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MBA PROJECT ON CASH MANAGEMENT AT HDFC BANK, Study Guides, Projects, Research of Finance

About cash management at HDFC bank ltd.

Typology: Study Guides, Projects, Research

2018/2019

Uploaded on 06/21/2019

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A PROJECT REPORT
ON CASH MANAGEMENT AT HDFC BANK LTD.
IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF
MASTER OF BUSINESS ADMINISTRATION
RANI DURGAVATI VISHWAVIDHYALAY, JABALPUR
UNDER THE GUIDANCE OF: SUBMITTED BY:
DR. RANU SAHU ABHILASHA TIWARI
(ASSISTANT PROFESSOR) MBA 4TH SEMESTER
ENROLL.NO.- R17026P7220017
SHRI RAM INSTITUTE OF MANAGEMENT
NEAR ITI MADHOTAL, JABALPUR (M.P.)
Batch-2017-19
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A PROJECT REPORT

ON CASH MANAGEMENT AT HDFC BANK LTD.

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF

MASTER OF BUSINESS ADMINISTRATION

RANI DURGAVATI VISHWAVIDHYALAY, JABALPUR

UNDER THE GUIDANCE OF: SUBMITTED BY: DR. RANU SAHU ABHILASHA TIWARI (ASSISTANT PROFESSOR) MBA 4TH^ SEMESTER ENROLL.NO.- R17026P

SHRI RAM INSTITUTE OF MANAGEMENT

NEAR ITI MADHOTAL, JABALPUR (M.P.)

Batch-2017-

SHRIRAM INSTITUTE OF

MANAGEMENT,JABALPUR (M.P)

CERTIFICATE

DR. ATUL DUBEY

PRINCIPLE

DATE: SRIM, JABALPUR

This is to certify that Ms. ABHILASHA TIWARI

MBA- 4TH semester student of SHRI RAM

INSTITUTE OF MANAGEMENT entitled the

project of “ STUDY OF CASH MANAGEMENT AT

HDFC BANK LTD, JABALPUR” Which is being

submitted herewith for the practice of partial

Jabalpur is the result of the original research work

completed by ABHILASHA TIWARI (MBA 4TH

Semester) under my supervision and guidance.

DR. RANU SAHU

(ASSISTANT PROFESSOR)

DECLARATION

I ABHILASHA TIWARI do hereby declare that the

project entitled “STUDY OF CASH

MANAGEMENT AT HDFC BANK LTD,

JABALPUR. “ is an original work carried out by

me under the guidance of DR. RANU SAHU in

partial fulfillment of Master Of Business

Administration during academic year 2019, All the

data represented in this project is true and correct

to the best of my knowledge and belief. This work

has not been submitted for any other degree exam

elsewhere.

ABHILASHA TIWARI PLACE:

JABALPUR

DATE:

ACKNOWLEDGEMENT

It gives me pleasure in expressing my heartfelt gratitude

and indebtedness for the kind blessing

showered upon me by honorable Chairman MR.R.V

KARSOLIYA Shriram Group of Institutions of Jabalpur

(M.P.)

I would like to express my gratitude towards Principal

DR. ATUL DUBEY (SRIM), Jabalpur for their kind co-

operation and encouragement which help me to

completing the project.

5 Objective of the study 22

6 Research Methodology 23

7 SWOT Analysis 26

8 Findings & Suggestions 28

9 Conclusion 29

10 Bibliography 30

  1. EXECUTIVE SUMMARY

Cash is the important current asset for the operation 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.

My research project deals with the “Cash management” carried out at “HDFC BANK LTD”. In this report I have studied and evaluated the cash management process as it is carried out in the bank.

The first section of my report deals with a detailed

company profile. It includes the company’s history and

detailed information about the company’s nature of

functioning.

The second section deals with the conceptual

background of cash. It contains the definition, process

and its significance.

In the third section of my report I have conducted a

research study to evaluate the process of cash

management and SWOT analysis at HDFC BANK LTD.

The fourth and final section of this report consists of my

findings, suggestions, conclusion and feedback.

2. INTRODUCTION

Cash management is concerned with the managing of:

  1. Cash flows into and out of the firm.
  2. Cash flows within the firm.
  3. Cash balances held by the firm at a point of time by financing deficit or investing surplus cash.
  1. Turn over inventory as quickly as possible, avoiding stock-out that may result in a loss of sales.
  2. Pay accounts payable as late as possible without deteriorating the firm's credibility, but take advantage of any favorable cash discount.
  3. Collect account receivables as quickly as possible without losing future sales due to high-pressure collection techniques. Cash discounts, if any are economically justifiable, may be used to accomplish this objectives.
  4. Involve in cash planning to determine deficit or surplus cash in each period.
  5. Surplus cash must be invested into marketable securities. 3. COMPANY PROFILE

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI’s liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of ‘HDFC Bank Limited’, with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.

HDFC Bank comprises of a dynamic and enthusiastic team determined to accomplish the vision of becoming a World-class Indian bank. HDFC bank’s business philosophy is based on our four core values- Customer Focus, Operational Excellence, Product Leadership and People. They believe that the ultimate identity and success of their bank will reside in the exceptional quality of people and their extraordinary efforts. They are committed to hiring, developing, motivating and retaining the best people in the industry.

BUSINESS FOCUS

HDFC Bank’s mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred

  1. CONCEPTUAL BACKGROUND

Cash management refers to a broad area of finance

involving the collection, handling, and usage of cash. It

involves assessing market liquidity, cash flow, and

investments. In banking, cash management, or treasury

management, is a marketing term for certain services

related to cash flow 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 clearing house facilities. Sometimes,

private banking customers are given cash management

services.

Financial instruments involved in cash management

include money market funds, treasury bills, and

certificates of deposit

OBJECTIVES OF CASH MANAGEMENT

Following are the various functions of cash

management that are essential for the effective

functioning of the organization:

(i) To satisfy day-to-day business requirements;

(ii) To provide for scheduled major payments;

(iii) To face unexpected cash drains;

(iv) To seize potential opportunities for profitable long- term investment;

(v) To meet requirements of bank relationships;

(vi) To build image of creditworthiness;

(vii) To earn on cash balance;

(viii) To build reservoir for net cash inflow till the availability of better use of funds by conscious planning;

(xi) To minimize the operating cost of cash management.

CASH MANAGEMENT TECHNIQUES

MONITOR CASH FLOW REGULARLY- Staying on top of

your cash flow is the first and foremost important aspect of cash management. To help with this, create a cash flow budget that charts finances for shorter and longer terms. This will assist in understanding where your

subscriptions or services you no longer need, cutting back on utilities, rent, or payroll, or renegotiating terms of outstanding loans or leases are different ways to save your company money.

KEY ELEMENTS OF CASH MANAGEMENT

FORECASTING - Forecasting can be defined as the

ability to calculate, predict, or plan future events or conditions using current or historical data. A cash budget monitors how much money will be available for investment, when it will become available, and for how long.

MOBILIZING - Cash mobilization involves techniques

used to assemble funds and make them readily available for investment.

BANKING RELATIONS - Maintaining good relations

with banks, savings and loan associations, investment bankers, commercial paper dealers, and security analysts is an important part of cash management.

Bankers prefer compensating balances to fee payments because deposits are the main source of a bank's loan able funds.

INVESTING CASH - investing in your business by

hiring new staff and equipment will eventually lead to greater profits and more money coming into the business.

▲ OPTIMUM CASH LEVEL

▲ INVESTING SURPLUS CASH

1. CASH PLANNING

Cash planning is a technique to plan and control the use of cash. It protects the financial condition of the firm by developing a projected cash statement from a forecast of expected cash inflows and outflows for a given period.

2. CASH BUDGETING

Cash budget is the most significant to plan for and to control cash receipts and payments. A cash budget is a summary statement of the firms expected cash inflows and outflows over a projected time period. It gives information on the timing and magnitude of expected cash flows and cash balances over the projected period. Cash forecasting may be done on short or long term basis. Generally forecast covering period of one year or less are considered short terms. Those extending beyond one year are considered long term.

3. MANAGEING CASH FLOWS

Once the cash budgets have been prepared and appropriate net cash flow established, the financial manager should ensure that there does not exist a significant deviation between projected cash flows and actual cash flows. To achieve this cash management efficiency will have to be improved through a proper control of cash collection and disbursement. The twin objectives of managing the cash flows should be to accelerate cash collections as much as possible and to decelerate or delay cash disbursements as such as possible.

4. OPTIMUM CASH LEVEL

A prudent finance manger desires to maintain only that much amount of cash balance as is just only that much amount of cash balance as is just sufficient to satisfy transaction requirements as well as to meet precautionary and speculative motives. This task is so important that carrying of excess cash balance entails loss of interest earnings to the firm and thus causes low profitability and maintaining a small, cash balance renders the firm’s liquidity position weak, although a higher profitability us ensured. Thus, determination of suitable level of cash holding involves risk-return trade- off.

5. INVESTING SURPLUS CASH

There is a close relationship between cash and money market searching or other short-term investment