Cash Management - ICICI Bank

A Project report On (Study of cash MANAGEMENT wITH icici bank)
Submitted in the partial fulfillment of Post Graduate Diploma in Business Management
ABSTRACT
In a business done financially affects cash eventually. Cash is to a business is what blood is to a living body. A business cannot operate without its life-blood cash, and without cash management, there may remain no cash to operate. Cash movement in a business is two-way traffic. It keeps on moving in and out of business. The inflow and outflow of cash never coincides. Important aspect which is unique to cash management is time dimension associated with the movement of cash. Due to non-synchronicity of cash inflow and outflow, the inflow may be more than the outflow or the outflow is more than the inflow at a particular point of time. Left to shift cash flow is apart to follow monotonic pattern, and showers of cash may be heavy, scanty or just normal. Hence there is a dire need to control its movement through skillful cash management. The primary aim of cash management is to ensure that there should be enough cash availability when the needs arise, not too much, but never too little.
CONTENTS
SL. NO. PARTICULARS
1 CERTIFICATE FROM THE CORPORATE GUIDE 2 CERTIFICATE FROM THE FACULTY GUIDE 3 DECLARATION 4 ACKNOWLEDGEMENT 5 EXECUTIVE SUMMERY 6 ON JOB TRAINING 7 7 Ps OF BANKING SECTOR 8 CORPORATE PROFILE Overview History Board Members Board Committees Graphical Representation Financial position Competitors 9 CASH MANAGEMENT SERVICE Introduction CMS Services Purpose of CMS Types of CSM in ICICI Bank
CSM
Benefits from Ele.Payment about Mutilated Currency Notes Mgt Cash mgt: Empirical Analysis 10 RESEARCH METHODOLOGY 11 RESULT AND ANALYSIS 12 CASE STUDY Case Study Analysis of the Case Study 13 LIMITATIONS OF THE REPORT 14 CONCLUSIONS AND RECOMMENDATIONS Conclusions Recommendations 15 REFERENCES 16 APPENDIXES Questionnaire Treasury Mgt Vs Cash Details
CERTIFICATE FROM THE CORPORATE GUIDE

This is to certify that the summer training project entitled Study of cash management at ICICI Bank done by student of has worked under my guidance. The matter embodied in this project work has been submitted earlier for the award of any degree to the best of my knowledge and belief.
ACKNOWLEDGEMENT
I sincerely thank my corporate guide Mr. Sanjeeb Ganguly (Manager of ICICI Bank, Nayapalli, Bhubaneswar) and Ms.Lipsa Mohanty (Senior Officer, ICICI Bank) for giving me this opportunity to work in their esteemed organization and helping me for completing the project in a successful manner. Without their encouragement and help, this project would have been incomplete. I am thankful to for her cooperation to complete my project and giving me the best of her job experience. Last but not the least I am thankful to almighty God, my family and my friends for their love and moral support.
EXECUTIVE SUMMARY
Title of the project:-
Cash Management System
Name of the organization:-
ICICI Bank
Name of the institute:MANAGEMENT
NSB SCHOOL OF BUSINESS
Project period:-
27th April 2009
to
08th June 2009
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 organization. Basically it tells what all have been studied while making the project.
To learn about various aspects of ICICI BANK cash management. To analyze the history of ICICI bank. To gain insights about functioning of ICICI cash management. To explore the future prospects of ICICI cash management.
CONCLUSION: My OJT has given me a good experience in learning how to manage cash, how to handle cash, how to receive & payments etc. in bank. And also how safety the cash manage in bank. I learn a lot from this training and I faced a lot of problem and also I can solve the problems easily.
7 PS of BANKING SECTOR
It is very important for any bank to identify the 7 Ps of services so was understands their customers better and provide them with best of service. The 7 Ps are:
1. PRODUCT MIX 2. PRICE MIX 3. PLACE 4. PROMOTION 5. PEOPLE 6. PROCESS 7. PHYSICAL EVIDENCE
CORPORATE PROFILE
OVERVIEW
ICICI Bank is India's second-largest bank with total assets of Rs. 3,793.01 billion (US$ 75 billion) at March 31, 2009 and profit after tax Rs. 37.58 billion for the year ended March 31, 2009. The Bank has a network of 1,443 branches and about 4,721 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management.
The ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. ICICI Bank now has wholly-owned subsidiaries, branches and representatives offices in 18 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK (the subsidiary through which the hisave savings brand is operated), offshore banking units in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular. ICICI reported a 1.15% rise in net profit to Rs. 1,014.21 crore on a 1.29% increase in total income to Rs. 9,712.31 crore in Q2 September 2008 over Q2 September 2007. The bank's current and savings account (CASA) ratio increased to 28% in 2008 from 25% in 2007.
HISTORY
1955 The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses.
1994 ICICI established Banking Corporation as a banking subsidiary. formerly
Industrial Credit and Investment Corporation of India. Later, ICICI Banking Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc.
2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was
a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s.
2002 The Boards of Directors of ICICI and ICICI Bank approved the reverse merger
of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank. ICICI started its international expansion by opening representative offices in New York and London.
2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the
UK it established an alliance with Lloyds TSB. 2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai.
2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that 2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about
country, India and South Africa.
US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia.
Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong.
2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened 2007 ICICI amalgamated Sangli Bank, which was headquartered in Sangli,
representative offices in Bangkok, Jakarta, and Kuala Lumpur.
in Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas.
ICICI also received permission from the government of Qatar to open a branch in Doha. ICICI Bank Eurasia opened a second branch, this time in St. Petersburg. 2008 The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch.
BOARD MEMBER OF ICICI BANK
Mr. K.V. Kamath, Chairman Mr. Sridar Lyengar Mr. Lakshmi N. Mittal Mr. Narendra Murkumbi Dr. Anup K. Pujari Mr. M.S.Ramachandran Mr. M.K.Sinha Prof. Marti G. Subrahmanyam Mr. T.S. Vijayan Mr. V.Prem Watsa Ms. Chanda Kochhar, Managing Director & CEO Mr. Sandeep Bakhshi, Deputy Managing Director Mr. N.S. Kannan, Executive Director & CEO Mr. K. Ramkumar, Executive Director Mr. Sonjoy Chatterjee, Executive Director
BOARD COMMITTEES
Audit Committee Mr. Sridar Iyengar, Chairman Mr. M. K. Sharma, Alternate Chairman Mr. Narendra Murkumbi
Board Governance & Remuneration Committee Mr. M. K. Sharma, Chairman Mr. K. V. Kamath Mr. Anupam Puri Mr. P. M. Sinha Prof. Marti G. Subrahmanyam Credit Committee Mr. K. V. Kamath, Chairman Mr. Narendra Murkumbi Mr. M .K. Sharma Mr. P. M. Sinha Ms. Chanda Kochhar
Customer Service Committee Mr. K. V. Kamath, Chairman Mr. Narendra Murkumbi Mr. M.K. Sharma Mr. P.M. Sinha Ms. Chanda Kochhar Fraud Monitoring Committee Mr. M. K. Sharma, Chairman Mr. K. V. Kamath Mr. Narendra Murkumbi Ms. Chanda Kochhar Mr. Sandeep Bakhshi Share Transfer & Shareholders'/ Investors' Grievance Committee Mr. M. K. Sharma, Chairman Mr. Narendra Murkumbi Mr. N. S. Kannan
Risk Committee Mr. K. V. Kamath, Chairman Mr. Sridar Iyengar Prof. Marti G. Subrahmanyam Mr. V. Prem Watsa Ms. Chanda Kochhar Committee of Directors Ms. Chanda Kochhar, Chairperson Mr. Sandeep Bakhshi Mr. N. S. Kannan Mr. K. Ramkumar Mr. Sonjoy Chatterjee
GRAPHICAL REPRESENTATION OF ICICI GROUP AND SOME GROWTH REPORT OF ICICI BANK
ICICI GROUP
FINANCIAL POSITION
Profit & loss Account
Mar ' 96 Income: Operating income Expenses Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings
Mar ' 08
Mar ' 07
Mar ' 06
Mar ' 05
135.31
39,467.92
28,457.13
17,517.83
11,838.10
4.49 0.31 17.55 22.35 28.05 0.55 28.60 84.92 4.51 0.60 23.50 16.51 16.52 11.73 4.78
2,078.90 1,750.60 6,447.32 10,276.82 5,706.85 65.58 5,772.43 23,484.24 578.35 5,194.08 1,611.73 4,092.12 65.61 4,157.73 5,156.00 1,227.70 149.67 3,778.63
1,616.75 1,741.63 4,946.69 8,305.07 3,793.56 309.17 4,102.73 16,358.50 544.78 3,557.95 984.25 2,995.00 115.22 3,110.22 3,403.66 901.17 153.10 2,349.39
1,082.29 840.98 2,727.18 4,650.45 3,269.94 466.02 3,735.96 9,597.45 623.79 3,112.17 556.53 2,532.95 7.12 2,540.07 2,728.30 759.33 106.50 1,862.46
737.41 601.71 1,248.31 2,587.43 2,679.78 448.46 3,128.25 6,570.89 590.36 2,537.88 522.00 2,007.28 -2.08 2,005.20 2,058.29 632.96 90.10 1,335.22
Balance Sheet
Sources of funds Owner's fund Equity share capital Share application money Preference share capital 1,112.68 350.00 899.34 350.00 889.83 350.00 736.75 0.02 350.00 616.40 350.00 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04
Reserves & surplus Loan funds Secured loans Unsecured loans Total Uses of funds
45,357.53
23,413.92
21,316.16
11,813.20
7,394.16
2,44,431.05 2,91,251.26
2,30,510.19 1,65,083.17
99,818.78 68,108.58
2,55,173.45 1,87,639.16 1,12,718.75 76,469.14
Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments Net current assets Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total Notes: Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs) 4,01,114.91 11126.87 31,129.77 42,895.38 -11,765.62 1,03,797.62 23,551.85 38,228.64 -14,676.78 80,694.15 15,642.79 25,227.88 11,115.99 9,107.61 7,036.00 2,927.11 4,108.90 1,11,454.34 6,298.56 2,375.14 3,923.42 189.66 91,257.84 5,968.57 1,987.85 3,980.71 147.94 71,547.39 5,525.65 1,487.61 4,038.04 96.30 5,090.20 1,033.79 4,056.41 93.99
50,487.35 42,742.86
21,396.16 18,019.49
-9,585.09 -10,280.17 -8,911.89 66,090.96 -
44,341.52 37,981.38
1,99,771.41 1,34,920.99 1,07,311.46 82,116.13 8992.67 8898.24 7367.16 6130.21
Ratios
Mar ' 08 Per share ratios Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) 36.78 41.97 37.37 42.56 11.00 51.29 33.30 39.36 34.59 40.64 10.00 42.19 28.47 35.48 28.55 35.56 8.50 36.75 27.25 35.26 27.22 35.23 8.50 36.37 26.76 35.56 26.71 35.51 7.50 34.06 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04
Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.) Net operating income per share (Rs) Free reserves per share (Rs) Profitability ratios Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) Leverage ratios Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio Liquidity ratios Current ratio Current ratio (inc. st loans) Quick ratio Inventory turnover ratio Payout ratios Dividend payout ratio (net profit) Dividend payout ratio (cash profit) Earning retention ratio Cash earnings retention ratio Coverage ratios Adjusted cash flow time total debt Financial charges coverage ratio
417.64 417.64 354.71 346.22
270.37 270.37 316.45 199.52
249.55 249.55 196.87 193.24
170.35 170.35 160.69 110.70
130.67 130.67 187.90 66.38
14.45 12.99 10.51 11.81 8.80 8.94 62.34
13.33 11.41 10.81 12.30 12.31 12.79 82.46
18.66 15.10 14.12 17.55 11.40 11.43 56.24
22.63 17.64 16.32 21.14 15.99 15.97 70.54
18.12 13.44 13.67 18.20 20.47 20.43 106.69
0.01 5.27 15.95 5.61
0.01 9.50 9.52 4.52
0.01 7.45 11.83 2.94
0.02 7.98 11.13 2.14
0.04 8.55 10.47 2.26
0.72 0.10 6.42 -
0.61 0.08 6.04 -
0.62 0.08 6.64 -
0.51 0.09 4.98 -
0.50 0.10 4.18 -
33.12 29.08 66.35 70.51
33.89 28.84 64.80 70.22
34.08 27.36 65.82 72.58
36.05 27.85 63.98 72.17
37.49 28.19 62.59 71.85
52.34 1.25
65.12 1.25
52.30 1.39
38.43 1.48
31.25 1.36
Fin. charges cov.ratio (post tax) Component ratios Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets Bonus component in equity capital (%)
1.20
1.22
1.33
1.40
1.31
4.43 0.78 -
6.12 0.80 -
4.80 0.82 -
5.08 0.83 -
0.59 0.83
COMPETITORS
The financial sector in India has become stronger in terms of capital and the number of customers. It has become globally competitive and diverse aiming, at higher productivity and efficiency. Exposure to worldwide competition and deregulation in Indian financial sector has led to the emergence of better quality products and services. Reforms have changed the face of Indian banking and finance. The banking sector has improved manifolds in terms of capital adequacy, asset classification, profitability, income recognition, provisioning, exposure limits, investment fluctuation reserve, risk management, etc. Sum of the competitors of ICICI bank from last few years are State Bank of India, Citibank, Canara Bank and HDFC Bank. The details of the competitors are as follows: State Bank of India was established in the year 1806. It has
network of more than 14,000 domestic and 70 foreign offices and
branches. The new infrastructure has enabled the bank to further grow its ATM network with plans to add another 3,000 by the end of 2007 raising the total number to 8,600 but it has 7236 numbers of ATMs. The new infrastructure serves as the bank's backbone, carrying all applications, such as the IP telephone network, ATM network, Internet banking and internal e-mail. The Citibank was incorporated in the year 1812, when a group of New York merchants came together to found it. It is an International bank with its operations spreading across many countries. It has more than 100 branches all over the countries and territories around the world, where half of its 1,400 offices and ATMs are over 5,500re in the United States. It has $3.5 billion in assets and approximately 120,000 new customers in the state. It provides various strategic financial advisory services including acquisitions, mergers, financial restructurings, loans, foreign exchange, cash management, etc.
The products and services offered by the bank are Loans, Citibusiness, etc. HDFC Bank Limited was incorporated in August 1994. The Banking, Insurance services, Credit cards, Investment, Online services, NRI services, Wealth management
bank has a Pan India network of 758 branches in 325 cities and over 1716 ATMs. Net Profit for the year ended March 31, 2006 was Rs. 1,141 crores. It has technical expertise, maintains product quality and has set global standards for itself. The bank has corporate governance and aims to attain fairness for the stakeholders. Some of the products & services offered by the bank are Accounts & Deposits - saving, current & fixed deposits, Private Banking, Loans, Cards - Credit Cards, Debit Cards, Prepaid Cards, Investment & Insurance, Forex Services, Payment Services, Internet Banking etc.
Canara Bank was established in 1906 . The bank, along with
13 other major commercial banks of India, was nationalized on 19th July, 1969, by the Government of India. It has a network of 2542 branches, spread over 25 States/4 Union Territories of India. Its head office is located in Bangalore, India. In terms of business it is one of the largest nationalized commercial banks in India, with a total business of about Rs. 2 trillion.
CUSTOMERS
This is a common believe among the customers that, credit cards are no longer tools of personal finance. They provide an alternative means of raising working capital for companies, especially in the small and medium sector. Typically, this business segment operates by availing themselves of overdraft facility against current accounts to meet the credit requirements. However, ICICI's credit card offers them credit for short periods, without waiting for the bank to approve the
overdraft. Due to which the customers have some of the follows reactions: Most of the customers say that when they took a home loan
from ICICI Bank, got a credit card free shortly thereafter, without asking for it or having to fill any form. These customers have the impression that the products of this bank must be having several hidden charges which are reveled later on. Similarly many customers say they have been paying annual fee on different companies like Citibank and Standard Chartered bank credit cards for eight years. But they also have been waiving their fee for the last two years. They have got an SBI credit card free, even without asking for it. But this facility is not possible in case of ICICI bank credit card. The customers believe that, the credit card which is recently launched by ICICI Bank i.e. Future card is more beneficial then other credit cards. This card provides lots of benefits and facilities to the customer, who can use the card in all the retail stores of future group. It is a life time free card, at the time of your survey we found that people where more interested to know about this card. Due to recent controversy with ICICI bank the customers have lost faith upon this bank. When we approach them or create an awareness of future card of ICICI Bank, they try to give some reasons like they dont have time or they are busy.
CASH MANAGEMENT SERVICE

Introduction:
Cash management is a marketing term for certain services offered primarily to larger 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. Sometimes, private banking customers are given cash management services.
Cash Management Services offered.
The following is a list of services generally offered by banks and utilized by larger businesses and corporations:
Account Reconcilement Services: Balancing a checkbook can be a difficult process
for a very large business, 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 login credentials, allowing employees to send wires and access other cash management features normally not found on the consumer web site.
Armoured Car Services: Large retailers who collect a great deal of cash may have
the bank pick this cash up via an armored car company, instead of asking its employees to deposit the cash.
Balance Reporting Services: Corporate clients who actively manage their cash
balances usually subscribe to secure web-based reporting of their account and transaction information at their lead bank. 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.
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 market mutual funds.
Zero Balance Accounting: can be thought of as somewhat of a hack. Companies with
large numbers 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.
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 no longer for transmission than a telephone call.
Controlled Disbursement: This is another product offered by
banks under Cash 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 intraday investment opportunities, typically money market investments. This is different 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.
Optimum Utilization of Operating Cash:
Implementation of a sound cash management programme is based on rapid generation, efficient utilization and effective conversation of its cash resources. Cash flow is a circle. The quantum and speed of the flow can be regulated through prudent financial planning facilitating the running of business with the minimum cash balance. This can be achieved by making a proper analysis of operative cash flow cycle along with efficient management of working capital.
Cash Forecasting:
Cash forecasting is backbone of cash planning. It forewarns a business regarding expected cash problems, which it may encounter, thus assisting it to regulate further cash flow movements. Lack of cash planning results in spasmodic cash flow.
Cash Management Techniques:

Every business is interested in accelerating its cash collections and
decelerating cash payments so as to exploit its scarce cash resources to the maximum. There are techniques in the cash management which a business to achieve this objective.
Liquidity Analysis:
The importance of liquidity in a business cannot be over emphasized. If one
does the autopsies of the businesses that failed, he would find that the major reason for the failure was their usability to remain liquid. Liquidity has an intimate relationship with efficient utilization of cash. It helps in the attainment of optimum level of liquidity.
Profitable Deployment of Surplus Funds

Due to non-synchronization of ash inflows and cash outflows the surplus cash
may arise at certain points of time. 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 acceptability of market for its short-term investments.
Economical Borrowings
Another product of non-synchronization of cash inflows and cash outflows is emergence of deficits at various points of time. A business has to raise funds to the extent and for the period of deficits. Rising of funds at minimum cost is one of the important facets of cash management.
Purpose of Cash Management

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

There are two types of Cash Management Services they are as:
COLLECTIONS :ICICI Bank's Cash Management Services helps you make optimum use of your working capital, leveraging the float between faster collections and just-in-time payments. ICICI Banks vast network across the length and breadth of the country uses superior technology based solutions to deliver speedy, efficient collections. You get customized daily transaction reports and online reports. CMS solutions are customized to your specific needs for the most productive use of your cash flow.
The collection services are of two types: 1- Local cheque collections(LCC) and 2- Upcountry cheque collection (UCC).
4. Local Cheque Collections (LCC) Internet Clear
Collect & Internet Swift Collect.
Under LCC, we offer collection facility for local cheques from more than 340 own branch locations apart from over 315 tie-up locations and providing funds centrally on guaranteed basis. This service includes location wise MIS, which is available online too. We offer courier pick-up facility, flexible day arrangement, competitive pricing and customized MIS.
5. Upcountry cheque collection (UCC) Internet
smart Collect, Internet quick Collect & Internet Anywhere Collect.

Under UCC, we offer collection facility for upcountry cheques, which a customer can draw on any location in India and deposit at more than 340 ICICI Bank centers. We offer a huge network of more than 4,900 locations covering the length and breadth of the country. This network includes our own branch network at more than 340 locations apart from our tie-up locations. Under this product, we offer flexible day arrangement, competitive pricing and customized MIS.
Processing Fees & Other Charges Processing Fees for CMS(cash management system) Facilities : 3%
Other Charges: Charges would be subject to volumes & value of collections / disbursements & Locations for pickup with a maximum limit of Rs. 10/- per 000 subject to minimum charges per instrument. Minimum Charges - Rs 10/- to Rs 30/- per instrument. Courier Charges - maximum of Rs 50/- per instrument Cheque Return Charges - maximum of Rs 500/- per instrument.
PAYMENTS:ICICI Bank's Cash Management Services helps you make optimum
use of your working capital, leveraging the float between faster collections and just-in-
time payments. Our vast network across the length and breadth of the country uses superior technology based solutions to deliver speedy, efficient payments. Our solution is customized to your needs. So you can leave the burden of bulk demand drafts and pay orders, dividend and interest warrants, fund transfers, cheque writing and more to ICICI Bank. You also get customized daily transaction reports and online reports for complete MIS.
Payments/Internet Multi Pay:Under payments, who offers the following services?
Bulk DD/PO printing. DDs can be issued payable at more than 540 locations in India. Remote printing of pay orders at 46 major centers. Fund Transfers. Cheque writing. Benefiiciry advices. A secure technology platform to meet bulk payment requests ERP integration.
from client quickly.
At Par Payments Internet Safe Pay

Make payments through dividend warrants, interest warrants, refund orders, redemption warrants, etc. These warrants are payable at par at the centers/locations selected by you. You can avail of this service through over 340 ICICI Bank locations and 200 correspondent bank locations. You get monthly reconciliation statement
showing the account status and unpaid list of warrants on a monthly basis. I-Safe Pay offers you a complete solution for executing your payments through different modes including Warrants, Demand Drafts / PO, ECS, Direct Credit, Swift Remittances and Foreign DD.
Cash Management to benefit from Electronic Payments

The new electronic payment products and services offer the corporate clients an improved bottom line by helping manage cash requirements. 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 methods of payment can be incorporated into firm-wide computing systems. 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 authorization 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 flow, inventory, and financial planning due to swift bank payments.
Banknet Fourth Annual Conference on Payment Systems in Mumbai, India on 16 January 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.
BANK OF INDIA(BoI) & ICICI Bank Tie Up For Cash Management
The state-owned Bank of India (BoI) has entered into a strategic correspondent banking arrangement with ICICI Bank for making use of the formers wide branch network covering 1,000 branches for the latters cash management services. BoI expects a Rs 2,000-crore turnover through the arrangement which will generate fee-based income for it. The Mumbai-based BoI has its cash management service available at 29 operating branches and 11 polling branches. More centres are being set up to provide wider coverage to corporates.
ICICI Bank, with its network of 409 branches and extension counters, (another 100 ICICI centres will be converted into branches in the future) and over 1,000 ATMS, is making efforts to spread into larger part of the country via correspondent-banking relationship with more public sector banks to implement its retail focus. The second largest bank in the country is also one of the top 12 internet banks in the world. Recently, it took over two branches of StanChart Grindlays in Shimla and Darjeeling with a deposit base of over Rs 100 crore. BoI has a tie-up with ICICI Prudential Life Insurance the insurance subsidiary of ICICI Bank to provide reference of its customers to the life risk firm. BoI charges a referral fee for the service. The scheme is being piloted at seven centers, covering 70 branches, which will be expanded to other centers in a phased manner. Bank of India has been constantly exploring uncharted viable and profitable business opportunities. Well distributed branch network and wide customer base are the banks strength. These are being leveraged for generating new business to augment fee income. Meanwhile, BoI has entered into a strategic tie-up with the Securities Trading Corporation of India in facilitating secondary market sale of government securities to retail investors through the banks branches. The bank has taken several initiatives in providing value additon through various products and services to satisfy the needs of the customers using technology to its full advantage. Multi-branch banking project of the bank has been extended to cover around 194 branches in five cities which will give the operational flexibility to the customers. The bank is also in the advanced stage of covering another 80 branches within the network. The bank has already commissioned 48 ATMs (both on-site and off-site) and another 102 ATMs are at various stages of implementation through an outsourcing model.
SOILED AND MUTILATED CURRENCY NOTES

Members of public are hereby informed that the Reserve Bank of India (RBI) has authorized all branches of public sector banks and all currency chest branches of private sector banks to accept and exchange all types of soiled/mutilated notes of all denominations. Refund value of such notes in exchange is, however, paid as per RBI (note Refund) Rules, 1975. With a view to render better service to the public the exchange facility for mutilated notes is also offered by RBI through TLR (Triple Lock Receptacle) covers. Members of public can obtain from the Enquiry Counter of all the Regional offices of RBI such TLR
cover and put their notes in the cover with particulars and deposit them in the respective RBI office against a paper token. This box is kept at the Enquiry counter at each Issue Office of RBI. The admissible exchange value of the mutilated notes will be remitted by means of a bank draft or a pay order. Mutilated notes can also be sent to any of the RBI Offices by registered/insured post. Notes which have become excessively soiled, brittle or burnt and therefore cannot withstand normal handling can be tendered only at Issue Office of the RBI. Persons holding such notes may approach the Officer-in-Charge of the Claims Section, Issue Department of the Reserve Bank for this purpose. The facilities provided to the members of public for exchange of their soiled, mutilated etc. notes are as under.
Soiled Notes
Soiled notes are those which have become dirty and slightly cut. Notes which have numbers on two ends, i.e. notes in the denomination of Rs.10 and above which are in two pieces, are also treated as soiled note. The cut in such notes, should, however, not have passed through the number panels. All these notes can be exchanged at the counters of any public sector bank branch, any currency chest branch of a private sector bank or any Issue Office of the Reserve Bank of India. There is no need to fill any form for doing this.
Mutilated Notes
Notes which are in pieces and/or of which the essential portions are missing can also be exchanged. Essential portions in a currency note are name of issuing authority, guarantee, promise clause, signature, Ashoka Pillar emblem/portrait of Mahatma Gandhi, water mark. Refund value of these notes is, however, paid as per RBI (Note Refund) Rules. These can also be exchanged at the counters of any public sector bank branch, any currency chest branch of a private sector bank or any Issue Office of the RBI without filling any form.
GUIDELINES FOR ASSESSMENT OF MUTILATED NOTES

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

To suit public convenience, the exchange facility for mutilated notes is also offered through TLR(Triple Lock Receptacle) covers. Members of public can obtain from the Enquiry Counter of the Reserve Bank a TLR cover and put their notes in the cover with particulars, such as, name, address, denominations of notes deposited, etc. filled in the columns provided on the cover, close it and deposit it in a box called Triple Lock Receptacle against issue of a paper token. This box is kept at the Enquiry counter at each Issue Office of the Reserve Bank. The admissible exchange value of the mutilated notes will be remitted by means of a bank draft or a pay order. Mutilated notes can also be sent to any of the RBI offices by registered/insured post.
Excessively soiled, brittle, burnt notes

Notes which have become excessively soiled, brittle or are burnt and, therefore, cannot withstand normal handling can be exchanged only at Issue Office of the RBI. Persons holding such notes may approach the Officer-in-charge of the Claims Section, Issue Department of the Reserve Bank for this purpose.
Minting & Issue

The Government of India has the sole right to mint coins. The responsibility for coinage vests with the Government of India in terms of the Coinage Act, 1906 as amended from time to time. The designing and minting of coins in various denominations is also the responsibility of the Government of India. Coins are minted at the four India Government Mints at Mumbai, Alipore(Kolkata), Saifabad(Hyderabad), Cherlapally (Hyderabad) and NOIDA (UP). The coins are issued for circulation only through the Reserve Bank in terms of the RBI Act.
Denominations
Coins in India are presently being issued in denominations of 10 paisa, 20 paisa, 25 paisa, 50 paisa, one rupee, two rupees and five rupees. Coins upto 50 paisa are called 'small coins' and coins of Rupee one and above are called 'Rupee Coins'. Coins can be issued up to the denomination of Rs.1000 as per the Coinage Act, 1906.
Distribution
Coins are received from the Mints and issued into circulation through its Regional Issue offices/sub-offices of the Reserve Bank and a wide network of currency chests and coin depots maintained by banks and Government treasuries spread across the country. The RBI Issue Offices/sub-offices are located at Ahmedabad, Bangalore, Belapur (Navi Mumbai), Bhopal, Bhubaneshwar, Chandigarh, Chennai, Guwahati, Hyderabad, Jammu, Jaipur, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. These offices issue coins to the public directly through their counters and also send coin remittances to the currency chests and small coin depots. There are 4422 currency chest branches and 3784 small coin depots spread throughout the country. The currency chests and small coin depots distribute coins to the public, customers and other bank branches in their
area of operation. The members of the public can approach the RBI offices or the above agencies for requirement of coins.
Measures to improve the supply of coins
The various Mints in the country have been modernized and upgraded to enhance their production capacities. Government has in the recent past, imported coins to augment the indigenous production. Notes in denomination of Rs.5 have been reintroduced to supplement the supply of coins.
New initiatives for distribution
Coin Dispensing Machines have been installed at select Regional Offices of the Reserve Bank on pilot basis. Dedicated Single-window counters have been opened in several of the Reserve Bank's offices for issuing coins of different denominations packed in pouches. Mobile counters are being organized by the Reserve Bank in commercial and other important areas of the town where soiled notes can be exchanged for coins.
Appeal to the Public
The Bank, with active co-operation from various agencies, has been endeavoring to distribute the coins in an equitable manner to all parts of the country. The mission cannot be successful without
unstinting support from the people at large and the various voluntary agencies. Members of public are requested to avoid holding on to coins and instead, use them freely for transactions to ensure that there is a smooth circulation of coins. Voluntary agencies are requested to educate the public about the various facilities available in their areas for distribution of coins, exchange of soiled notes and proper handling of notes.
TREASURY MANAGEMENT VERSUS CASH MANAGEMENT

Introduction:
Major changes of corporate treasury management policies have been in the past few decades. Treasury management has gradually taken up more and more responsibilities. In the 1960s treasury-related tasks entailed purely routine work in what was no more than an ancillary function as a centralizing cash management unit linked to administrative tasks. In the 1970s the first significant changes began to take place as the economic environment was hit by recession, which favored the emergence of new short-term monetary policy instruments and the first hints of deregulation of financial markets, but treasury management was still restricted to the obtaining of funding, the management of payments and collections and the maintenance of bank balance positions. It was not until the
1980s that it became integrated into general corporate management and finally outgrew its purely administrative function linked to the accounting department. Treasury functions began to be based essentially on a financial cash management or liquidity management perspective. More recent advances (development of new information and communication technologies, emergence and use of new financial instruments and an approach to business focused on increasing the value of organizations in all areas) have favored the development of new treasury management functions, and increased the importance of treasury departments within companies. In this way, now the techniques and instruments required for optimum development are available (Fernndez, 2001).
The functions now linked to treasury management extend beyond the mere control of monetary flows and positions. Exchange-rate and interest-rate volatility in the wake of the internationalization and deregulation of currency markets, the need to increase control of credit risk in increasingly competitive markets and the appearance of new financial instruments have forced treasury management to become more forecast-based in its actions, with more emphasis on the management of investments, treasury deficits and different financial risks. Basic responsibilities of treasury departments will be those tasks that enable companies to use the techniques and information needed to minimize the financial costs of resources and maximize returns on cash surpluses, thus providing them with the necessary treasury funding in the desired currency at the appropriate time, as argued by Lpez (2003), and others. In the terminology of ash management literature this term brings together various functions associated with short-term financial flow management: liquidity management, banking management, management of treasury surpluses and deficits and financial risk management; it is a broader concept than the mere management of payments and collections (treasury management). In this context, our objective is to provide empirical evidence for the definition of cash management by drawing up an explanatory model. The following pages present a cash management model obtained using the technique of structural equations, which has never been used before in research analysing the factors linked to treasury management. A salient result of our model is that the management of payments and collections and treasury forecasts are the functions to which the companies surveyed attach most importance. These are the functions that have traditionally been most closely linked with treasury management,
though others which have been incorporated more recently, such as management of bank balances at value date, management of relationships with banks, management of treasury deficit funding and management of treasury surpluses, are all also highly rated by companies.
The paper is structured as follows. Following the Introduction, the second section introduces the topic of cash management, highlighting features and issues of significance for the focus of this paper and reviewing some of the arguments in favour of the advanced cash management. The third section then describes the data and the analysis procedure used in the empirical study. The results of the investigation are shown in the fourth section. The final section presents the conclusions, and the paper ends with a list of bibliographical references.
Treasury Management:
1. Introduction:
Cash management can be seen from two different perspectives depending on how many responsibilities it includes: treasury management (or basic cash management) and advanced cash management. Specifically, treasury management handles actual cash management at companies, and one of its main functions is to establish the optimum cash level so that payments can be made and received as necessary for the proper operation of the company. The second concept includes not only treasury management per se but also other tasks such as treasury forecasting, negotiation and establishment of relationships with financial institutions and financial risk management. Pindado (2001) argues that basic cash management refers to that part of the working capital that makes up the optimal level needed by a company treasury. However, if the profit opportunities available in the process of cash flow creation are to be maximized, this scope must be broadened to take in more operational decisions, since optimum cash levels are influenced by other factors outside the restrictive concept of "treasury". Linking these concepts with the concepts of
monetary theory reveals that the initial reasons for cash management were transaction and precaution, and those reasons were then joined by speculation, taking it closer to the overall concept of treasury management in the broad sense of the term (Maseda & Iturralde, 2001).
2. Basic cash management:
Treasury management or basic cash management propitiates the development of administrative techniques conducive to optimizing the level of disposable assets to be maintained by a company (Myers & Mjluf, 1984; Chastain, 1986; Harford, 1999). To prevent breaks or gaps in the trading cycle due to lack of cash, administrators must calculate the cash amount best suited to their level of activity, plan the timing of the relevant payments and collections and draw up a policy of investment in assets with high liquidity that can be converted to cash at a low transactional cost to serve as support for the treasury funds maintained by the company (Kamath et al., 1985; Srinivasan & Kim, 1986). It is therefore essential to establish the right level of disposable assets to short-term financial investments at companies. Holding the wrong amount in cash or cash equivalent may interrupt the normal flow of business activities. Moreover, the wrong safety margin may result in financial difficulties, with firms unable to meet needs that may arise at any given time or unable to take advantage of unexpected investment opportunities. Maintaining a cash surplus thus has a number of advantages. On the one hand it enables companies to carry on the normal transactions that arise in the course of their activities and avoid any treasury gaps. On the other hand it helps them cover any unexpected needs for cash by acting as a preventive balance. However, there are also disadvantages in being too conservative, as reflected in the opportunity costs entailed by assets with little or no profitability (Awan, 2001)2. Having liquid assets available constitutes an opportunity cost for a company, as the return on those assets is lower then the return on productive investments, but there may still be transaction costs arising from the sale or purchase of financial assets, and disadvantages in terms of taxation. The particular importance of disposable asset management as a responsibility of the company treasurer should lead companies to conduct an overall analysis of this point, covering management of the collections circuit, cash and payment circuit (Palom & Prat, 1984). This overall analysis should strive to shorten collection periods, lengthen payment periods and avoid idle resources that do not generate returns (Masson et al., 1995). Casanovas & Fernndez (2001) defend the idea put forward by Palom & Prat (1984), and indicate that
treasury management is seen as administration of the treasury circuit, entailing chiefly the analysis, study and review of the three circuits indicated (payments, collections and cash holding). However, taking basic treasury principles as their reference, these authors identify and determine more complex techniques, instruments and functions, which they also integrate into treasury management. They mention advanced cash management, which is considered to include the management of short-term investments, short-term financing and bank relationships. Therefore, although they stress the essence of treasury management, they analyses and set out more advanced management techniques and tools, which are considered as characteristic of cash management.
1. Advanced cash management

Torre (1997) defines treasury management as a set of techniques that act on the short-term liquidity of a company, and at the same time affect those factors and processes that translate immediately into cash, with the ultimate aim of increasing the profitability of the company and improving working capital management. In this sense cash management as an overall, integrated service of which the customer takes that part that best suits him or that he needs at any given time, served basically by a computer or another online solution. This specific notion of treasury management in a broad and in technological point of view has been for decades in theory. However, it began to acquire true significance in today's difficult global economic environment, risk reduction and cash-management efficiencies are critical to corporate success (Platt, 2003). The management of interest-exchange rate risk and the management of contractual relationships with financial institutions are other functions that have been added to cash management, with the purpose of increasing profitability with the minimum risk and in the best conditions (Welch, 1999; Mulligan, 2001). So far we have considered in this way the cash management or the treasury management in a broad sense, which groups availability, profitability, planning and financial risk with liquidity management as argued Von Eije & Westerman, 2002; Bort, 2004, and others. Moreover, it includes a set of strategic and organizational measures concerned with working capital, risk management,
banking relationships and planning that affect both the cash flows and the financial results of firms. In short, treasury management is based on payment and collection management, liquidity management and banking management which has now taken on a broader perspective that includes the planning of disposable treasury assets and their subsequent monitoring, a strategy for investing surpluses to obtain maximum profitability and finance deficits with minimum costs, management of interest-rate and exchange-rate risks and, finally, banking management (Charro & Ortiz, 1996; Lpez, 2003). Cash management brings together actions concerned with liquidity management (Kirkman, 1977; Driscoll, 1983; Torre, 1997), payment and collection management (Driscoll, 1983; Palom & Prat, 1984; Masson et al., 1995; Torre, 1997; Casanovas & Fernndez, 2001), treasury forecasts (Pindado, 2001), banking management (Torre, 1997; Lpez, 2003), investment of treasury surpluses and deficit and financing management functions (Masson et al., 1995; Torre, 1997; Pindado, 2001) and financial risk management (Masson et al., 1995; Buckley, 2004).
All these responsibilities are interconnected, which generates an overall model of cash management with a policy aimed at obtaining profits or reducing costs to generate value for firms and, in short, help attain the general goals of those firms. Treasury management in a broad sense, or advanced cash management, not only involves financial tools and techniques for managing liquidity but entails an entire corporate culture. Corporate culture means the set of beliefs, expectations and basic principles shared by the members of an organization. These beliefs give rise to rules of conduct (norms) that powerfully shape the conduct of the individuals and groups in the organization and thus distinguish it from other organizations (Leal, 1991).
This vision of treasury management from a broad perspective covers three fundamental aspects, as shown in the following figure:
The basic attribute is liquidity management, through which the necessary disposable assets are obtained when required, at the minimum possible cost. This responsibility requires the forecasting of liquid asset flows, the planning of short-term financing and investment sources and relationships with financial institutions, and risk management. The second attribute is working capital management, which handles the disposable assets obtained from sales and collections, and purchases and payments. These two cash flows -payments and collections- are the principal source of financing and investment for business activity. Although larger companies may have a specific department to manage these concepts, they are so closely related to treasury matters that they can be subsumed into treasury management in the broad sense. The development of all these functions depends on the corporate culture of the firm, in the sense of the set of shared beliefs and values as to the way in which the above functions are carried out. In this regard, numerous authors have considered culture as a critical factor for organizations (Gordon, 1985; Parker, 2000) and have drawn links between corporate culture and corporate financial management (Denison, 1984; Gordon, 1985), though other authors reviewing their work have failed to find hard evidence of such links (Siehl & Martin, 1990).
Cash Management: Empirical Analysis

1. Descriptive Analysis.
Treasurers or treasury managers undertake various tasks in all areas of cash management, such as management of payments made and received, monitoring of liquidity of banking operations, short-term treasury forecasts, management of account balances at value dates, negotiation with banks, management of treasury deficit funding, management of treasury peaks and management of interest and exchange rate risks. Monitoring and optimization of the circuit of payments received is the variable that cores highest among the firms surveyed (4.495), possibly because it brings together management functions concerned with the main payments received by firms, on which their survival depends. The preparation of treasury forecasts (4.468) obtains the second highest score on average, mainly because proper treasury management must be based on knowledge of future positions. The responsibilities which obtained the lowest score are coverage of interest rate risk (3.517) and exchange-rate risk (3.097), but some firms are unaware of these functions and others find them of little relevance due to the low degree of influence of such risks on their financial activities. In general, the remaining responsibilities obtain high scores (above four in almost all cases). None of them stands out from the rest. The responsibilities in question are day-to-day control of banking position (4.338), monitoring of banking positions at value date (4.272), establishment of an optimum cash level (4.267), optimization of liquidity (4.308), and monitoring and optimization of the purchase-payment circuit (4.285). Other responsibilities include minimization of costs of short-term . borrowing required to cover treasury deficits (4.282) and maximization of returns on treasury surpluses (3.992).
In short, all treasury management responsibilities obtain high scores except coverage of financial risks. Particularly high scores are obtained by management of payments for payments received, due to its importance for the survival of firms, and by management of treasury forecasts as a way of obtaining advanced information on movements of available liquid assets.
2. Explanatory Model
Factor analysis was used to develop a model capable of explaining cash management and showing the results arising from its use. To define the construct used in the explanatory model, which cannot be observed directly in actual businesses, exploratory factor analysis was used first on a subsample, followed by confirmatory analysis on another, different subsample, to make the model more robust.
Exploratory Factorial Analysis
Exploratory factorial analysis is applied to a randomly selected subsample. The following table shows determinant values of the correlation matrix, KMO (Kaiser-Meyer & Olkin) and Bartletts sphericity test. An examination of this table reveals that the correlations between the variables used are still sufficiently high to justify the application of a factorial analysis of principal components.
The results of the exploratory analysis show that the eleven variables concerned with treasury management responsibilities can be grouped into two components with only minimal information loss.
Basic cash management, which includes three levels: liquidity management (short-term
Treasury forecasts, at least monthly, establishment of an optimum cash level, optimization of Liquidity), operational management (monitoring and optimization of the purchase-payment Circuit, monitoring and optimization of the sales-cash circuit), and banking management (monitoring of banking positions at the value date, day-to-day control of banking positions).
Advanced cash management, which also includes three levels: investment management (maximization of returns on treasury surpluses), financial management (minimization of costs of short-term borrowing), and risk management (coverage of interest-rate risk, coverage of exchange-rate risk).
Fig. Explanatory Factorial Analysis of Treasury Management.
Confirmatory Factorial Analysis

Confirmatory factor analysis is then applied to different subsamples to produce a valid, reliable scale for measuring this factor. Using statistical techniques from a convergent
perspective, the present study aims to provide evidence of the existence of a single underlying concept that can explain cash management sufficiently well to bring together the variables in the scale considered overall. To obtain a valid, reliable scale capable of expressing the concept of treasury management, the internal consistency of the model is checked using reliability techniques (Cronbachs alpha, composite reliability and extracted variance), convergent validity and discriminant validity of actors. The factors meet the reliability requirements, since the Cronbachs alpha obtained for each factor is high, the composite reliability is close to or higher than 0.6 (Bagozzi & Yi, 1994) and the extracted variance reaches the recommended figure of 0.5 (Fornell & Larcker, 1981). Convergent validity is checked by the overall model fit measures. It is observed that the p-value of the chi- square does not attain the recommended figure of 0.05 (see Figure 5). However, this does not necessarily mean that the proposed model fails to reproduce faithfully the data observed, because this statistic is substantially affected by the size of the sample (Hair et al., 1998), so it is necessary to analyse the rest of the indices to determine whether the measurement model is valid. GFI, AGFI, NFI, IFI, TLI and CFI are close to or higher than 0.9, indicating a good model fit. The root mean square error of approximation (RMSEA) also indicates a good fit at 0.05. Furthermore, the discriminate validity of the scale is ratified, determining that the results and the coefficients of causal analyses will not be modified by problems of co linearity, and all factors are distinct from one another. The path diagram in the following figure also shows that the weight of each item in each factor in the solution is close to or higher than the figure of 0.7 established. The model reflects the idea that treasury management comprises basic cash management and advanced cash management. Basic cash management includes the constructs for liquidity management, operational management and banking management. Advanced cash management includes those for investment management, financial management and management of financial risk coverage.
The theoretical concept underlying this model is supported by the opinions of the treasury managers surveyed, who understand cash management as including not just liquidity management tasks but also others such as management of payments made and received,
forecast management, banking management, investment management, financial management and financial risk management.
Research Methodology
Research is a process through which we attempt to achieve systematically and with the support of data the answer to a question, the resolution of a problem, or a greater understanding of a phenomenon. This process, which is frequently called research
methodology, has eight distinct characteristics:
1. Research originates with a question or problem. 2. Research requires a clear articulation of a goal. 3. Research follows a specific plan of procedure. 4. Research usually divides the principal problem into more manageable sub problems. 5. Research is guided by the specific research problem, question, or hypothesis. 6. Research accepts certain critical assumptions. 7. Research requires the collection and interpretation of data in attempting to resolve the problem that initiated the research. 8. Research is, by its nature, cyclical; or more exactly, helical. 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 characteristics of consumer behavior. The methods used were following:
Questionnaire method Direct Interaction with the clients.
MODE OF DATA COLLECTION
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.
RESULT AND ANALYSIS

Are you aware of ICICI bank straight to bank services? (a) Yes (b) No
Analysis of the above diagram
Its very good for the ICICI bank as most of the companies are aware of the cash management services provided by the bank. The bank can look into companies as to propose its services to the concerned company personals.
2. (a) (b) (c) (d)
In which company bank do you have your account? Axis Bank ICICI Bank HSBC Bank standard chartered Bank
From the above diagram it can be easily inferred that ICICI bank is facing neck to neck competition from HSBC Bank and it should keep on improving to remain at the top position.
3. (a) (b)
Does the financial crisis in US affecting your functioning here in INDIA? Yes No
From the pie chart its quite evident that the financial crisis in US are affecting people globally and even insurance companies are gravely affected by the crisis.
4. (a) (b)
Are you satisfy with your company services? Yes No
From the above analysis it can be interpreted that most of the companies were satisfied by there CMS provider but still they found few areas of improvement ICICI Bank can give solutions for those areas So as to attain business rom these companies.
5. (a) (b) (c)
What are your main modes of premium collection? Cash Cheque Demand Draft
Most of the companies accept premium in the form of cheque as its a safer instrument than cash and is easily handled as compared to demand draft ICICI Bank can provide various cheque collections options to the companies.
6. (a) (b)
Do you have centralized or decentralized? Centralized Decentralized
Most of the companies aspire to become centralized as they want to have all the cash balances at there main branch at the end of the day as it saves a lot of time and money ICICI Bank can offer the services of there new E-banking software so as to suffice a companys all needs.
7. (a) (b)
Do you accept premium through credit cards Yes No
Most of the insurance companies are planning to introduce this new facility as of now not many companies have started with this concept but sure are panning in near future.
8. (a) (b) (c)
What are your main modes making payments? Cheque Cash DD
Like premium most of the companies distribute their payments through cheques only DD and cash are made out under special circumstances
9. (a) (b)
Do you reinsure your polices? Yes No
Most of the companies re-insure themselves from one another or by a re-insurer it helps them to reduce risk on there part ICICI Bank can look into to the opportunity to become the reinsuring bank as its quite rewarding
CASE STUDY (ICICI BANK)

GROUND REALITIES:
The ABC Ltd. is a FMCG Company. The company has presence in more than 15 cities and has its head quarter in Mumbai. The company has Depots at these cities. And each depot has some turnover every month. The name of Cities, the monthly turns over of the each depots and no. Of retailers in each cities are as follows:
Sr. No.
Cities
Monthly Turnover (Rs. In Crore)
No. of Retailers
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Mumbai New Delhi Calcutta Madras Ahmedabad Banglore Hyderabad Pune Jaipur Indore Cochin Agra Jalandhar Jammu Nagpur Lucknow
1.5 1.25 1.00 0.75 0.75 0.70 1.00 0.50 0.60 0.75 0.50 0.50 0.40 0.10 0.10 0.10
200 180 175 180 150 160 155 140 150 120 130 120 110 115 135 140
The requirements of the ABC Ltd. are as follows: 1. 2. 3. All money should be ABC Ltd. a/c at New Delhi. All money should on the next day basis. Details of cheques deposited at different location on daily basis:
Location No. of cheques deposited Cheque number Cheque amount Date of deposit Clearing date Retailer name/code
Returned cheques
Date Reason Location Amount 4. 5. 6. Courier pick-up service at each location. Monthly reports of each location about sales, collection, expenditures etc. Other MIS reports
ANALYZING PROCESS:
These are the conditions and facts of the organization. Now, what the bank will do? I have taken the case of ICICI BANK CMS. This is regarding how the bank makes deal with the company.
The ICICI BANK will analyses the location of the company. The ABC Ltd. has sixteen locations in the country. This is not always possible to have the branches at each location of the client for the banks. In this case, we are taking the assumptions as follows:
In 10 locations of the company, the bank has its own presence. In 2 locations of the company, the bank has tie-up with correspondent bank
And in remaining 4 locations, the bank has no presence as well as no tie-up with any other bank. How the bank makes allocation of the different instruments? The bank broadly categorized the instruments into two types:
I. Local Cheque Collections (LCC) LCC are the cheques, which are drawn and deposited at the same location. Eg. A Cheque drawn at Jaipur and deposited at Jaipur only. The LCC is again categorised into two types: 1) LCC BRN: A local Cheque which is drawn and deposited at the same location where the bank has its own presence.
2) LCC COR: A local Cheque which is drawn and deposited at the same location where the bank doesnt have its own presence but has tie up with correspondent Bank.
II.
Upcountry Cheque Collections (UCC)

The UCC are the cheques, which are drawn and deposited at different locations. Eg.
A Cheque drawn at Jaipur and deposited at Delhi.
The UCC is again categorised into three types: 1) UCC BRN: A upcountry Cheque which is drawn at one location and deposited at another location where the bank has its own presence.
2) UCC COR: A upcountry Cheque which is drawn at one location and deposited at another location where the bank has tie-up with correspondent Bank.
3) UCC ONW:
A upcountry Cheque which is drawn at one location and deposited at another location where the bank neither have its own presence nor have tie-up with correspondent bank.
PRICING:
Pricing is competitive; varies from centre to center. It also varies from instruments to instruments.
Special pricing can be worked out taking into account the volume of funds & the centres. The pricing part of the CMS is very complex. Normally, the ICICI bank takes into account the following factors while going for pricing:
1) Bank In Funds/ Out of Funds & Correspondent Bank Charges: When Cheque is deposited in the bank it passes through the clearing house. In India, clearing is done through RBI, SBI and PNB banks. The RBI has presence in 15 cities in India while SBI has 938 locations in India including its associates. Other cities where clearing house is not there, the clearing is done through Correspondent Bank, mostly these are PNB Banks or Co-operative Banks. Suppose I deposit the Cheque on day 0, then the time taken by the clearing houses to debit the bank account would be different. The ICICI BANK has to debit its customers account on the next day basis irrespective of days to clear.
Day Cheque credited Day1
when will
the Clearing Bank be
Days for which Bank In Fund/Out of bank fund is out Fund
RBI
Not out of funds
Day2 Day3
SBI Correspondent Bank
1 1
1 Day out of funds 1 Day out of funds
In this case, the bank charges interest on the money which it gives in form of Credit Against Uncleared Cheque, to the company. When it comes to the Correspondent bank, the bank has to pay extra charges to these banks. It depends upon the Banks.
2) Overheads:
The bank takes into account the o/hs charges, which it occurs in the process. The o/hs charges include salary, administration charges, maintenance etc.
3) Margin: After including the transaction and other o/hs charges, the bank gets the cost of transaction. On this the bank adds its margin for being in the business.
In pricing, other elements like courier charges return cheques etc. also considered. Pricing in CMS in generally negotiable between the company and the Bank.
Features of ICICI Bank CMS:
Exclusive CMP desks with infrastructure Debit Transfers Courier pick-up at branches No collection a/cs needed at branches Customized Reports Transmission of data through Internal LAN system Direct credit to accounts
Benefits to Customers: Centralized Control of cash Cost reduction Enhanced Liquidity Interchange of Information between treasury & operating units Reduced excess cash balance Cash forecasting & scheduling Effective control over disbursements Timely & effective investments
LIMITATIONS OF THE REPORT

Following are the limitations faced by me during this project:
1. The allotted time period of 6 weeks for the study was relatively insufficient, keeping in mind the long duration it can take at times, to close a particular corporate deal.
2. The study might not produce absolutely accurate results as it was based on a sample taken from the population.
3. It was difficult getting time and access to senior level Finance/HR managers (who had to be talked to, to get required information) due to their busy schedules and prior commitments.
4. A few of the managers refrained from giving the required information as he considered me to be from their confidential domains.
CONCLUSION
The study allowed us get answers regarding the service awareness among people and the problems it faces. The key findings and analysis of the survey showed the following.
A large number of clients and customers call the branch frequently to handle banking issues; this shows the keenness of the customers to call the branch for almost every small issue. The service Straight2bank does provide an answer to the problem of the customers.
The service provided by straight TO bank does offer the main requirements of the customers for which they visit or call the branch
All the respondents wanted to carry out the banking needs at their convenience. This means the service caters the banking needs that customers generally require and its main benefit of banking while sitting at office is desired by one and all, thereby proving that the service does have the potential usage.
Few of the respondents were aware about the service which was desired by 100% respondents clearly showing that there has been a falter in its promotion and awareness strategies.
Customers were not aware that the service was a free one, this is clear that almost all the attributes of the services are favorable to the customers still customers are not using the service and are not even aware of it.
Almost all customers once educated about the service readily enrolled for it whereas a mere portion did not trust the bank and thought that the bank would have some hidden charges that they are not putting forward.
Many clients who enrolled for the straight TO bank service would have problems using it as the drop boxes are not strategically placed many areas do not even have drop box facility; ICICI BANK must look into the policies of installing the drop box. They should assign it to the regional office or allow branches to put up boxes where the branch thinks it would be optimally utilized no matter which area of the city as of now that branches are allowed to put up drop boxes in a radius which falls in close by areas to the branch. A customer who lives close by to the branch would not use this service whereas customers who are far of require the service, however the branch cannot provide them with the facility as they cannot install the boxes in that area and it is the duty of the local branch of that area to put up boxes which is not happening they hardly know where customers of the other branch are located.
RECOMMENDATIONS
We suggest following measures, which ICICI Bank could take so as to take on heavy competition from HSBC Bank, SBI, PNB and SCB Banks:
Try to reduce cost, so that benefits can be passed on to customers. Senior
managers at ICICI Bank agree to reduce cost, because of services we provide.
ICICI Bank should provide competitive prices as now-a-days a lot business is
being acquired by SBI, AXIS bank and HSBC bank and ICICI is facing a lot competition from these banks.
ICICI Bank should contact with their clients regularly for knowing the problems
faced by them. This will help ICICI Bank in providing best services to customers. This will result in additional customer base by getting further references from satisfied clients.
ICICI Bank should focus on getting the business other business clients other than
its existing customers as it would help them to increase their business opportunities.
REFERENCES
Book
Business Research Methods William G. Zikmund
Managerial Decision Modeling with spreadsheets Nagraj
Balakrishnan, Barry Render & Ralph M. Stair Summer Internship Simplified Prof. Anil Mishra Management research Methodology- K.N. Krishnaswamy, Appa Iyer Sivakumar,
M. Mathirajan
Website
www.icicibank.com www.inc.com
www.treasurymanagement.com www.business.ml.com www.google.com www.hdfcbank.com
Magazine and newspaper

Business Todays The times of India The Economic times
APPENDIXES
QUESTIONNAIRE
Dear Respondent,
I am student of NSB School of Business Management, New Delhi; I am doing this research to compare different charges and services provided by trading firm to its clients. 1. (a) (b) Are you aware of ICICI bank straight to bank services? Yes No
2. (a) (c) (e)
In which company bank do you have your account? Axis bank HSBC Bank HDFC Bank (b) (d) ICICI Bank SBI Bank
3. (a) (b)
Does the financial crisis in US affecting your functioning here in INDIA? Yes No Are you satisfy with your company services? Yes No
4.
(a) (b)
5.
What are your main modes of premium collection?
(a) (b) (c)
Cash Cheque Demand Draft
6. (a) (b)
Do you have centralized or decentralized? Centralized Decentralized
7. (a) (b)
Do you accept premium through credit cards Yes No
8.
(a) (b) (c)
What are your main modes making payments? Cheque Cash DD
9. (a) (b)
Do you reinsure your polices? Yes No
Personal Information Name: Age: Sex: ( ) Male ( ) Female
Phone No: Occupation:

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

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

CERTIFICATE FROM THE CORPORATE GUIDE

Title of the project:-

Cash Management System

Name of the organization:-

Name of the institute:MANAGEMENT

NSB SCHOOL OF BUSINESS

27th April 2009

08th June 2009

1994 ICICI established Banking Corporation as a banking subsidiary. formerly

country, India and South Africa.

representative offices in Bangkok, Jakarta, and Kuala Lumpur.

BOARD MEMBER OF ICICI BANK

2,55,173.45 1,87,639.16 1,12,718.75 76,469.14

-9,585.09 -10,280.17 -8,911.89 66,090.96 -

1,99,771.41 1,34,920.99 1,07,311.46 82,116.13 8992.67 8898.24 7367.16 6130.21

417.64 417.64 354.71 346.22

270.37 270.37 316.45 199.52

249.55 249.55 196.87 193.24

170.35 170.35 160.69 110.70

130.67 130.67 187.90 66.38

14.45 12.99 10.51 11.81 8.80 8.94 62.34

13.33 11.41 10.81 12.30 12.31 12.79 82.46

18.66 15.10 14.12 17.55 11.40 11.43 56.24

22.63 17.64 16.32 21.14 15.99 15.97 70.54

18.12 13.44 13.67 18.20 20.47 20.43 106.69

0.01 5.27 15.95 5.61

0.01 9.50 9.52 4.52

0.01 7.45 11.83 2.94

0.02 7.98 11.13 2.14

0.04 8.55 10.47 2.26

0.72 0.10 6.42 -

0.61 0.08 6.04 -

0.62 0.08 6.64 -

0.51 0.09 4.98 -

0.50 0.10 4.18 -

33.12 29.08 66.35 70.51

33.89 28.84 64.80 70.22

34.08 27.36 65.82 72.58

36.05 27.85 63.98 72.17

37.49 28.19 62.59 71.85

network of more than 14,000 domestic and 70 foreign offices and

Canara Bank was established in 1906 . The bank, along with

CASH MANAGEMENT SERVICE

Cash Management Services offered.

Account Reconcilement Services: Balancing a checkbook can be a difficult process

Zero Balance Accounting: can be thought of as somewhat of a hack. Companies with

Controlled Disbursement: This is another product offered by

Optimum Utilization of Operating Cash:

Cash Management Techniques:

Profitable Deployment of Surplus Funds

Purpose of Cash Management

To eliminate idle cash balances. Every dollar held as cash

To properly time disbursements. Some payments must be

TYPES OF CASH MANAGEMENT SERVICES IN ICICI BANK

4. Local Cheque Collections (LCC) Internet Clear

Collect & Internet Swift Collect.

5. Upcountry cheque collection (UCC) Internet

smart Collect, Internet quick Collect & Internet Anywhere Collect.

PAYMENTS:ICICI Bank's Cash Management Services helps you make optimum

Payments/Internet Multi Pay:Under payments, who offers the following services?

from client quickly.