cash management - icici bank
TRANSCRIPT
RESEARCH REPORT ON
CASH MANAGEMENT OF ICICI BANK
SUBMITTED FOR PARTIAL FULFILLMENT OF AWARD OF
Post Graduate Diploma in Management
BY
MS. RINI NIGAM
ROLL NO:
MBF201014
UNDER THE SUPERVISION OF
PROF. J. S. SHUKLA
APEEJAY INSTITUTE OF TECHNOLOGY,
SCHOOL OF MANAGEMENT
February, 2012
DECLARATION
The work in this report is based on the original work carried out by me at “Apeejay Institute of Technology, School of Management, Greater Noida”. No part of this report has been submitted elsewhere for any other degree or qualification and it is all my own work unless referenced to the contrary in the text.
Rini Nigam
MBF201014
CERTIFICATE
This to certify that Ms. Rini Nigam, Roll No.: MBF201014 a student of PGDM (B&F) 2010-2012 batch of Apeejay Institute of Technology, School Of Management, Greater Noida has done the project work on Cash Management of ICICI Bank under my supervision and guidance. I understand this project report is being submitted to Apeejay Institute of Technology, Greater Noida for award of degree of Post Graduate Diploma in Management. To the best of my knowledge, this report has not been submitted to any other University for award of any other degree.
During this period, I have found the performance of her work satisfactory.
Prof. J. S. Shukla Date:
Prof. D. N. Bajpai Date:
Director,
Apeejay Institute of Technology,
Greater Noida
ACKNOWLEDGEMENT
I, hereby take the opportunity to express my deep and profound
gratitude to Prof. J. S. Shukla, my research project guide for
giving me an opportunity to do a project on CASH
MANAGEMENT OF ICICI BANK. I thank him for his
valuable guidance and support which proved indispensable in
the completion of this report.
Last but not the least I would also like to thank my family and friends for their support during the completion of the project.
All may not have been mentioned but none is forgotten.
Name: Rini Nigam
Course: PGDM (B&F)
Roll No. MBF201014
TABLE OF CONTENTS
CHAPTER NO. TITLE PAGE NO.
DECLARATION i
CERTIFICATE ii
ACKNOWLEDGEMENT iii
1) CORPORATE PROFILE
i. OVERVIEW
ii. HISTORY
iii. GRAPHICAL PRESENTATION
iv. FINANCIAL POSITION
v. COMPETITORS
2) CASH MANAGEMENT SERVICE
3) RESEARCH METHODOLOGY
4) RESULT AND ANALYSIS
5) CASE STUDY
i. CASE STUDY
ii. ANALYSIS OF THE CASE STUDY
6) LIMITATIONS , CONCLUSION &
RECOMMENDATION
i. LIMITATIONS
ii. CONCLUSIONS
iii. RECOMMENDATIONS
7) REFERENCES
8) APPENDIX
i. QUESTIONNAIRE
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.
OBJECTIVES:
It helps us to know more about the topic that is being
undertaken and helps us to explore future prospects of the organization.
Basically it tells what all have been studied while making the project.
➢ To learn about various aspects of ICICI BANK cash management.
➢ To gain insights about functioning of ICICI cash management.
➢ To explore the future prospects of ICICI cash management.
CHAPTER -1
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, 2011 and profit after tax
Rs. 37.58 billion for the year ended March 31, 2011. 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
2011 over Q2 September 2010. The bank's current and savings account
(CASA) ratio increased to 28% in 2011 from 25% in 2010.
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 country, India and South Africa.
2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia
bank with about 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 representative offices in Bangkok, Jakarta, and Kuala Lumpur.
2007 ICICI amalgamated Sangli Bank, which was headquartered
in Sangli, 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.
GRAPHICAL REPRESENTATION OF ICICI GROUP AND SOME GROWTH REPORT OF ICICI BANK
ICICI GROUP
FINANCIAL POSITION
Mar ' 08 Mar ' 09 Mar ' 10 Mar ' 11
Operating income 39,467.92 28,457.13 17,517.83 11,838.10
Material consumed - - - -
Manufacturing expenses
- - - -
Personnel expenses 2,078.90 1,616.75 1,082.29 737.41
Selling expenses 1,750.60 1,741.63 840.98 601.71
Administrative expenses 6,447.32 4,946.69 2,727.18 1,248.31
Expenses capitalized - - - -
Cost of sales 10,276.82 8,305.07 4,650.45 2,587.43
Operating profit 5,706.85 3,793.56 3,269.94 2,679.78
Other recurring income 65.58 309.17 466.02 448.46
Adjusted PBDIT 5,772.43 4,102.73 3,735.96 3,128.25
Financial expenses 23,484.24 16,358.50 9,597.45 6,570.89
Depreciation 578.35 544.78 623.79 590.36
Other write offs - - - -
Adjusted PBT 5,194.08 3,557.95 3,112.17 2,537.88
Tax charges 1,611.73 984.25 556.53 522.00
Adjusted PAT 4,092.12 2,995.00 2,532.95 2,007.28
Non recurring items 65.61 115.22 7.12 -2.08
Other non cash - - - -
adjustments
Reported net profit 4,157.73 3,110.22 2,540.07 2,005.20
Earnings before appropriation
5,156.00 3,403.66 2,728.30 2,058.29
Equity dividend 1,227.70 901.17 759.33 632.96
Preference dividend - - - -
Dividend tax 149.67 153.10 106.50 90.10
Retained earnings 3,778.63 2,349.39 1,862.46 1,335.22
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, Banking, Insurance services, Credit cards,
Investment, Online services, NRI services, Wealth management
etc.
HDFC Bank Limited was incorporated in August 1994. The
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
don’t have time or they are busy.
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.
Armored Car Services: Large retailers who collect a great deal of
cash may have the bank pick this cash up via an armored car , instead of
asking its employees to deposit the cash.
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: 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.
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
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.
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
Treasury’s 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 Bank’s 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, they 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 from
client quickly.
ERP integration.
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 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. 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.
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 former’s wide branch network covering 1,000 branches for the
latter’s cash management services. BoI expects an Rs 2,000-crore
turnovers 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 bank’s 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 bank’s
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.
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 was questionnaire
Secondary data: - the sources of secondary data were internet,
books and newspaper articles.
RESULT AND ANALYSIS
1) Are you aware of ICICI bank straight to bank services?
(a) Yes
(b) No
Analysis of the above diagram
It’s very good for the ICICI bank as most of the population is 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. In which company bank do you have your account?
(a) Axis Bank
(b) ICICI Bank
(c) HSBC Bank
(d) standard chartered Bank
Analysis of the above diagram
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. Are you satisfy with your company services?
(a) Yes
(b) No
Analysis of the above diagram
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.
4. What are your main modes making payments?
(a) Cheque
(b) Cash
(c) DD
Analysis of the above diagram
Like premium most of the companies distribute their payments
through cheques only DD and cash are made out under special
circumstances
5. Do you reinsure your polices?
(a) Yes
(b) No
Analysis of the above diagram
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 re-insuring 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 Mumbai 1.5 200
2 New Delhi 1.25 180
3 Calcutta 1.00 175
4 Madras 0.75 180
5 Ahmedabad 0.75 150
6 Banglore 0.70 160
7 Hyderabad 1.00 155
8 Pune 0.50 140
9 Jaipur 0.60 150
10 Indore 0.75 120
11 Cochin 0.50 130
12 Agra 0.50 120
13 Jalandhar 0.40 110
14 Jammu 0.10 115
15 Nagpur 0.10 135
16 Lucknow 0.10 140
The requirements of the ABC Ltd. are as follows:
1. All money should be deposited at ABC Ltd. a/c at New Delhi.
2. All money should be collected on the next day basis.
3. 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. Courier pick-up service at each location.
5. Monthly reports of each location about sales, collection,
expenditures etc.
6. 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 Cash
Management Service. This is regarding how the bank makes deal with
the company.
The ICICI BANK will analyze 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.
1 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 doesn’t have its own presence but has tied 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:
An upcountry Cheque which is drawn at one location and
deposited at another location where the bank has its own presence.
2) UCC COR:
An 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:
An upcountry Cheque which is drawn at one location and
deposited at another location where the bank neither has its own
presence nor have tie-up with correspondent bank.
PRICING:
Pricing is competitive; varies from centre to centre. 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 customer’s account on the next day basis
irrespective of days to clear.
Day when the
Cheque will be
credited
Clearing Bank Days for
which bank
is out fund
Bank In
Fund/Out of
Fund
Day1 RBI 0 Not out of funds
Day2 SBI 1 1 Day out of
funds
Day3 Correspondent Bank 1 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 outstanding charges, which occurs
in the process. The outstanding charges include salary, administration
charges, maintenance etc.
3) Margin:
After including the transaction and other outstanding 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 Cash Management Process 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 for the research study was relatively
insufficient.
2. The study might not produce absolutely accurate results as it was
based on a sample taken from the population.
.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
research are as follows:.
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.
Few of the respondents were aware about the service which was
desired by 100% respondents clearly showing that there has been a
fault 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.
RECOMMENDATIONS
We suggest following measures, which ICICI Bank could
take so as to take on heavy competition from HSBC Bank, SBI, PNB and
other Banks:
Try to reduce cost, so that benefits can be passed on to
customers.
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.
REFERENCES
Books/ Magazines:
Managerial Decision Modeling with spreadsheets – Nagraj
Balakrishnan, Barry Render & Ralph M. Stair
Business Research Methods – William G. Zikmund
Business today
Websites:
www.icicibank.com
www.inc.com
www.investopedia.com
www.google.com
APPENDIXE
QUESTIONNAIRE
Dear Respondent,
I am student of Apeejay Institute of Technology, School of Management,
Greater Noida. I am doing this research to know awareness of Cash
Management Services.
1. Are you aware of ICICI bank straight to bank services?
(a) Yes
(b) No
2. In which company bank do you have your account?
(a) Axis bank (b) ICICI Bank
(c) HSBC Bank (d) SBI Bank
(e) HDFC Bank
3. Are you satisfy with your company services?
(a) Yes
(b) No
4. What are your main modes making payments?
(a) Cheque
(b) Cash
(c) DD
5. Do you reinsure your polices?
(a) Yes
(b) No
Personal Information
Name:
Age:
Sex: ( ) Male ( ) Female
Phone No:
Occupation: