Receivable Management With Ref To Sbi PDF

A Study of Receivable Management with reference to SBI 2020-21
INTRODUCTION:
1.1 Introduction
There are very few businesses, which have the luxury of receiving money
before selling, i.e. Selling for advance payments. Most of the Companies
sell their offeringson a credit. Which means that they will collect the money
after selling .Although it looks very simple on the face of it, Managing
receivables from Debtors canbe a very complex task depending on the
nature of our business. As our business. grows and as our offering gets
complex the process of collecting the payments needsto be designed
accordingly. So the entire process of defining the Credit Policy, Setting
Payment Terms, PaymentFollow ups and finally timely collection of the
due payments can be defined as Receivables Management.
Receivable management monitors and control all cash movements of
organizations. It maintains a systematic record of all sales transactions.
Receivable management helps business in deciding appropriate investment in
trade debtors. It aims that a sufficient amount of cash needed for day-to-day
activities is maintained at business. Credit facilities are extended by doing proper
analysis and planning to ensure optimum cash flow in a business organization.
Bad debts are harmful to organizations and may lead to heavy losses. Receivable
management takes all necessary steps to avoid bad debts in business transactions.
It designs and implement schedules for collection of outstanding amount timely
and informs the collection department on due dates. Customers are notified for
amount standing against them and charges interest on delay in payments.
Receivable management business ensures that a sufficient amount of cash is
always maintained within the business so that operations can continue
uninterrupted. It helps in deciding the optimum proportion of credit sales. The
overall process of receivable management involves properly recording all credit
sales invoices, sending notices on due date to collection department, recording all
collections, calculation of outstanding interest on late payments etc.
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Sant Rawool Maharaj Mahavidyalaya, Kudal
1.2 Objective of the project
 To understand how receivable being managed by SBI

 To gain knowledge about the system prevailing in banks.
 To suggest method for improving Receivable management in banks
 To study in details, the way banks currently manage their finance and
make decisions to achieve tradeoff between profitability and liquidity
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1.3 Scope of the project
Efficient Receivable management are pre-requisites so executes payments, collect

receivable and manage liquidity. This study done, taking consideration of State
Bank of India With reference to experience availed at branch the study of the
topic will help to get the knowledge about Receivable management policy of
banks as particularly in public sector. The mounting pressure from competitor
forces the banks to look for an information technology vendor who can offer
better solutions and services in receivable management and internet banking.
Hence the study will lead to analysis of policies and procedure of managing cash
inflow and outflow. This will give brief view about entire structure of liquidity
management of banks and solutions offered by them.
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1.4 Research methodology
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.
PRIMARY SOURCES
These include the survey or questionnaire method, as well as the personal

interview methods of data collection.
SECONDARY SOURCES
These includes books, the internet, company brochures, the company website,
competitor’s website etc., newspaper articles etc.
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1.5 Limitations of the project
Following are the limitations faced by me during the project
 The financial data is confidential due to nature.

 The study is depending upon past annual report, oral information by employee
 The reliability of the study depends upon the study accuracy of the data in
annual report possibilities of errors and bias in information.
 Financial statements are preparing on the basis of certain accounting concepts
and conventions, any change in the method or procedure of accounting system
limit the utility of financial statements.
 Ratio of the past are not true indicator of nature
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2.0 THEORETICAL BACKGROUND
2.1 INTRODUCTION
Meaning and concept
Receivable
Receivables are the sums owed to the firm because of exchange of products or
services in the customary course of business. Claims of the company towards its
clients form receivables of thefirm. It forms a major part of a company's current
assets. Receivables are otherwise called accounts receivables, trade receivables,
customer receivables or book debts. The receivables are made for the clients'
conveniences. The credit policy of the fixed governs the glory historical given to
customers and step of receivables. The reason behind keeping up or putting
resources tothe chances of rivalry, and to build the garage sale and earnings.
Receivable Management
It is the decision of an organization to make investments in its credit sales or not.

It involves huge cost considerations. It is a crucial consideration when it comes to
increasing volume of firm. Since sales increases, simultaneously the profits show
an upward trend as well. Bad debtsare also another cost involved with receivables
management. Hence, receivables management would calculated the decision a
business takes with regard to its debtors.
In India, Management of Receivables is also known as:
1.Payment Collection.
2.Collection Management.
3.Accounts Receivables.
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2.2 Importance of Receivable Management in banking sector
1.Monitor And Improve Cash Flow
Receivable management monitors and control all cash movements

of organisations. It maintains a systematic record of all sales transactions.
Receivable management helps business in deciding appropriate investment in
trade debtors. It aims that a sufficient amount of cash needed for day-to-day
activities is maintained at business. Credit facilities are extended by doing proper
analysis and planning to ensure optimum cash flow in a business organisation.
2.Minimises Bad Debt Losses
Bad debts are harmful to organisations and may lead to heavy losses. Receivable
management takes all necessary steps to avoid bad debts in business transactions.
It designs and implement schedules for collection of outstanding amount timely
and informs the collection department on due dates. Customers are notified for
amount standing against them and charges interest on delay in payments.
3.Avoids Invoice Disputes
Receivable management has an efficient role in avoiding any disputes arising in
business. Disputes adversely affect the relationship between customers and
business organisations. Complete and fair record of all transactions with
customers are maintained on a daily basis. There is no chance of confusion and
dispute arising as all sales transactions are accurately maintained. Automated
receivable management systems present full evidence in a short time in case of
dispute arising for resolving them.
4.Boost Up Sales Volume
Receivable management increase the sales and the profitability of the
organisation. By extending the credit facilities to their customers business are able
to boost up their sales volume. More and more customers are able to do
transactions with the business by purchasing products on a credit basis.
Receivable management helps business in managing and deciding their
investment in credit sales. This leads to increase in the number of sales and profit
level.
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5. Improve Customer Satisfaction

Customer satisfaction and retention are key goals of every business. By lending
credit, it supports financially weaken customers who can’t purchase business
products fully on a cash basis. This strengthens the relationship between customer
and organisation. Customers are happy with the services of their business
partners. Receivable management help in organising better credit facilities for
their customers.
Helps In Facing Competition Receivable management helps in facing stiff
competition in the market. Several competitors existing in market offers different
credit options to attract more and more customers. Receivable management
process analysis all information about market and helps the business in farming its
credit lending policies. Customers are provided better services by extending credit
at convenient rates. Appropriate amount and rates of credit transactions can be
easily decided through receivable management process. All credit and payment
terms are decided for every customer as per their needs.
6. Nature of Receivable Management
Regulate Cash Flow Receivable management regulates all cash flows in an
organization. It controls all inflow and outflow of funds and ensure that an
efficient amount of cash is always available. Proper management of receivables
enables organizations in efficient functioning at all the times.
7. Credit Analysis
It perform proper analysis of customer credentials for determining their credit
ratings. Monitoring and scanning of customers before provide them any credit
facility helps in minimizing the credit risk.
8. Decide Credit Policy
Receivable management decides the credit policy and standards as per which
credit facility should be extended to customers. A company may have a lenient
credit policy where customer credit-worthiness is not at all considered or a
stringent policy where credit-worthiness is considered for providing credit.
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9. Credit Collection
Receivable management focuses on efficient and timely collection of business
payments from its customers. It works towards reducing the time gap in between
the moments when bills are raised and payment is collected.
10. Maintain Up-To-Date Records
Receivable management maintains a systematic record of all business transactions
on a regular basis. All transactions are maintained fairly in the form of proper
billing and invoices which helps in avoiding any confusion or settling of disputes
arising later.
Importance and Function of Receivable Management
10. Evaluates Customer Credit Ratings
Receivable management evaluates its customers borrowing capacity and repaying
ability for determining their credit ratings. It approves any credit facility to its
customers after analyzing their information both qualitatively and quantitatively.
Proper investigation of client details helps in reducing the credit risk.
11. Minimizes Investment In Receivables
It reduces investment in receivable by ensuring optimum funds are available
within organization at all the times. Receivable management decides proper credit
limit and credit period for avoiding any bankruptcy situations. Attempts are made
to collect account receivable as soon as they become due for payment which
reduces the overall investment in receivables.
12. Optimize Sales
Efficient receivable management assist business in raising their sales volume.
Business are able to attract more and more customers by providing them credit
facilities. They are able to properly decide and monitor credit facilities with the
help of a receivable management.
13. Reduce Risk Of Bad Debts
It takes all steps to avoid any instances of bad debts. Receivable management
notify all customers for the payment as soon as the amount gets due. It charges
interest on delay payments and aims at optimum collection of all payment timely.
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Implementation of proper schedule and monitoring of collection process results in

minimizing the risk of bad debts.
14. Maintain Efficient Cash
Maintaince of efficient cash is crucial for the survival of every organization.
Receivables management properly records all cash inflows and outflows of a
business. All credit facilities are extended after analyzing the capability of
organization and due payments are collected timely. This results in steady cash
flow within the organization.
15. Lower Cost Of Credit
Receivable management helps business in lowering its cost of credit by limiting
the credit amount and credit period for its customers. It performs all processes
such as acquiring credit information of clients and collecting all due payments in
an efficient way which lower the overall cost associated with credit facilities.
Scope of Receivable Management
16. Formulation Of Credit Policy
Receivable management is the one which formulates and implements an effective
credit policy in an organization. Credit policies are decided as per the capabilities
of an organization. A company may either follow a liberal policy or stringent
credit policy for providing credit facilities to its customers.
17. Credit Evaluation
Credit evaluation involves examining the credit worthiness of customer before
approving any credit amount. Proper investigation of customer’s information
lowers the risk of bad debts. Receivable management acquire all credentials of
client for determining their borrowing capacity and repaying ability.
18. Credit Control
Receivable management implement a proper structure for monitoring all credit
functions of business. It records credit sales with proper documents on a daily
basis. Invoices are raised immediately after goods get dispatch and amount are
collected soon as they become due for payment.
19. Maximize Profit
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It plays an efficient role in maximizing the profit of organizations. Receivable

management helps in boosting the sales volume by providing credit facilities to
customers. More and more people are able to purchase goods on credit which
maximizes the overall profit level.
20. Better Competition
Efficient account receivable management helps business in facing the strong
competition in market. It enables in providing credit facilities to customers as per
their needs and capabilities. Receivable management analyses the credit strategies
adopted by competitors and according frame policy for an organization. It attracts
more and more customers by offering them credit facilities.
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2.3 Role Of Receivable Management System In Banking Sector

The speedier you are, it’s easier for you to address the challenges of
globalization. In this technology era the Receivable Management System provides
following Benefits to its customers: Funds available as per need on day zero, day
one, day two, day three etc. Corporate can plan their cash flows, Bank interest
saved as instruments are collected faster, Affordable and competitive rates. MIS
reports customized to meet individual corporate requirement. Single point enquiry
for all queries. Pooling of funds at desired locations. Operational in 148
Cities/Centers.
 Advanced Web Services: now a day’s most of the banks giving the web
services and internet facility to their customers. 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.
 Account Reconcilement Services: to maintain a checques book most difficult
task for big organizations as they have lots of transactions on daily basis to
overcome 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
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 pay3.
 Armored Car Services (Cash Collection Services): big organization have an
large cash transaction on daily basis or hourly basis so bank provides the
facility to collection of cash from their doorstep.
 Automated Clearing House: This system is criticized by some consumer
advocacy groups; because under this system banks assume that the company
initiating the debit is correct until proven otherwise .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
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collect funds from customers (this is generally how automatic payment plans
work).
 Balance Reporting Services: Corporate clients who are having a large cash
transaction on daily basis and they need reporting so 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 activity, including
deposits, checks, and wire transfers in and out, ACH (automated
clearinghouse debits and credits), investments, etc.
 Lockbox – Retail services: the companies where cash balance is very high
for their convenience purpose bank provides a post box where corporate can
maintain a cash balance called “Lockbox-Retail”.
 Cash Concentration Services: Most of the time large corporate do not find a
branch of their bank to nearby their location. 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.
 Lockbox - Wholesale services: The corporate with small numbers of
payment sometimes they want detailed processing. This might be a small
manufacture company.
 Reverse Positive Pay: Reverse positive pay is similar to positive pay, but the
process is reversed, with the company, not the bank, maintaining the list of
checks issued. When checks are presented for payment and clear through the
Federal Reserve System, the Federal Reserve prepares a file of the checks'
account numbers, serial numbers, and dollar amounts and sends the file to the
bank. In reverse positive pay, the bank sends that file to the company, where
the company compares the information to its internal records. The company
lets the bank know which checks match its internal information, and the bank
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pays those items. The bank then researches the checks that do not match,
corrects any misreads or encoding errors, and determines if any items are
fraudulent. The bank pays only "true" exceptions, that is, those that can be
reconciled with the company's files.
 Positive Pay: This is the service where the corporate electronically shares its
check register of all written checks with the bank. The bank therefore will
only pay checks listed in that register, with exactly the same specifications as
listed in the register (amount, payee, serial number, etc.). This system
dramatically reduces check frauds.
 Sweep accounts: These systems, excess funds from a company’s bank
accounts are automatically moved into a money market mutual fund
overnight, and then moved back the next morning. This allows them to earn
interest overnight. This is the primary use of money market mutual funds.
 Zero Balance Accounting: Corporate having a huge amount of stores or
locations can very often be confused if all those stores are depositing into a
single bank account. Traditionally, it would be impossible to know which
deposits were from which stores without seeking to view images of those
deposits. To help correct this problem, banks developed a system where each
store is given their own bank account, but all the money deposited into the
individual store accounts are automatically moved or swept into the
company's main bank account. This allows the company to look at individual
statements for each store. U.S. banks are almost all converting their systems
so that companies can tell which store made a particular deposit, even if these
deposits are all deposited into a single account. Therefore, zero balance
accounting is being used less frequently.
 Controlled Disbursement: The bank gives a daily report in the First hour of
the day, which provides the disbursement amount that will be payable to the
customer. This early knowledge of daily funds requirement allows the
customer to invest any surplus in intraday investment opportunities, typically
money market investments.
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2.4 Benefits of Receivable Management
1. Better Cash Flow.

All our Budgets and projections depends on how much we can spend. Predictable
cash flow enables us to manage our operations and expansion plans.
2. Lower Working Capital Requirements.
Effective receivables management ensures that our Working Capital requirements
are kept at minimum.
3. Lowered Interest costs.
Working capital is also fixed capital, which attracts interest. Lower Debtors will
reduce our Interest burden.
4. Better Bargaining with Sellers.
When we are buying any goods or services, we can bargain mainly on quantity or
Payment terms. Having a good receivable management provides us with enough
cash flow to bargain effectively with our Suppliers.
5. Stop profit leakages
In case of thin margins, just imagine how much more sales we have to do to
recover and adjust just one small bad-debt. Non receipt or delayed receipt is the
biggest profit leakage any company can have.
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2.5 System for Receivable management

1. Defining a clear Terms for Payment
Having a well defined clear terms of Payments is half the battle won. We might
need to have different payment terms based on what we are selling, or quantity or
pricing.
Payment terms should be set right into the Invoice that we send and even the PO
that we receive from the customer.Having a down payment (or advance payment)
is the best option. Most of the time, we have mythical fear that we will lose the
customer if we ask for advance payment.
2. Well Defined Credit Policies.
How much credit is to be given and to whom and for how long. Every customer
might be thinking that they are different. We need to have a proper Credit Policy
to cover every kind of Customer.
3. Setting Responsibilities clearly
Who will follow up and collect the payment? There should be very clear cut
policy regarding this. Otherwise, its an ever lasting buck passing exercise and
ultimately the company has to suffer. In most of the SME cases, assigning the
receivables responsibilities to Sales team is a good idea.
4. Proper Credit Check Process in Place.
Having a Credit Policy with no Credit Check in place is absolutely wasteful.
Apart from financial documents and Bank details., nowadays there are many
credit rating agencies, which provide online Data about the Credit ratings of any
particular client. It’s always a very good idea to do a market research of the
customer before providing them with the credit. If the customer is an existing one
then just analyzing past history will tell us lot of actionable information. There
should be a clear policy regarding When to engage legal team for Debt collection
5. Various options for paying.
With many online banking and other options, Now the banking has improved a
lot. We should provide as many options to our Customers to make payment, like
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Bank, Cash, Credit Card, Electronic Funds transfer, Bill discounting, Bill
Purchase etc.
6. Use Technology
Firstly, the Technology can be used in Credit Check Process, as discussed above.
More importantly, deploying a software solution, which makes entire Receivable
Management process a lot more easier, with automations and reporting.While
determining any Receivable management solution, make sure that it has Mobile
Application.There should be realtime dashboard reporting that we need for
smooth operations.
7. Regular Ageing Analysis and Action.
The Customer who go bad, generally don’t go bad overnight. They actually shows
a lot of signs of bad debts, before they go bad. But to catch those signals, we need
to have proper ageing analysis and monitoring of Receivables.Also, there should
be clear policy for the next actions. What should the team do, when the Customer
does not pay after the bills are overdue? Do we have legal team and process in
place which is competent enough to take legal actions?
8. Outsource the Receivable Process.
This is very common, for BFSI segment, but not for other businesses. There are
debt collection agencies, who have specialised processes and capabilities to make
the entire process of Receivables as smooth as possible. But this is not a bad idea,
as this will enable us to focus more on the other functionality of the business like
Marketing, Sales and innovation.
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2.6 Principles for managing Account Receivables

1. Credit Extension Policy
A credit policy is the blueprint which firms rely on to arrive at decisions as

whether to extend creditto a customer or not. The basic aim of the credit policy is
to avoid extension of credit to customers who will be unable to pay their debts.
Bigger entities usually have a formal credit policy while that of small firms tend
to be quite informal with a number of small business owners relying on their
instincts.
A good credit policy should seek to bring in and keep good customers with no
adverse impact on thecash flow. In addition the policy should be able to drive
sales as well. A good credit extension policyhas the following important variables
as follows
a. Credit standard
b. Credit Terms
a. Credit standard
Credit standard could be explained as the level of financial strength and all other
minimum qualities and the characteristics of credit worthiness of a credit
applicant required to be considered for credits. Credit standard requirements of a
firm could either be liberal or restrictive. With a firm that has lenient credit
standards, the minimum conditions to be met by the customers to be considered
for credit are quite flexible and relaxed.
b. Credit Terms
Credit terms could be defined as the detailed terms and conditions surrounding
credit sale by a firm to its customers. In this reason, it could be deduced that credit
terms impact the size of the accounts receivable. Credit period refers to the
number of days given to a client to pay for the debt. With the exception of a very
few, most customers often prefer longer credit days periods so the extension of
payment period is likely to stimulate sales but would adversely affect the cash
conversion cycle. Therefore, it locks up much capital in receivables with
attending cost . There is always a high probability of default payment which leads
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to bad debt arising whenever a receivable stays outstanding and unpaid for a
longer period. The onus is on the manager and the department in charge to come
up with an optimum payment period for credit and the firm should stick to it in
order to ascertain the trade-off between cost and profitability
2. Credit Risk analysis and evaluation
The principal objective of receivables management is to ensure minimum or
optimum investment in accounts receivable and considerable reduction in bad
debt losses. In order to arrive at this achievement, the financial manager has to
follow definite principles and procedures to ascertain whether a customer is
worthy for credit or not, taking into consideration the credit ceiling to be grantedas
well as the credit period. Granting credit in trade is a mechanism for promoting
sales but it becomesuseless when due payment cannot be guaranteed. As
alternative sources of funds become costlyand unavailable due to increasing
lending rates, customers tend to look at trade credit as a source of funding.
Customers already owing are likely to request for extension of payment days and
perhaps a review of other terms to stretch out payments for relief. New customers
tend to request and negotiatefor credit account and terms. Here the onus behooves
on firms at the supply end especially to exercisecaution in credit decisions. Every
credit transaction should initially be considered a potential bad or doubtful debt.
3. Financial review
It is helpful to focus on the following; whether the firm is increasingly piling up
stock and are unableto sell it. What is the cash position of the firm in question,
negative or positive? Has the firm utilizedall borrowing space, do they have a
good working capital strength to handle short-term debts even though they may be
recording losses? It is prudent also to assess the recent trade history in terms of
credit volumes and payment patterns; assessing the promptness of the latest trade
payments, can painta clearer picture of the finances of the entity.
4.Credit Collection Policy
A credit collection policy could be explained, as a formally organized elements
and processes that guides the collection of overdue and delinquent debts . Credit
collection policy manual, has in it, the procedures used to collect past due accounts
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depicting the level of firmnessexhibited through the process. In times of delay or

refusal to honor a payment obligation, the firm might write a series of polite letters
or send personnel periodically to customers as a means to facilitate payment. Other
firms may turn overdue and delinquent debts immediately to factor agency to
ensure quick and easy collection . It has become increasingly difficult for firms in
recent times to excessively write-off bad and doubtful debts.
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2.7 Advantages Of Ratio Analysis
‘Ratio Analysis is to a business what a score board is to a game’. The ratios are
useful in the following ways:
 Assessment of Financial health & operational efficiency: Ratios reveal useful
trends for assessment of financial strength and operational efficiency of an
enterprise.
 Facilitates inter-firm Comparison: For inter-firm comparison, ratio analysis is of
immense importance. Suitable relationships can be established between various
relevant factors in a concern and these can be compared with the same in other units
in the industry or average for the industry as a whole.
 Intra firm comparison possible: The performance of different divisions of the
enterprise can also be compared suitably with the help of ratio analysis. The
departmental efficiency can be judged and appropriate decisions taken in several
directions.
 Planning & Forecasting: Ratios not only perform post mortem operations, but also
serve as barometers for future. Ratios have predatory value and they are very
helpful in forecasting and planning the business activities for a future period.
The ratio analysis is one of the most popular techniques employed to diagnose the
financial edifice and flow of funds of a firm. The ratios are used to locate symptoms of
problems.
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2.8 Limitations Of Ratio Analysis

It is said “ratios like statistics have an air of precision and finality about them which at
times may be misleading.” Ratios can at times be quite deceptive since they are precise
in numbers mathematically. Therefore, the limitations of ratio analysis must be kept in
mind, which are as under:
 Only Indicators:
Ratios are simply indicators, too much reliance should not be put on figures. Ratios are
at best only symptoms and there is always a need to investigate the facts revealed by
them further, since the malady may be deep seated.
 Dependence of financial statements:

The base of ratio analysis is financial statement. Whatever limitations financial
statements have, those automatically apply to ratio analysis too. There may be differing
accounting policies pursued in different years or different firms. Comparisons,
horizontal or vertical, will become vicious, in case, say, valuation of inventories or
charge of depreciation is on different basis. Careful examination of the statements
disclosing accounting policies, if any, is necessary. Suitable adjustments should be
made in the financial statements before attempting ratio analysis.
 No price terminology
Accounting ratios and terms used to calculate such ratios have no standard and precise
definitions as yet. For example, net profit ratio is calculated on the basis of operating
profit by one and net profit before tax by the other and the net profit after tax by the
third.
 Effect of inflation:
Comparisons become meaningless since, on account of change in the level of prices,
the values shown in the financial statements lose their significance. Adjustment in the
values is required before undertaking ratio analysis.
 Accuracy of accounts:
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If the accounts have not been correctly prepared, the ratio cannot be correctly
computed. Ratios are only as accurate as the accounts on the basis of which these are
established. The effect of window dressing should be eliminated after proper
adjustments in case the ratio analysis is to serve any useful purpose.
 Cause-and-Effect Relation missing:

The relationship of cause & effect is necessary to be established before relating two
variables. If ratios of not significantly related figures are calculated, these will give
misleading results. The exact cause & the exact effect should also be very clear at the
outset.
 Correct Interpretation:
Ratio computation leads us nowhere; accept to some summarized figures only after
studying the realities behind the financial statements, the ratio can be correctly i
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3.0 COMPANY PROFILE

3.1 History
State bank of india is an indian multinational, public sector banking and financial
services statutory body headquartered in Mumbai, Maharashtra. SBI is the 43rd
largest bank in the world and ranked 221st in the fortune Global 500 list of the
world biggest cooperations of 2020, being the only indian bank on the list. It is a
public sector bank and largest bank in india with a 23% market share by assets
and a 25% share of the total loan and deposit market.
The bank descends from the Bank of Clcutta, founded in 1806 via the Imperial
Bnk of india, making it oldest commercial bank in the indian subcontinent. The
bank of Madras merged into the other two presidency branch in British india, the
Bank of Culcutta and the bank of Bombay , to form the Imperial bank of india,
which in turn became the state bank of india in 1955, with Reserve Bank of india
(indias central bank ) taking 60% stake, renaming it State bank of india.
SBI has world largest branch network, with more than 13500 branch offices
through out the india, staffed by nearly 220000 employees. SBI is also present
worldwide, with seven international subsidiaries in the United states, Canada,
Nepal, Bhutan, Nigeria , Mauritius and the united kingdom and more than 50
branch offices in more than 30 countries.
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3.2 Evolution of Public sector banks:

Public sector in the banking industry emerged with the nationalization of imperial
bank of India (1921) and creating the state bank of India (1955) as a part of
integrated scheme of rural credit proposed by the all India rural credit survey
committee (1951). The bank is unique in several respects and it enjoys a position
of preeminence as the agent of RBI wherever RBI has no branches. It is the single
largest bank in the country with large international presence, with a network of 48
overseas offices spread over 28 countries covering all the time zones. One of the
objectives of establishing the SBI was to provide extensive banking facilities in
rural areas by opening as a first step 400 branches within a period of 5 years from
July 1, 1955. In 1959, eight banking companies functioning in formerly princely
states were acquired by the SBI, which later came to be known as associate banks.
Later, two of the subsidiary banks', viz., the state bank of Bikaner and jaipur were
merged to form the state bank of Bikaner and jaipur, thus form eight banks in the
SBI group then making banks in the state bank group. The public sector in the
Indian banking got widened with two rounds of nationalization-first in July 1969
of 14 major private sector banks each with deposits of RS. 50 crore or more, and
thereafter in April 1980, 6 more banks with deposits of not less than RS. 2 crore
each. It resulted in the creation of public sector banking with a market share of
76.87 per cent in deposits and 72.92 per cent of assets in the banking industry at
the end of march 2003. With the merger of 'new bank of India' with 'Punjab
national bank' in 1993, the number of nationalized banks became 19 and the
number of public sector banks 27. The number of branches of public sector banks,
which was 6,669 in June 1969, increased to 41874 by mach 1990 and again to
46,752 by March 30, 2003. The public sector banks thus came to occupy a
predominant position in the Indian banking scene. It is however, important to note
that there has been a steady decline in the share of in the total assets of
during the latter - half of 1990s. While their share was 84.5 per cent at the end of
march 1996, it declined to 81.7 per cent in 1998 and further to 81 per cent in 1999
Page 25
3.3 Different products of SBI

Deposit Loan Cards Different
Credit cards
Saving account Home Loans Consumer Cards SBI
international
cards
Life plus senior Loan against Credit cards SBI gold cards
citizen saving property
account
Fixed Deposits Personal loans Travel cards SBI Gold master

cards
Security Deposits Car Loan Debit cards Your city Your
cards
Recurring Loan against Commercial cards Partnership
Deposits securities cards
Salary Account Two wheeler Corporate cards SBI employees
cards
Women saving Farmer Finance Prepaid cards SBI Advantage
account cards
Rural saving Business Purchase cards
account Installment Loans
Page 26
3.4 Listing and Shareholdings of SBI
 As on 31st march 2017, Government of India held around 61.23% equity shares in
SBI.
 The Life Insurance Corporation of India, itself state owned, is the largest non-
promoter shareholding in the company with 8.82% shareholdings.
Shareholders Shareholdings
Promoters: Government of India 56.92

FIIs/GDR/OCB/NRI 10.94%
Banks and Insurance companies 10.63%
Mutual funds & UTI 13.72%
Others 07.79%
Total 100%
 The equity shares of SBI are listed on the Bombay Stock Exchange, where it is a
constituent of the BSE SENSEX index, and the National stock Exchange, where it
is constituent of the CNX fifty. Its Global Depository Receipts are listed on the
London stock exchange.
Page 27
3.5 Awards & Recognitions
 Best transaction bank in india by ‘The Asian Banker” for the second time
in the row.
 The Best Trade finance bank (India)- 2019 fo the eight cosequative year y
global finance magazine
 Best MSME Bank award-large bank by CIMSME
 “YONO, our digital initiative won the “Mobile banking Initiative for the
year india” at the Asian banking and Finance retail banking awards,
Singapore and ET BFSI Innovation awards.
 “Green Bond Pioneer award” for being the largest new emerging markets
Cerified Climate Bond issuer of 2018 by climate bond initiative
 SBI was ranked as the top bank in india based on tier capital by the
banker magazine in 2014 ranking.
 SBI was ranked 298th in the fortune global 500 ranking of the world
biggest corporation for the year 2012.
 Best online banking award, Best customer initiative awards & Best risk
management award by IBA banking technology awards 2010.
Page 28
3.6 Vision And Mission

Vision  To be the most trusted and preffered finance
service provider worldwide.
 My customer first
 First in customer satisfaction
Mission  We will be prompt, polite & proactive with

our customers.
 We will speak language of young india
 We will go beyond of call of duty to make our
customer feel valued.
 We will be of service even in the remotes part
of country
 We will create products and services that help
customers achieve their goals.
 We will be embibe state of the art technology
to drive excellence.
Page 29
3.7 SWOT analysis

Strengths  SBI is India’s biggest bank in terms of market
shares, sales and reserves.
 SBI has been ranked in the fortune Global 500
list.
 The bank is active in 36 countries involved in
currency traders around world.
 SBI has many subsidiaries –SBI cards, SBI
life insurance, Jio payment bank, Yes bank,
Andhra Pradesh gramin bank, Kavenri gramin
bank, Vikas bank.
Weakness  The lack of adequate technology driven
infrastructure relative to private banks.
 Employees are hesistant to fix issues
efficiently due to better job stability, and the
turnaround period for client is lengthy relative
to private banks.
 Despites the modernization, the banks still
conveys the perception of the traditional banks
to new age clients.
Opportunities  Merger would result in a rise in market share
to protect its number one spot.
 SBI aims to expand and invest in foreign
activities are yet to be modernized, there is a
greater opportunity for leveraging new
technology and applications to enhance
customer ties.
Page 30
Threats  FDI permitted in the banking sector was

increased to 49% which is a major challenge
to SBI as citizen continue to turn to
international banks for better banking services
facilities and technology.
 Other Government banks, such as GNP,
Andhra, Allahabad bank and Indian bank are
coming up.
 Customer prefer to switch to private banks
and financial services providers for loans and
mortages as SBI involves struct verification
procedure and takes a long time to process.
Page 31
4.0 DATA ANALYSIS AND INTERPRETATION
4.1 Balance sheet

Particulars 2018 2019 2020
Capital & Liability
Capital 892.46 892.46 892.46
Reserve & surplus 218236.10 220021.36 231114.97
Deposit 2706343.29 2911386.01 3241620.73
Borrowing 362142.07 403017.12 314655.65
Other liabilities and 167138.08 145597.30 163110.10

provisions
Total 3454752.00 3680914.25 3951393.92
Assets
Cash and Balance with 418892.84 488817.81 540710.56

Reserve Bank of India
Investment 1060986.72 967021.95 1046954.52
Advances 1934880.19 2185876.92 2325289.56
Fixed Assets 39992.25 39197.57 38439.28
Total 3454752.00 3680914.25 3951393.92
Table no 4.1
Page 32
4.2 Statement of Income and Expenditure

Particulars 2018 2019 2020
Interest Earned 220499.32 242868.65 257323.59
Other income 44600.69 36774.89 45221.48
Total income 265100.01 279634.54 302545.08
Total Expenditure 205589.05 224207.52 234412.46
Operating Profit 59510.96 55436.02 68132.62
Provisions & 75039.20 53828.55 43330.37

Contingencies
PBT 15528.24 1607.47 24802.25
Tax 8980.79 745.25 10314.13
Net Profit 6.547.45 862.22 14488.12
Gross NPA 223427.46 172753.60 149091.85
Table no 4.2
Page 33
4.3 Ratio analysis and interpretation

4.3.1 ANALYSIS OF SOLVANCY RATIO
Solvency ratio= Loan and advances/ total deposits
Year Total Advances Total deposits Ratio
2017-18 1934880.19 2706343.29 71.49
2018-19 2185876.92 2911386.01 75.08
2019-20 2325289.56 3241620.73 71.73
Table no. 4.3.1
Solvency ratio
71.73 71.49
75.08
2017-18 2018-19 2019-20
Chart no. 4.3.1

Interpretation-
It is inferred from the pie chart the solvency ratio in the year 2017-18 is 71.49,
2018-19 is 75.08, 2019-20 is 71.73. the average solvency ratio of SBI bank over
the study period was registered as 72.57. it is indicated that out of every 100
deposited Rs. 72.57 being lent.
Page 34
4.3.2 ANALYSIS OF LIQUIDITY RATIO

Liquidity ratio=Cash & bank balance/ total assets
Year Cash & bank Total assets Ratio
balance
2017-18 418892.84 3454752.00 12.13
2018-19 488817.81 3680914.25 13.28
2019-20 540710.56 3951393.92 13.68
Table no. 4.3.2
Liquidity Ratio
12.13
13.68
13.28
2017-18 2018-19 2019-20
Chart no. 4.3.2
Interpretation-
The ratio shows the liquidity position of the bank. The ratio reveals that the relationship
between the cash and bank balance to total assets of bank. The SBI ratio ranges between
12.13 to 13.68 and ratio increasing year after year.
Page 35
4.3.3 INTEREST EARNED TO TOTAL INCOME

Interest earned to total income ratio=Interest earned/ total income
Year Interest earned Total income Ratio
2017-18 220499.32 265100.01 83.18

2018-19 242868.65 279634.54 86.85
2019-20 257323.59 302545.08 85.05
Table no. 4.3.3
Interest earned to total income
85.05 83.18
86.85
2017-18 2018-19 2019-20
Chart no. 4.3.3
Interpretation- In above table represent the interest earned to total income of SBI show
decreasing trend during the year 2019-20 due to loan sanctioning decreases. table also
shows that the average ratio of SBI is 86.36% which shows that the interest earned to
total income ratio of SBI is 7.4% it means people prefer SBI to take loans and advances
Page 36
4.3.4 ANALYSIS OF OPERATING RATIO

Analysis of operating ratio=Interest income/ Working capital
Year Interest income Working capital Ratio
2017-18 220499.32 251754.76 87.58
2018-19 242868.65 343220.51 70.76
2019-20 257323.59 377600.46 68.15
Table no. 4.3.4
Operating ratio
68.15
87.58
70.76
2017-18 2018-19 2019-20
Chart no. 4.3.4

Interpretation
This ratio shows that the bank ability to leverage its average to total resources in
enhancing its main stream operational interest income. the interest income of the SBI had
been decrease from .except 2017-18 to 2019-20.due to demonetization period .the
average of interest income to working capital of SBI is 75.5.
Page 37
4.3.5. NET PROFIT MARGIN RATIO
Net profit margin ratio= Net profit/ interest earned

Year Net Profit Interest Earned Ratio
2017-18 6547.45 220499.32 2.97
2018-19 862.22 242868.65 0.35
2019-20 14488.12 257323.59 5.63
Table no 4.3.5
Net Profit Margin ratio
2.97
5.63
0.35
2017-18 2018-19 2019-20
Chart no 4.3.5
Interpretation
The above diagram shows the net profit margin of the bank of three year. In the
year 2017-18 net profit margin ratio is 2.97, and in the year 2018-19 the ratio is
0.35 which means it is decreasing in this year. and in year 2019-20 the ratio is
highest 5.63.
Page 38
4.3.6. RETURN ON ASSETS (ROA)
Return on assets= Net profit/ total assets

Year Net profit Total assets Ratio
2017-18 6547.45 3454752.00 0.18
2018-19 862.22 3680914.25 0.23
2019-20 14488.12 3951393.92 0.37
Table no 4.3.6
Return on assets
0.18
0.37
0.23
2017-18 2018-19 2019-20
Chart no 4.3.6
Interpretation-
In above diagram it shows the ROA ratio of the bank. In the year 2017-18 the
ratio is 0.18 and in the year 2018-19 it become 0.23 and in the year 2019-20 it
become 0.37. It shows their ROA is position Is in increasing order.
Page 39
4.3.7. LOAN TO ASSETS RATIO

Loan to assets ratio= Total loan/ total assets
Year Total loan Total assets Ratio
2017-18 362142.07 3454752 10.48
2018-19 403017.12 3680914.25 10.95
2019-20 314655.65 3951393.92 7.96
Table no. 4.3.7
Loan to Assets Ratio
7.96
10.48
10.95
2017-18 2018-19 2019-20
Chart no 4.3.7
Interpretation-
In the above chart the average total loan to assets ratio was registered as 9.80.
during the year 2017-18 the ratio is registered as 10.48. In the year 2018-19 and
2019-20 was 10.95 and 7.96 respectively.
Page 40
4.3.8. RETURNS ON LOANS
Return on loan= Net interest income/ total loan
Year Net interest Total loan Ratio

income
2017-18 220499.32 1934880.19 11.40
2018-19 242868.65 2185876.92 11.11
2019-20 257323.59 2325289.56 11.07
Table no. 4.3.8
Return on loan
11.07 11.4
11.11
2017-18 2018-19 2019-20
Chart no 4.3.8
Interpretation-
The average interest earned to total loan was registered as 11.19. the highest
interest earned ratio was 11.11. net interest earned to total loan was registered
during the year 2017-18 and 2019-20 was 11.4 and 11.07.
Page 41
4.3.9 DEPOSIT TO TOTAL ASSET RATIO
Deposit to total assets ratio= total deposit/ total assets
Year Total deposit Total assets Ratio
2017-18 2706343.29 3454752.00 78.34
2018-19 2911386.01 3680914.25 79.09
2019-20 3241620.73 3951393.92 82.04
Table no 4.3.9
Deposit to Assets Ratio
82.04 78.34
79.09
2017-18 2018-19 2019-20
Chart no. 4.3.9
Interpretation-
it is revealed from the above chart that the average deposit to total assets ratio of
SBI bank was 79.81. the maximum ratio has registered was 82.04 in the year 219-
20. as this ratio establishes the extent of the bank assets being funded by the
deposits.
Page 42
5.0 FINDINGS AND SUGGESTIONS
5.1 Findings
 The research work provides the key finding according to the data analysis.
 It is concluded that, the average solvency ratio of SBI bank is 72.57 and it
indicates that out of every 100 deposited, 73 being lent.
 It is clear from the liquidity ratio the the liquidity position of the bank. The
ratio reveals that the relationship between the cash and bank balance to total
assets of bank. The SBI ratio ranges between 12.13 to 13.68 and ratio
increasing year after year. Maintain proper liquidity is main objective of any
bank and this bank is in good liquidity position.
 Interest earned to total income of SBI show decreasing trend during the year
2019-20 due to loan sanctioning decreases.
 Operating ratio shows that the bank ability to leverage its average to total resources
in enhancing its main stream operational interest income. the interest income of the
SBI had been decrease from. except 2017-18 to 2019-20.due to demonetization
period. the average of interest income to working capital of SBI is 75.5.
 The Net Profit Margin Ratio of the bank is in good position accordingly. In
the year 2017-18 net profit margin ratio is 2.97, and in the year 2018-19 the
ratio is 0.35 which means it is decreasing in this year. and in year 2019-20 the
ratio is highest 5.63.
 The ROA ratio of the bank In the year 2017-18 the ratio is 0.18 and in the year
2018-19 it become 0.23 and in the year 2019-20 it become 0.37. It shows their
ROA is position Is in increasing order.
 The Loan to assets ratio in the year 2019-20 is 7.96 which means it is the
lowest amongst all the year.
 Return on loans during three years showing positive upward trend. Return on
loan is in good position.
Page 43
5.2 Suggestions
on the basis of analysis and interpretation of the collected data, I identified some
suggestions for considerations. On the basis of the study the following
suggestions are given to the State Bank Of India to improve their performance.
 I suggest that they maintain properly liquid funds

 Profit through bank should cover their interest expenses. So try to increase
their operating profit.
 Try to efficient use of current assets because it leads towards efficient
management of current assets and it shows the good liquidity of the bank.
 In contrast, banks generally lack sufficient deposits to fund their main
business dealing with large companies, governments, other financial
institutions, and wealthy individuals. Most borrow the funds they need from
other major lenders in the form of short term liabilities which must be
continually rolled over. This is known as liability management, a much riskier
method than asset management.
 The SBI should maintain the net profit ratio should increase the net profit ratio
by increasing the sale and curtailing the expenses
 SBI bank should maintain the operating profit ratio
 Interest earned by SBI higher earning capital SBI should maintain it
 SBI should maintain its productivity and mobilization of deposits
 SBI bank had ability to generate profit without needing as much capiat.SBI
bank had good management capacity to provide adequate return
 SBI bank have high ratio which mean that SBI have capability to generating a
applicant dividend for investors.
 SBI bank dividend payout ratio shows can reinvest the profit or distribute to
share holder in way of dividend
 SBI should increase the utilization of deposits for providing loan and
advances
Page 44
6.0 CONCLUSION
 This present research work dealt with performance of State Bank of India with
presence to Receivable management and ratio analysis.
 Receivables management is the diligent tracking and methodical practice of
following up on and collecting payments”
 The successful management of accounts receivables encompasses all of the
above to not only make sure you are extending credit appropriately to
customers who are “credit-worthy” but also that the terms ensure that you will
have an adequate cash flow for the day-to-day operations of your business.
 There is satisfactory progress in the SBI bank and overall performance of the
bank is good. The performance of SBI bank has been analyzed in details in
term of deposit, mobilization, loans and advances, investment position,
earning and profitability efficiency
 By analysis of the financial performance of SBI we can say that the SBI is
financially sound as compare to the other bank. State Bank of India is
performing better because the trustworthiness of people is more towards SBI
as compare to other bank. SBI is leading and many rural and urban branches it
also gives strength to SBI and makes it enable to cover the advance given
which in turn reduce the bad debts of SBI.
 According to the analysis, the SBI is maintaining the required standards and
running profitability. SBI have more profitability because it enters into the
commercial market
 Poor receivable management of banks can lead to failure of banks; thus every
bank must use techniques of Receivable management. Good Receivable
management techniques can lead to positive cash flow.
Page 45
BIBLIOGRAPHY
 Annual report and balance sheet of State Bank of India.
WEBLIOGRAPHY
 www.sbi.co.in
 www.sbiinvestments.in
 www.investopedia.com
 www.google.com
 www.isca.in
 www.thebanker.com
 www.seminarsonly.com
 www.moneycontrol.com
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A Study of Receivable Management with reference to SBI 2020-21

1.2 Objective of the project

 To understand how receivable being managed by SBI

1.3 Scope of the project

Efficient Receivable management are pre-requisites so executes payments, collect

1.4 Research methodology

These include the survey or questionnaire method, as well as the personal

1.5 Limitations of the project

Following are the limitations faced by me during the project

 The financial data is confidential due to nature.

2.0 THEORETICAL BACKGROUND

Meaning and concept

It is the decision of an organization to make investments in its credit sales or not.

2.2 Importance of Receivable Management in banking sector

1.Monitor And Improve Cash Flow

Receivable management monitors and control all cash movements

5. Improve Customer Satisfaction

Implementation of proper schedule and monitoring of collection process results in

It plays an efficient role in maximizing the profit of organizations. Receivable

2.3 Role Of Receivable Management System In Banking Sector

2.4 Benefits of Receivable Management

1. Better Cash Flow.

2.5 System for Receivable management

2.6 Principles for managing Account Receivables

A credit policy is the blueprint which firms rely on to arrive at decisions as

depicting the level of firmnessexhibited through the process. In times of delay or

2.7 Advantages Of Ratio Analysis

2.8 Limitations Of Ratio Analysis

 Dependence of financial statements:

 Cause-and-Effect Relation missing:

3.0 COMPANY PROFILE

3.2 Evolution of Public sector banks:

3.3 Different products of SBI

Fixed Deposits Personal loans Travel cards SBI Gold master

3.4 Listing and Shareholdings of SBI

Promoters: Government of India 56.92

3.5 Awards & Recognitions

3.6 Vision And Mission

Mission  We will be prompt, polite & proactive with

3.7 SWOT analysis

Threats  FDI permitted in the banking sector was

4.0 DATA ANALYSIS AND INTERPRETATION

4.1 Balance sheet

Capital & Liability

Capital 892.46 892.46 892.46

Reserve & surplus 218236.10 220021.36 231114.97

Deposit 2706343.29 2911386.01 3241620.73

Borrowing 362142.07 403017.12 314655.65

Other liabilities and 167138.08 145597.30 163110.10

Cash and Balance with 418892.84 488817.81 540710.56

Advances 1934880.19 2185876.92 2325289.56

Fixed Assets 39992.25 39197.57 38439.28

Total 3454752.00 3680914.25 3951393.92

4.2 Statement of Income and Expenditure

Interest Earned 220499.32 242868.65 257323.59

Other income 44600.69 36774.89 45221.48

Total income 265100.01 279634.54 302545.08

Total Expenditure 205589.05 224207.52 234412.46

Operating Profit 59510.96 55436.02 68132.62

Provisions & 75039.20 53828.55 43330.37

Tax 8980.79 745.25 10314.13

Net Profit 6.547.45 862.22 14488.12