cash constitutes the smallest portion

of the total current assets, yet managements considerable time is developed in managing it.

In recent past, a number of innovations have been done in cash management techniques. An

obvious aim of firm these days is to manage its cash affairs in such away as to keep cash balance

at a minimum level and to invest the surplus cash in profitable investment opportunities. In order

to resolve the uncertainty about cash flow prediction and lack of synchronization between cash

receipts and payment, the firm should develop appropriate strategies for cash management, the

firm should evolve strategies for cash management. The firm should evolve strategies regarding

the following four facet of cash management

• Cash planning. Cash inflow and outflow should be planned to project cash surplus or deficit for

each period of the planning period. Cash budge should be prepared for this purpose.

• Managing the cash flow. The firm should decide about the properly managed. The cash flow

should be accelerated while, as far as possible, the cash outflow s should be decelerated.
 • Optimum cash level. the firm should decide about the appropriate level of cash balance. The cash

of excess cash and danger of cash deficiency should be matched to determine the optimum level

of the cash balances.

• Investing surplus cash. The surplus cash balance should be properly invested to earn profit. the

firm should decide about the division of such cash balance between alternative short-term

investment opportunities such as bank deposit, marketable securities, or inter-corporate lending.

OBJECTIVE OF STUDY

• To minimize the operating cost of cash management.

• To satisfy day-to-day business requirement.

• To meet the requirement of bank relationship.

• To earn cash balance

NEED FOR THE STUDY

The importance of cash management in any bank concern cannot be overstressed Under

the present inflationary condition, management of cash is perhaps more important than even

management of profit and this require greatest attention and efforts of the finance manager. It

needs vigilant attention as each of its component require different type of treatment and it

throws constant attention on exercise of skill and judgement awareness of economic trend etc.

due to urgency and complicacy the vital importance of cash. The importance of cash

management can be understood in term of the uncertainty involved in the cash flows. Sometimes
The cash inflow is more than the cash outflow, or sometimes the cash outflow is more. Thus, A

firm has to manager cash affairs in a way, such that the cash balance is maintain at the minimum

level while the surplus cash. An optimum cash management system is one that not only prevents

the insolvency but also reduce the days in account receivables, increase the collection rates

chooses the suitable investment that improve the overall financial position of the firm. The

concept of cash management can be further understood in term of the cash management cycle.

The sale generate cash, and this has to be disbursed out. The firm invest the surplus cash or

borrows cash in cast of deficits.

SCOPE OF THE STUDY

• It helps to take short term financial decision

• It indicates the cash requirement needed for plant or requirement expansion

programmed.

• To find strategies for efficient management of cash.