Introduction

Cash is the important current asset for the operations of the business. Cash is the basic input needed to
keep the business running on a continuous basis; it is also the ultimate output expected to be realized
by selling the service or product manufactured by the firm. The firm should keep sufficient cash,
neither more nor less. Cash shortage will disrupt the firm’s manufacturing operations while excessive
cash will simply remain idle, without contributing anything towards the firm’s profitability. Thus, a
major function of the financial manager is to maintain a sound cash position.
Cash is the money which a firm can disburse immediately without any restriction. The term cash
includes coins, currency and cheques held by the firm, and balances in its bank accounts. Sometimes
near-cash items, such as marketable securities or bank time’s deposits, are also included in cash. The
basic characteristic of near-cash assets is that they can readily be converted into cash. Generally, when
a firm has excess cash, it invests it in marketable securities. This kind of investment contributes some
profit to the firm

MOTIVES FOR HOLDING CASH

The firm’s need to hold cash may be attributed to the following the motives:
 The transactions motive
 The precautionary motive
 The speculative motive
  Transaction Motive
The transaction motive requires a firm to hold cash to conducts its business in the ordinary course. The
firm needs cash primarily to make payments for purchases, wages and salaries, other operating
expenses, taxes, dividends etc. The need to hold cash would not arise if there were perfect
synchronization between cash receipts and cash payments, i.e., enough cash is received when the
payment has to be made. But cash receipts and payments are not perfectly synchronized. For those
periods, when cash payments exceed cash receipts, the firm should maintain some cash balance to be
able to make required payments. For transactions purpose, a firm may invest its cash in marketable
securities. Usually, the firm will purchase securities whose maturity corresponds with some anticipated
payments, such as dividends, or taxes in the future. Notice that the transactions motive mainly refers
to holding cash to meet anticipated payments whose timing is not perfectly matched with cash receipts.

 Precautionary Motive
The precautionary motive is the need to hold cash to meet contingencies in the future. It provides a
cushion or buffer to withstand some unexpected emergency. The precautionary amount of cash
depends upon the predictability of cash flows. If cash flow can be predicted with accuracy, less cash
will be maintained for an emergency. The amount of precautionary cash is also influenced by the firm’s
ability to borrow at short notice when the need arises. Stronger the ability of the firm to borrow at short
notice, less the need for precautionary balance. The precautionary balance may be kept in cash and
marketable securities. Marketable securities play an important role here. The amount of cash set aside
for precautionary reasons is not expected to earn anything; therefore, the firm attempt to earn some
profit on it. Such funds should be invested in high-liquid and low-risk marketable securities.
Precautionary balance should, thus, held more in marketable securities and relatively less in cash.

 Speculative Motive
The speculative motive relates to the holding of cash for investing in profit-making opportunities as
and when they arise. The opportunity to make profit may arise when the security prices change. The
firm will hold cash, when it is expected that the interest rates will rise and security prices will fall.
Securities can be purchased when the interest rate is expected to fall; the firm will benefit by the
subsequent fall in interest rates and increase in security prices. The firm may also speculate on
materials’ prices. If it is expected that materials’ prices will fall, the firm can postpone materials’
purchasing and make purchases in future when price actually falls. Some firms may hold cash for
speculative purposes. By and large, business firms do not engage in speculations. Thus, the primary
motives to hold cash and marketable securities are: the transactions and the precautionary motives.
CASH MANAGEMENT
Cash management is a broad term that refers to the collection, concentration, and disbursement of
cash. It encompasses a company’s level of liquidity, its management of cash balance, and its short-
term investment strategies. In some ways, managing cash flow is the most important job of business
managers. For some time now, technology has been the key driving force behind every successful
bank. In such an environment, the ability to recognize and capture market share depends entirely on
the bank’s competence to evolve technically and offer the customer a seamless process flow. The
objective of a cash management system is to improve revenue, maximize profits, minimize costs and
establish efficient management systems to assist and accelerate growth.
The objective of cash management is to have adequate control over the cash position, so as to avoid
the risk of insolvency and use the excessive cash in some profitable way. The cash is the most
significant and highly liquid asset the firm holds. It is significant as it is used to pay the firm’s
obligations and helps in the expansion of business operations.

The concept of cash management can be further understood in terms of the cash management cycle.
The sales generate cash, and this has to be disbursed out. The firm invests the surplus cash or borrows
cash in case of deficit. Thus, it tries to achieve this cycle at a minimum cost along with the liquidity
and control.
An optimum cash management system is one that not only prevents the insolvency but also reduces
the days in account receivables, increases the collection rates, chooses the suitable investment vehicles
that improves the overall financial position of the firm.
The importance of the cash management can be understood in terms of the uncertainty involved in the
cash flows. Sometimes the cash inflows are more than the outflows, or sometimes the cash outflows
are more. Thus, a firm has to manage cash affairs in a way, such that the cash balance is maintained at
its minimum level while the surplus cash is invested in the profitable opportunities.
FACETS OF CASH MANAGEMENT
Cash management is concerned with the managing of: (i) cash flows into and out of the firm,(ii) cash
flows within the firm, and (iii) cash balances held by the firm at a point of time by financing deficit or
investing surplus cash. Sales generate cash which has to be disbursed out. The surplus cash has to be
invested while deficit has to be borrowed. Cash management seeks to accomplish this cycle at a
minimum cost. At the same time, it also seeks to achieve liquidity and control. Cash management
assumes more importance than other current assets because cash is the most significant and the least
productive asset that a firm holds. It is significant because it issued to pay the firm’s obligations.
However, cash is unproductive. Unlike fixed assets or inventories, it does not produce goods for sale.
Therefore, the aim of cash management is to maintain adequate control over cash position to keep the
firm sufficiently liquid and to use excess cash in some profitable way.
Cash management is also important because it is difficult to predict cash flows accurately, particularly
the inflows, and there is no perfect coincidence between the inflows and outflows of cash. During some
periods, cash outflows will exceed cash inflows, because payment of taxes, dividends, or seasonal
inventory builds up. At other times, cash inflow will be more than cash payments because there may
be large cash sales and debtors may be realized in large sums promptly. Further, cash management is
significant because cash constitutes the smallest portion of the total current assets, yet management’s
considerable time is devoted in managing it. In recent past, a number of innovations have been done
in cash management techniques. An obvious aim of the firm these days is to manage its cash affairs in
such a way as to keep cash balance at a minimum level and to invest the surplus cash in profitable
investment opportunities. In order to resolve the uncertainty about cash flow prediction and lack of
synchronization between cash receipts and payments, the firm should develop appropriate strategies
for cash management. The firm should evolve strategies regarding the following four facets of cash
management:

 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 flows.

 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 inability 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
center. 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.
The ideal cash management system will depend on the firm’s products, organization structure,
competition, culture and options available. The task is complex, and decisions taken can affect
important areas of the firm. For example, to improve collections if the credit period is reduced, it may
affect sales. However, in certain cases, even without fundamental changes, it is possible to significantly
reduce cost of cash management system by choosing a right bank and controlling the collections
properly.
Objectives of Cash Management

 Fulfil Working Capital Requirement: The organization needs to maintain ample liquid cash
to meet its routine expenses which possible only through effective cash management.
 Planning Capital Expenditure: It helps in planning the capital expenditure and determining
the ratio of debt and equity to acquire finance for this purpose.
 Handling Unorganized Costs: There are times when the company encounters unexpected
circumstances like the breakdown of machinery. These are unforeseen expenses to cope up
with; cash surplus is a lifesaver in such conditions.
 Initiates Investment: The other aim of cash management is to invest the idle funds in the right
opportunity and the correct proportion.
 Better Utilization of Funds: It ensures the optimum utilization of the available funds by
creating a proper balance between the cash in hand and investment.
 Avoiding Insolvency: If the business does not plan for efficient cash management, the situation
of insolvency may arise. It is either due to lack of liquid cash or not making a profit out of the
money available.
Cash Management Models
Cash management requires a practical approach and a strong base to determine the requirement of cash
by the organization to meet its daily expenses. For this purpose, some models were designed to
determine the level of money on different parameters.
The two most important models are discussed in detail below:

 The Baumol’s EOQ Model

Baumol model of cash management helps in determining a firm's optimum cash balance under
certainty. It is extensively used and highly useful for the purpose of cash management. As per the
model, cash and inventory management problems are one and the same. William J. Baumol developed
a model (The transactions Demand for Cash: An Inventory Theoretic Approach) which is usually used
in Inventory management & cash management. Baumol model of cash management trades off between
opportunity cost or carrying cost or holding cost & the transaction cost. As such firm attempts to
minimize the sum of the holding cash & the cost of converting marketable securities to cash.

There are certain assumptions that are made in the model. They are as follows:
1. The firm is able to forecast its cash requirements with certainty and receive a specific amount
at regular intervals.
2. The firm’s cash payments occur uniformly over a period of time i.e. a steady rate of cash
outflows.
3. The opportunity cost of holding cash is known and does not change over time. Cash holdings
incur an opportunity cost in the form of opportunity foregone.
4. The firm will incur the same transaction cost whenever it converts securities to cash. Each
transaction incurs a fixed and variable cost.
For example, let us assume that the firm sells securities and starts with a cash balance of C rupees.
When the firm spends cash, its cash balance starts decreasing and reaches zero. The firm again gets
back its money by selling marketable securities. As the cash balance decreases gradually, the average
cash balance will be: C/2. This can be shown in following figure:

The firm incurs a cost known as holding cost for maintaining the cash balance. It is known as
opportunity cost, the return inevitable on the marketable securities. If the opportunity cost is k, then
the firm’s holding cost for maintaining an average cash balance is as follows:
Holding cost = k (C/2)
Whenever the firm converts its marketable securities to cash, it incurs a cost known as transaction
cost. Total number of transactions in a particular year will be total funds required (T), divided by the
cash balance (C) i.e. T/C. The assumption here is that the cost per transaction is constant. If the cost
per transaction is c, then the total transaction cost will be:
Transaction cost = c (T/C)
The total annual cost of the demand for cash will be:
Total cost = k (C/2) + c (T/C)
Optimum level of cash balance
As the demand for cash, ‘C’ increases, the holding cost will also increase and the transaction cost
will reduce because of a decline in the number of transactions. Hence, it can be said that there is a
relationship between the holding cost and the transaction cost.
The optimum cash balance, C* is obtained when the total cost is minimum.
Optimum cash balance (C*) = Ö2cT/k
Where, C* is the optimum cash balance.
T is the total cash needed during the year.
k is the opportunity cost of holding cash balances.
With the increase in the cost per transaction and total funds required, the optimum cash balance will
increase. However, with an increase in the opportunity cost, it will decrease.
Limitations of the Baumol model:
1. It does not allow cash flows to fluctuate.
2. Overdraft is not considered.
3. There are uncertainties in the pattern of future cash flows.
  The Miller – Orr’ Model
Most firms maintain a minimum amount of cash on hand to meet daily obligations or as a requirement
from the firm's bank. A maximum amount may also be specified to reflect the tradeoff between the
transactions cost of investing in liquid assets (e.g. Money Market Funds) and the cost of lost interest
if the cash is not invested. The Miller-Orr model computes the spread between the minimum and
maximum cash balance limits as.
Spread= 3(0.75 x transaction cost x variance of daily cash flows / daily interest rate) ^(1/3)
(where a^b is used to denote "a to the power b").
The maximum cash balance is the spread plus the minimum cash balance, which is assumed to be
known.
The "return point" is defined as the minimum cash balance plus spread/3.
Whenever the cash balance hits (or exceeds) the maximum, the firm should invest the difference
between the amount available and the return point; if the minimum is reached, sufficient securities
should be sold to bring it up to the return point.
Graph Explanation:
i. When cash balance reaches point ‘A', the upper limit, company will invest the surplus to bring
down the cash balance to return point.
ii. When cash balance touches down point `B', the lower limit, the company would liquidate some
of its securities to increase the balance back to return point.
iii. Upper and lower limits are determined as explained above.
iv. These limits depend upon variance of cash flow, transaction cost and interest rate.
v. If variability of cash flow is high and transaction cost is high too, then the limits will be wide
apart, otherwise narrow would suffice.
vi. If interest rates are high then the narrow limits would be set
vii. To keep interest cost as low as possible, the return point is set 1/3 of the spread between the
lower and upper limit.
Cash Management Services Generally offered
The following is a list of services generally offered by banks and utilised 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 logon credentials, allowing employees to send wires and access other cash
management features normally not found on the consumer web site.
 Armored Car Services: Large retailers who collect a great deal of cash may have the bank
pick this cash up via an armored car company, instead of asking its employees to deposit the
cash.
 Automated Clearing House: services are usually offered by the cash management division of
a bank. The Automated Clearing House is an electronic system used to transfer funds between
banks. Companies use this to pay others, especially employees (this is how direct deposit
works). Certain companies also use it to collect funds from customers (this is generally how
automatic payment plans work). This system is criticized by some consumer advocacy groups,
because under this system banks assume that the company initiating the debit is correct until
proven otherwise.
 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, wire
transfers in and out, ACH (automated clearinghouse debits and credits), investments, etc.
 Cash Concentration Services: Large or national chain retailers often are in areas where their
primary bank does not have branches. Therefore, they open bank accounts at various local
banks in the area. To prevent funds in these accounts from being idle and not earning sufficient
interest, many of these companies have an agreement set with their primary bank, whereby
their primary bank uses the Automated Clearing House to electronically "pull" the money from
these banks into a single interest-bearing bank account.
 Lockbox services: Often companies (such as utilities) which receive a large number of
payments via checks in the mail have the bank set up a post office box for them, open their
mail, and deposit any checks found. This is referred to as a "lockbox" service.
 Positive Pay: Positive pay is a service whereby the company electronically shares its check
register of all written checks with the bank. The bank therefore will only pay checks listed in
that register, with exactly the same specifications as listed in the register (amount, payee, serial
number, etc.). This system dramatically reduces check fraud.
 Sweep Accounts: are typically offered by the cash management division of a bank. Under this
system, excess funds from a company's bank accounts are automatically moved into a money
market mutual fund overnight, and then moved back the next morning. This allows them to
earn interest overnight. This is the primary use of money 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.
The Importance of Cash Management
 Cash is crucial for every business. Every company has to have cash on hand or at least access
to cash in order to be able to pay for the goods and services it uses, and consequently, to stay
in business. By ensuring the company with the necessary funds for supporting its everyday
operations, cash management becomes a vital function for the company.
 Cash flows have an impact on the company’s liquidity. Liquidity is the ability of the company
to pay its obligations when they come due. It is comprised of: cash on hand, assets readily
convertible into cash, as well as ready access to cash from external sources, such as bank loans.
If cash flows and liquid funds are not effectively and successfully planned and managed, a
company may not be able to pay its suppliers and employees in a timely manner. It may be
profitable according to its financial statements, but in fact, this company will not be able to pay
its obligations when they come due. Moreover, lack of liquidity will incur increased costs in
the form of interest charges on loans, late payment penalties and losing supplier discounts for
paying obligations on time.
 Proper cash management can avoid the costs of additional funding and can provide the
opportunity for more favorable terms of payment. In the worst case scenario, if the liquidity
shortage continues for the longer term, the company might face no access to external resources,
ending into insolvency. Therefore, once again, it follows that cash management has a critical
importance for the life of every company.
 5 another benefit of cash management to the company is that it makes the company financially
flexible. Ready access to cash enables the company to undertake expenditure decisions if and
whenever it wishes, without the trouble and constraint of finding new financial support.
 The ultimate goal of every company is maximizing shareholder value, i.e. maximizing the net
present value of future cash flows. Cash management contributes to attaining that goal as well.
If a firm keeps high levels of cash, it increases its net working capital and the costs of holding
cash, both of which decrease the value of the firm.
 Cash management influences the value of the firm by limiting cash levels so that an optimal
balance between the costs of holding cash and the costs of inadequate cash is achieved. “In
addition, cash management influences firm value, because its cash investment levels entail the
rise of alternative costs, which are affected by net working capital levels. Both the rise and fall
of net working capital levels require the balancing of future free cash flows, and in turn, result
in firm valuation changes”
Cash Management Strategies
Cash management involves decision making at every step. It is not an immediate solution but a
strategical approach to financial problems. Following are the strategies of cash management:

 Business Line of Credit: The organization should opt for a business line of credit at an initial
stage to meet the urgent cash requirements and unexpected expenses.
 Money Market Fund: While carrying on a business, the surplus fund should be invested in
the money market funds. These are readily convertible into cash whenever required and yield
a considerable profit over the period.
 Lockbox Account: This facility provided by the banks enable the companies to get their
payments mailed to its post office box. This lockbox is managed by the banks to avoid manual
deposit of cash regularly.
 Sweep Account: The organizations should avail the facility of sweep accounts which is a mix
of savings and fixed deposit account. Thus, the minimum balance of the savings account is
automatically maintained, and the excess sum is transferred to the fixed deposit account.
 Cash Deposits (CDs): If the company has a sound financial position and can predict the
expenses well along with availing of a lengthy period, it can invest the surplus cash in the cash
deposits. These CDs yield good interest, but early withdrawals are liable to penalties.
Cash Flow Management Techniques
Managing cash flow is a contemplative process and requires a lot of analytical thinking. The various
techniques or tools used by the managers to practice cash flow management are as follows:

 Accelerating Collection of Accounts Receivable: One of the best ways to improve cash
inflow and increase liquid cash by collecting the debts and dues from the debtors readily.
 Stretching of Accounts Payable: On the other hand, the company should try to extend the
payment of dues by acquiring an extended credit period from the creditors.
 Cost Cutting: The company must look for the ways of reducing its operating cost to main a
good cash flow in the business and improve profitability.
 Regular Cash Flow Monitoring: Keeping an eye on the cash inflow and outflow, prioritizing
the expenses and reducing the debts to be recovered, makes the organization’s financial
position sound.
 Wisely Using Banking Services: The services such as a business line of credit, cash deposits,
lockbox account and sweep account should be used efficiently and intelligently.
 Upgrading with Technology: Digitalization makes it convenient for the organizations to
maintain the financial database and spreadsheets to be assessed from anywhere anytime.
Limitations of Cash Management
Cash management is an inevitable part of business organizations. However, it has a few shortcomings
which make it unsuitable for small organizations; these are as follows:

Cash management is a very time consuming and skilful activity which is required to be performed
regularly.
As it requires financial expertise, the company may need to hire consultants or other experts to perform
the task by paying administrative and consultation charges.
Small business entities which are managed solely, face problems such as lack of skills, knowledge,
time and risk-taking ability to practice cash management.
CASH MANAGEMENT AT STATE BANK OF INDIA
Cash Management As part of State Bank's global transaction solutions to Corporates and Institutions,
State Bank provides Cash Management, Securities Services and Trade Services through their strong
market networks in Asia. They are committed to providing you with
 Integrated, superior cross-border and local services
 Efficient transaction processing
 Reliable financial information
 Innovative products
 World-class clearing services thus ensuring a full suite of transactional products for your needs.
Cash Management Services for Corporates
STATE BANK OF INDIA provides cash management services to Corporate Clients under the brand
name SBI FAST (Funds Available in Shortest Time). SBI FAST ensures optimization of collections
and payouts while ensuring predictability in the cash flows. It ensures getting Funds in time, quick
transfers, account reconciliation, easy disbursements, controlled processes and customized MIS. SBI
FAST eliminates the inherent delays of the traditional funds transfer mechanism and enhances liquidity
to ensure optimum planning and utilization of funds. It also offers File upload facility on our web based
portal and are in the process of providing complete Host to Host facility.

SBI FAST Cash Management Services Offerings:

 COLLECTIONS:
a. Local Collections: (Cheques/drafts etc)
 Collection of instruments tendered at various CMP collection centers. Depending on the
clearing practices prevailing at the various centers (i.e. Day-0, Day-1, or Day-2), credit is
afforded, as mandated, to the client's main account at the pooling center the same day as the
proceeds are cleared.
 Convenient collecting locations across the country with pooling facility at any of our branches
as per client’s choice, which are physically connected to our central hub at Mumbai.
 Instruments can be deposited at the collection centers either by their dealers/
distributors/representatives or through couriers as per the arrangement.
 Client is not required to open any account at the Centre from which this facility is availed.
 Collection of instruments in High Value clearing, General/MICR Clearing, drawn on local
branch and drawn on other local SBI Branches.
 No correspondent arrangements. Collections are handled exclusively through our own network
and hence cost effective.
 SBI is the acknowledged leader in the collection services.
  Centralized Reconciliation Support.
b. Outstation Cheques Collection:
 Outstation Cheques can also be deposited at our CMP Cell branches and we afford Guaranteed
Credit facility with credit available on Day 0 to Day 7.
 Outstation Cheques drawn on our own branches are paid the same day at very concessional
charges.

c. Cash Collection:
 We also offer the facility of Cash Deposit at our CMP Cell branches on CMP software which
facilitates automatic pooling of funds with MIS.
 We are arranging for Cash Pick up at select centres shortly.
d. Uncleared Funds:
 Option of credit against Uncleared Instruments presented in General/MICR or High Value
clearing offered selectively at Bank's discretion.
 A nominal limit is required to be set up to take care of returns.

e. Balance Sweep:
 Transfer of day-end-balances in collection accounts maintained at various CMP centers across
the country to the pooling account.
 Clients can use the account for crediting local and outstation collections as well as for meeting
payments and the residual balance at the end of the day swept to the main account.

f. Debit Transfers:
 Debit Balances in operating accounts, where drawls are permitted up to a pre-fixed daylight
limit, maintained at CMP centers transferred to the main account at the end of the day.
 The facility dispenses the use of allocated limits and thereby ensures better control, for the
client over debits.
g. Customized MIS:
 Daily presentation/credit/return reports provided to the representative/dealer at the local center.
 Daily location-wise/product-wise presentation/credit/return reports provided to the Corporate
Office through E-mails.
 Customized weekly/fortnightly/monthly consolidated reports in soft-form, compatible with the
clients accounting system, through E-Mail/ Floppy/CD-ROM as required, for easier and
speedier reconciliation.
 Daily Credit forecast reports through E-Mail.
 Uncluttered/Pure MIS is our USP since the product is operated entirely through SBI?s own
network.

h. Electronic Collections:
1) Direct Debit
 For Collection of invoice payment from Dealers, SIP/Premium etc.
 Payment can be pulled from any account at any of our CBS (12,500).
 Mandate of Account holders required, which is validated by us.
2) RTGS/NEFT Receipts
 Dealer quotes are set up by the corporate.
 Funds received through RTGS/NEFT modes are credited to the Corporate pooling Account.
 MIS is generated giving Dealer Name, Invoice no and amount received.

 PAYMENTS
a. Real Time Gross Settlement
 Inter Bank Product - Settlement through RBI.
 Minimum Transaction Amount Rs.2.0 lac.
 Settlement on the day of transaction.
 Competitive market related rates
 Payment file upload facility available through SBI CMP Portal /Host to Host Connectivity
b. National Electronic Fund Transfer
 Inter Bank Product - Settlement through RBI.
 Used for amount less than Rs.2.0 lac.
 Settlement on the same day or next day.
 Any NEFT enabled Bank anywhere.
 Payment file upload facility available through SBI CMP Portal /Host to Host Connectivity

c. Electronic Clearing Scheme

 Electronic mode of payment at all 72 ECS centers.
 Useful for payment of interest, dividend, salary, pension to a large number of investors/
shareholders/ employees/ ex-employees.
 Payment file upload facility available through SBI CMP Portal /Host to Host Connectivity

d. Direct Credit
 Intra-Bank of SBI for electronic payment that uses ' Core Power '.
 Settlement online & available between CBS branches (Over 12,500 & growing).
 Can be used for payment for Purchases, Rent, Incentives, Salaries etc.
 Payment file upload facility available through SBI CMP Portal /Host to Host Connectivity

e. Drafts
 Meets Bulk Drafts requirement on day '0'.
 Facsimile signed up to Rs.5.0 lacs.
 Printed with forwarding letter also.
 Provision for direct dispatch to the beneficiary from our office.
 Payment file upload facility available through SBI CMP Portal /Host to Host Connectivity
f. Multi City Cheques
 Client's facsimile signatures affixed for amount upto Rs.5 lacs.
 Printed with customized forwarding letter.
 Provision for direct dispatch to the beneficiary.
 Maximum amount per cheque Rs.10 lacs.
 Payable at all CBS branches of the Bank.
 Payment file upload facility available through SBI CMP Portal /Host to Host Connectivity
g. Dividend Warrants
 All electronic and paper modes handled with widest reach.
 ECS? Across all 68 RBI/SBI/Other Bank Centers.
 RTGS/NEFT? Across all RTGS/NEFT enabled banks branches.
 Direct Credits? Across all branches of SBI.
 Dividend Warrants Payable at par at all 12500 plus branches
 Validation of Instrument No. & amount at the time of payment.
 Drafts issued at any of the 12500 plus branches.
 Regular paid / unpaid status provided.