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About cash management at HDFC bank ltd.
Typology: Study Guides, Projects, Research
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UNDER THE GUIDANCE OF: SUBMITTED BY: DR. RANU SAHU ABHILASHA TIWARI (ASSISTANT PROFESSOR) MBA 4TH^ SEMESTER ENROLL.NO.- R17026P
DR. RANU SAHU
(ASSISTANT PROFESSOR)
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.
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:
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
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
(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
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
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.
used to assemble funds and make them readily available for investment.
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.
hiring new staff and equipment will eventually lead to greater profits and more money coming into the business.
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.
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.
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.
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.
There is a close relationship between cash and money market searching or other short-term investment
