Project Report On Cash Management of Standard Chartered Bank
Project Report On Cash Management of Standard Chartered Bank
ON
REPORTS ON
MARKETING,
MANAGEMENT,
ECONOMICS
MARKETING MANAGEMENT,
ACCOUNTING,
HUMAN RESOURCE,
ORGANIZATIONAL BEHAVIOR,
FINANCIAL MANAGEMENT
COST ACCOUNTING
VISIT
HTTP://PAKISTANMBA.JIMDO.COM
RUKMINI DEVI INSTITUTE OF ADVANCED STUDIES
CERTIFICATE
Avnish Mehra, Roll No. 1371591706 is an authentic work carried out by her at
embodied in this project work has not been submitted earlier for the award
(Project Guide)
RDIAS
ACKNOWLEDGEMENT
I sincerely record my appreciation to all, who have contributed in preparing this report with
who zestfully monitored the growth of this project. He from time to time guided me in the right
direction and took care that I had enough time to complete my project.
As an amateur in this field I am indebted to those who have readily responded to my request for
expert guidance.
( )
AVNISH MEHRA
1371591706
ABSTRACT
what blood is to a living body. A business cannot operate without its life-blood cash, and without
cash management, there may remain no cash to operate. Cash movement in a business is two-
way traffic. It keeps on moving in and out of business. The inflow and outflow of cash never
coincides. Important aspect which is unique to cash management is time dimension associated
with the movement of cash. Due to non-synchronicity of cash inflow and outflow, the inflow
may be more than the outflow or the outflow may be more than the inflow at a particular point of
time. This needs regulation. Left to itself cash flow is apt to follow monsoonic pattern, and
showers of cash may be heavy, scanty or just normal. Hence there is a dire need to control its
movement through skillful cash management. The primary aim of cash management is to ensure
that there should be enough cash availability when the needs arises, not too much, but never too
little.
TABLE OF CONTENTS
3. Research Methodology 16 - 17
4. Literature Review 18 – 36
5. Industry Profile 37 – 43
6. Company Profile 44 - 87
✔ History of Standard Chartered Bank
✔ About Standard Chartered Bank
✔ Products offered by SCB
✔ Cash Management at length
7. Result and Analysis 88 – 96
business customers. It may be used to describe all bank accounts (such as checking accounts)
provided to businesses of a certain size, but it is more often used to describe specific services
such as cash concentration, zero balance accounting, and automated clearing house facilities.
and corporations:
a very large business, since it issues so many checks it can take a lot of human
monitoring to understand which checks have not cleared and therefore what the
company's true balance is. 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.
• 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.
• 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
• Automated Clearing House: services are usually offered by the cash management
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 funds from
customers (this is generally how automatic payment plans work). This system is criticized
by some consumer advocacy groups, because under this system banks assume that the
• Balance Reporting Services: Corporate clients who actively manage their cash balances
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 activity, including
deposits, checks, wire transfers in and out, ACH (automated clearinghouse debits and
• 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.
• Lockbox services: Often companies (such as utilities) which receive a large number of
payments via checks in the mail have the bank set up a post office box for them, open
their mail, and deposit any checks found. This is referred to as a "lockbox" service.
• Positive Pay: Positive pay is a service whereby the company 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 fraud.
• Sweep Accounts: are typically offered by the cash management division of a bank.
Under this system, 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
large numbers of stores or locations can very often be confused if all those stores are
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
• Wire Transfer: A wire transfer is an electronic transfer of funds. Wire transfers can be
done by a simple bank account transfer, or by a transfer of cash at a cash office. Bank
wire transfers are often the most expedient method for transferring funds between bank
accounts. A bank wire transfer is a message to the receiving bank requesting them to
effect payment in accordance with the instructions given. The message also includes
settlement instructions. The actual wire transfer itself is virtually instantaneous, requiring
Management Services. The bank provides a daily report, typically early in the day, that
provides the amount of disbursements that will be charged to the customer's account. This
early knowledge of daily funds requirement allows the customer to invest any surplus in
from delayed disbursements, where payments are issued through a remote branch of a
bank and customer is able to delay the payment due to increased float time.
In the past, other services have been offered the usefulness of which has diminished with the rise
of the Internet. For example, companies could have daily faxes of their most recent transactions
Cash management aims at evolving strategies for dealing with various facets of cash
efficient utilisation 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 alongwith efficient management of working capital.
• Cash Forecasting
expected cash problems, which it may encounter, thus assisting it to regulate further cash flow
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
• 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 unability to remain liquid. Liquidity has an intimate relationship with efficient utilisation of
Due to non-synchronization of ash inflows and cash outflows the surplus cash may arise
at certain points of time. If this cash surplus is deployed judiciously cash management will itself
become a profit centre. However, much depends on the quantum of cash surplus and
of deficits at various points of time. A business has to raise funds to the extent and for the period
of deficits. Raising of funds at minimum cost is one of the important facets of cash management.
Cash management is the stewardship or proper use of an entity’s 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.
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
Treasury’s account. Minimizing idle cash balances requires accurate information about expected
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
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 Government. They want to accelerate collections.
One way vendors can do this is to offer discount terms for timely payment for goods sold.
BANK
Cash Management As part of Standard Chartered's global transaction solutions to Corporates
and Institutions, we provide Cash Management, Securities Services and Trade Services through
our strong market networks in Asia, Africa, the Middle East and Latin America. We also provide
a bridge to these markets for clients from the U.S and Europe. We are committed to providing
you with
Innovative products
World-class clearing services Thus ensuring a full suite of transactional products for your
needs.
For Corporates
Standard Chartered is highly recognized as a leading cash management supplier across the
emerging markets. Our Cash Management Services cover local and cross border Payments,
Collections, Information Management, Account Services and Liquidity Management for both
corporate and institutional customers. With Standard Chartered's Cash Management services,
you'll always know your exact financial position. You have the flexibility to manage your
company's complete financial position directly from your computer workstation. You will also be
able to take advantage of our outstanding range of Payments, Collections, Liquidity and
Investment Services and receive comprehensive reports detailing your transactions. With
Standard Chartered, you have everything it takes to manage your cash flow more accurately.
Payments Services
Collection Services
Liquidity Management
Standard Chartered is highly recognized as a leading cash management supplier across the
emerging markets. Our Cash Management Services cover local and cross border Payments,
Collections, Information Management, Account Services and Liquidity Management for both
corporate and institutional customers. If you are looking for a correspondent banking partner you
can trust, Standard Chartered can help you. We have more than 500 offices located in 50
countries throughout the world and, with 150 years of on-the-ground experience, we can help our
Clearing Services
Asian Gateway
Payment Services Global payments solution for efficient transaction processing Looking to
Efficient processing of all your payables in the most cost effective way
Straight through processing both at your end as well as your bank's back-end
Solution Standard Chartered's Straight Through Services (STS) Payments Solution can be
tailored to the different payment needs of companies, whatever industry, size or country you 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 realise the benefits of STS, please contact your
local Relationship Manager or Cash Management representative. Our Coverage We are the
foreign bank having the largest geographical representation in the country. We are present in 31
locations which enables you to print Payable At Par at 31 locations with the highest number of
print sites. i.e. we can print cheque, drafts for you at 31 locations and thus bring down your cost.
We can also provide 700+ locations online for draft required. We are the only bank which
Collection Services
Comprehensive receivables management solution. Standard Chartered 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.
returns.
Cost Management - reducing interest costs through optimal utilisation of funds. Our
Solution The Standard Chartered 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. In India we have around 270 local locations and we
are the only foreign bank which is present in 31 locations. We have the widest network among
foreign banks in the country. This Collections Solution, delivered through a standardised
international platform, has the flexibility to cater to your local needs, thus enabling you to meet
your objectives of reducing costs and increasing efficiency and profitability through better
receivables and risk management. The key components of our solution include the following:
Guaranteed Credit
Comprehensive MIS
System Integration
Outsourcing of Collection
Liquidity Management
Solutions for efficient management of your funds A corporate treasurer's main challenge often
revolves around ensuring that the company's cash resources are utilised to their maximum
our global experience and on-the-ground market knowledge, Standard Chartered will help you
define an overall cash management strategy which incorporates a liquidity management solution
that best meets your needs. Click here for an illustration of our propositions.
Key Features Based on your needs and the regulatory environment that you are in, you can
Notional Pooling
OBJECTIVES
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
organisation. Basically it tells what all have been studied while making the project.
phenomenon. This process, which is frequently called research methodology, has eight distinct
characteristics:
4. Research usually divides the principal problem into more manageable subproblems.
7. Research requires the collection and interpretation of data in attempting to resolve the
Descriptive research is used in this project report in order to know about cash management
services to clients and determining their level of satisfaction. This is the most popular type of
research technique, generally used in survey research design and most useful in describing the
Questionnaire method
Direct Interaction with the clients.
Primary Data: - The sources of Primary data were questionnaires and personal
interviews.
Secondary data: - the sources of secondary data were internet, books and newspaper
articles.
Sample size: 8
LITERATURE REVIEW
Web-based Cash Management
Finacle web-based cash management solution enables banks to offer comprehensive cash
management services to businesses, ranging from small enterprises to large corporate houses.
Built on new-generation industry standard technologies J2EE and .NET, the modular solution
manages cash positions and electronically sends and receives funds in a secure
The solution is multi-currency enabled and offers multilingual support. It is also designed to
support multiple channels including the Internet and mobile, and can be interfaced with disparate
Key Offerings
• Payables Management
• Receivables Management
• Trade Finance
Additional Features
• Alerts
• Infrastructure
• Security
The new electronic payment products and services offer the corporate clients an improved
bottom line by helping manage cash requirements. It helps corporate to make the best use of
their funds and provides an effective means of managing their financial requirements.
Several of the trends in cash flow forecasting favor the use of electronic payment products
like RTGS, Electronic Funds Transfer (EFT) and card payments. Improved technology and
systems integration makes it more attractive to use electronic payment products because these
The new forecasting techniques also suggest use of electronic payments, because they offer
disaggregated revenue and spending data that can easily be categorized and studied.
Electronic payments and cards provide control over incoming funds, and allow companies to
limit access to these funds to authorized parties. In addition, limiting corporate purchases to
electronic payments makes it easier for firms to monitor cash outflows and prevent
unauthorized expenditures, because these payments are easier to document and provide an
audit trail.
From the perspective of a Corporate, the electronic payment systems ensure speed and
security of the transaction processing chain, from verification and authorisation to clearing
and settlement. Also it gives a great deal of freedom from more costly labor, materials, and
accounting services that are required in paper-based processing, better management of cash
2008will discuss on topics like: How innovations in the payments world could shape cash
management, How can banks and corporate facilitate one another's business, Linking of
electronic payment systems like RTGS, EFT, NEFT, SWIFT etc in cash management etc.
Banknet will also release results of “Bank Customer Survey on Payment Systems” at the
conference
Business Benefits
Finacle’s features such as wire initiations, liquidity management, alerts, cross border payments
and positive pay offer a consistent stream of fee-based revenues. The customer relationship
management capabilities embedded within these systems also enable targeted marketing, leading
Business Agility
Built on industry standard platforms J2EE and .NET, the solution provides banks with
tremendous flexibility to extend their product portfolio and customize the solution according to
requirements. The architecture of the solution enables the bank to write business rules once and
deploy anywhere, add new rules, modify existing ones or integrate with other applications
seamlessly. The solution also provides an additional layer that can be extended to interface with
multiple back office systems. All this enhances agility of operations, helping the bank identify
Cost Savings
Thin-client architecture over the Internet reduces the cost of maintenance associated with
frequent upgrades and support. The deployment of Finacle enables a cost-effective channel
through which to serve customers. As the number of transactions completed on-line increases,
the number of more expensive branch transactions decreases. This is especially true of small
business customers who tend to use the branch as their primary channel. Greater automation and
productivity, as well as reduced human error, further lead to increased cost savings.
defining user-permissions, based on hierarchy and roles. This leads to greater convenience and
offer better monitoring of banking transactions in real time. A more empowering corporate client
Cash is your business's lifeblood. Managed well, your company remains healthy and strong.
If you haven't considered cash management an important issue, then you're probably
undermining your business's short-term stability and its long-term survival. But how can you
Start with understanding how good cash-management practices can influence your company's
growth and survival by reading "The Art of Cash Management," Inc Finance Editor Jill
Andresky Fraser's classic article on the topic. Then dive into forecasting your business-cash
needs and learning how to handle a cash crisis. Assembled here are practical pieces of advice,
tips and tricks from CEOs, and tools that you can use to get a handle on business cash.
If your definition of cash flow is flawed, and you're not tracking the right numbers, you
Everyone wants cash on hand at all times. Here are 10 rules to help you get there.
Every business has a magic number. By employing his, our columnist didn't overstaff this
year.
Tighten your seatbelt. Surviving the ups and downs of the world economy means keeping
Credibility with vendors, bankers, and other creditors is built slowly, but can be destroyed
quickly if your company falls behind on payments. Know how to break the bad news to
How do you prep for a cash crisis? Wayne Karpoff, president of Myrias Software Corp., knew
cash would be a problem late last year. His 15-employee, $1.5-million company dropped selling
its products and became a full-time service business. So he built a contingency fund into his
annual budget -- an amount equal to three months' worth of payroll. He got the idea when his
bank suggested he set up a contingency fund to safeguard his mortgage payments in the event he
found himself out of work. He dipped into the fund three times last year to float the company
Here are the keys to creating a powerful tool to take control of your cash flow.
Here is a 4-step process you can use to create cash flow projections you can trust.
Lisa Hickey created a fund to support creative risks her Boston-based ad agency, Velocity
Inc., takes when trying innovative ideas that might not pan out.
Don't put together an annual sales forecast using only gut instinct and wishful thinking!
Here are some rules you can follow to create a forecast that you and your employees can
count on.
Developing a budget is simple, and when created with solid sales and expense forecasts
in mind, you can ensure that your budget will stand up to the daily demands of your
business. Here are some steps you can take to create a cash flow budget you can rely on.
Tools
Tracking these key financial ratios will highlight financial trends in your business.
Use these financial-ratio worksheets to determine 10 key ratios and track financial trends
in your business.
A Simple Formula
Profit-and-Loss Projection
There are, of course, many ways to improve and re-engineer the processes. However,
depending on budgets and also to minimise disturbances to the business, the following are the
suggested simple and initial steps. Note that the larger the corporation, the more involved the
Recognize the need for improvement and commit to change (this commitment must come
The project team must have a credible and strong project leader and be sponsored by the
decision maker(s).
This is straightforward and a simple overview. Ask questions such as: Is electronic
banking used? To what degree? How are revenues collected and how are payments made? How
many staff are dedicated to these functions? What is the decision-making and authorisation
Review existing service providers and other service providers, making initial
presentations and discussions with banks and providers. Quickly shortlist potential providers for
further in-depth discussions and presentations. Develop a good idea of what solutions, services
There must be a true desire and commitment to improve and make changes for the better;
however, the process should be evolutionary and practical. Take care to ensure goals are not
artificially set for easy attainment nor established for ideal perfection so to be unreachable or
unrealistic. The goals should be at a higher level than where the company is now and the initial
level of improvement. For example, a goal may be to achieve costs savings and efficiency gains
on the process of collecting revenues and reconciling with the accounts receivable system.
(6) Establish and commit to specific initiatives, sequence and timeframe:
Action points, initiatives and a realistic time frame must be decided for achieving each
initiative. Communicate these to the providers. For example, an initiative may include
(7) Obtain simple written proposals from the shortlisted potential providers:
Have providers present proposals and be prepared to ask questions and probe exactly
what is being offered and whether the proposed solution, services and products meet your
It is not necessary to have only one provider of services. For example, there could be a
domestic collection bank and a regional account management bank. Document all goals and
services as well as pricing and the period the pricing covers, such as one-year or two-year, and
(9) Review the internal project team and add actual users to help implement the proposed
changes:
This process is to help obtain commitment from the bottom up and to gain the buy in of
internal users. The bank provider(s) should also have a parallel team to work with your
implementation or project team. Also, a mutually designed and agreed schedule and action plan
should be established.
objectives are obtained. There should also be an ongoing emphasis on improvement, and a
culture for empowering staff to recommend and look for ways and means to improve cash
management services and processes. This needs to be encouraged, especially with the new
developments in technology afforded by the Internet. Management and users must commit to the
the threat of fraud has never been greater. Personal computers, the Internet and e-mail can
You can help prevent many types of fraud if you know what to look for. Below are some of the
Among ways that scam artists obtain access to personal and/or financial information are:
sensitive personal, financial or password information. The e-mail appears to have been sent
by a reputable company from a legitimate e-mail address and includes logos and links to
pretend to be, for example, from the security and fraud department of a major credit card
company. They ask questions to verify personal information such as your home address, as
well as the numbers on the back of your credit card, to verify you have the card.
Bank scams: Perpetrators attempt to get you to log on to a fake Web site to capture your
personal financial information. They send an e-mail to bank customers asking them to click
on a fake bank Web site and supply their account name and password. These e-mails may
contain logos and graphics that appear to be legitimate, but they often contain typos, e-mail
addresses or URLs that have nothing to do with the company. An example of this is the 419,
or advance-fee scam, run by Nigerian gangs who set up fake bank Web sites.
Use extreme caution in providing personal information on Web sites or on unsolicited phone
calls. Be cautious of unexpected e-mails linking to online forms that ask you to submit sensitive
personal information. Legitimate Web sites hardly ever ask for this kind of information to
confirm account renewal or other information. Scam artists take many precautions to make
If you receive an e-mail that warns you, with little or no notice, that an account of yours will be
shut down unless you confirm your billing information, do not reply or click on the link in the e-
mail. Instead, contact the company cited in the e-mail by a telephone number or Web site address
you know to be genuine. (Note: Merrill Lynch will not ask a client to send sensitive personal
phone number on the back of your credit card. Do not share any personal information over the
Keeping your operating funds working for your company is crucial to maintaining healthy cash
flow and maximizing your financial return. Investing idle funds wisely may help you to generate
income from your working capital, increasing your yields while maintaining liquidity.
There are a wide variety of investment instruments available to companies seeking a return on
excess cash. How do you know which investments to choose? Many businesses emphasize only
convenience and accept whatever return is offered. However, there are ways you may be able to
If your company is in a lower tax bracket, focus on higher yields rather than tax advantages;
however, if your federal tax bracket is high, you may be able to obtain a better after-tax return by
investing in federally tax-exempt securities. It's important to compare the yields on tax-free
obligations to their fully taxed equivalents to find those that provide a higher after-tax return.
The tax benefits of some investments may depend on your business structure.1
Extend the maturities of investments when practical
Investing funds for longer terms typically means higher yields. If your business keeps its cash
highly liquid, perhaps in a money market fund, when only a portion is needed for
Determine how much you can commit for a longer period. By investing that amount for as little
as 90 days, you may be able to earn extra return. Also consider intermediate-term investments
with maturities from one to three years. If your business is building cash reserves for an
expansion, an acquisition or new machinery, you may be able to invest those funds for a year or
two.
The potential for additional yield might warrant assuming some moderate investment risk.
Newly issued obligations guaranteed by the U.S. government (such as Treasury bills) yield less
than securities lacking that guarantee. You may be able to obtain a higher yield with high-quality
A number of rating services, such as Fitch Investors Service, Moody's Investors Service and
Standard & Poor's Corporation (S&P), provide comparative analyses of the risk levels of various
instruments. If you choose bonds with short maturities, you may want to consider an A-rated
bond by S&P. This type of bond is likely to yield a higher return than an AAA-rated bond (S&P’s
highest investment rating) of equal maturity. You should, however, be comfortable with the
Many working capital investment vehicles must be purchased in minimum amounts and in
multiples of the same or smaller amounts. Treasury bills, for example, can be bought in multiples
As a business grows and builds a stronger cash flow, the variety of investment opportunities
increases. If you have a large amount of investable assets (perhaps $100,000 or more), this gives
you an advantage in finding higher rates. Many institutional investment vehicles require high
Healthy cash flow is essential to the success of a small business. You may have the best service
or product around, your employees and customers may love you, your office may be well
organized, but if you don’t have the money to buy inventory or pay bills, you can’t keep your
business running. Many business owners make the mistake of believing cash flow is largely out
of their control. On the contrary, the following steps can really help.
to judge the health of a company. You should use these tools as well. Commonly used ratios can
help you analyze your pricing strategy, level of overhead, liquidity, the health of your cash flow,
your average collection period, the appropriateness of your collection terms and your inventory
turnover rate.
When it comes to the cash flowing through your financial accounts, your goals should be to
ensure that incoming funds spend as much time as possible earning interest or dividends for your
benefit and that outgoing funds are available when needed. With a traditional business checking
account, meeting these seemingly simple goals can be a complex task. You will have to move
funds manually into a separate money market account in order to earn interest or dividend
income and back into your checking account to cover disbursements when due.
investment and borrowing into a single account. A central asset account saves you time and effort
by automatically putting your cash where it needs to be, when it needs to be there. And by
keeping your cash in interest-bearing accounts right up until the moment disbursements clear
your account, a central asset account can also help increase your return and your bottom line.1
needs more money than it has on hand. This is why adequate credit resources are essential. A
business line of credit is useful and convenient because it can be used as needed, paid down and
reused without reapplying. When a line of credit is integrated with a central asset account, credit
is automatically accessed when needed. And incoming funds automatically go to pay down your
Although part of your business capital needs to be liquid, most businesses have some capital that
can be invested in short- and intermediate-term securities for potentially higher yields. A broad
array of investments can be purchased within a central asset account. And you can sell securities
in your account at any time, or, if appropriate, borrow against their value2, to meet working
capital needs. Be sure to discuss the risks of borrowing against your securities with your
Today’s business environment changes rapidly, and as a business owner, you need to regularly
review your cash flow and cash management policies to ensure that they are helping to keep your
business competitive.
INDUSTRY PROFILE
AN INTRODUCTION TO THE BANKING SECTOR IN INDIA
Banks are the most significant players in the Indian financial market. They are the biggest
purveyors of credit, and they also attract most of the savings from the population. Dominated by
public sector, the banking industry has so far acted as an efficient partner in the growth and the
development of the country. Driven by the socialist ideologies and the welfare state concept,
public sector banks have long been the supporters of agriculture and other priority sectors. They
act as crucial channels of the government in its efforts to ensure equitable economic
development.
The Indian banking can be broadly categorized into nationalized (government owned),
private banks and specialized banking institutions. The Reserve Bank of India acts a centralized
body monitoring any discrepancies and shortcoming in the system. Since the nationalization of
banks in 1969, the public sector banks or the nationalized banks have acquired a place of
prominence and has since then seen tremendous progress. The need to become highly customer
focused has forced the slow-moving public sector banks to adopt a fast track approach. The
unleashing of products and services through the net has galvanized players at all levels of the
banking and financial institutions market grid to look anew at their existing portfolio offering.
Conservative banking practices allowed Indian banks to be insulated partially from the Asian
currency crisis. Indian banks are now quoting al higher valuation when compared to banks in
other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems
linked to huge Non Performing Assets (NPAs) and payment defaults. Co-operative banks are
nimble footed in approach and armed with efficient branch networks focus primarily on the
‘high revenue’ niche retail segments.
The Indian banking has finally worked up to the competitive dynamics of the ‘new’
Indian market and is addressing the relevant issues to take on the multifarious challenges of
globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive
players capable of meeting the multifarious requirements of the large customer’s base. Private
Banks have been fast on the uptake and are reorienting their strategies using the internet as a
medium The Internet has emerged as the new and challenging frontier of marketing with the
conventional physical world tenets being just as applicable like in any other marketing medium.
The Indian banking has come from a long way from being a sleepy business institution
to a highly proactive and dynamic entity. This transformation has been largely brought about
by the large dose of liberalization and economic reforms that allowed banks to explore new
business opportunities rather than generating revenues from conventional streams (i.e.
borrowing and lending). The banking in Indiais highly fragmented with 30 banking units
contributing to almost 50% of deposits and 60% of advances. Indian nationalized banks (banks
owned by the government) continue to be the major lenders in the economy due to their sheer
size and penetrative networks which assures them high deposit mobilization. The Indian
banking can be broadly categorized into nationalized, private banks and specialized banking
institutions.
The Reserve Bank of Indiaacts as a centralized body monitoring any discrepancies and
shortcoming in the system. It is the foremost monitoring body in the Indian financial sector.
The nationalized banks (i.e. government-owned banks) continue to dominate the Indian
banking arena. Industry estimates indicate that out of 274 commercial banks operating in
India, 223 banks are in the public sector and 51 are in the private sector. The private sector
bank grid also includes 24 foreign banks that have started their operations here.
The liberalize policy of Government of India permitted entry to private sector in the banking, the
industry has witnessed the entry of nine new generation private banks. The major
differentiating parameter that distinguishes these banks from all
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