CHAPTER –I

COMPANY PROFILE : STATE BANK OF INDIA

State Bank of India is an India-based bank. In addition to

banking, the Company, through its subsidiaries, provides a range of
financial services, which include life insurance, merchant banking,
mutual funds, credit card, factoring, security trading, pension fund
management and primary dealership in the money market. It operates
in fSBI business segments: the treasury segment includes the entire
investment portfolio and trading in foreign exchange contracts and
derivative contracts; the corporate / wholesale banking segment
comprises the lending activities of corporate accounts group, mid
corporate accounts group and stressed assets management group; the
retail banking segment comprises of branches in National Banking
Group, which primarily includes personal banking activities, and other
banking business. As of March 31, 2011, the Bank had a network of
18,266 branches including 4,724 branches of its five Associate Banks

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History:
The evolution of State Bank of India can be traced back to the
first decade of the 19th century. It began with the establishment of the
Bank of Calcutta in Calcutta, on 2 June 1806. The bank was
redesigned as the Bank of Bengal, three years later, on 2 January
1809. It was the first ever joint-stock bank of the British India,
established under the sponsorship of the Government of Bengal.
Subsequently, the Bank of Bombay (established on 15 April 1840)
and the Bank of Madras (established on 1 July 1843) followed the
Bank of Bengal. These three banks dominated the modern banking
scenario in India, until when they were amalgamated to form the
Imperial Bank of India, on 27 January 1921.

An important turning point in the history of State Bank of India

is the launch of the first Five Year Plan of independent India, in 1951.
The Plan aimed at serving the Indian economy in general and the rural
sector of the country, in particular. Until the Plan, the commercial
banks of the country, including the Imperial Bank of India, confined
their services to the urban sector. Moreover, they were not equipped
to respond to the growing needs of the economic revival taking shape
in the rural areas of the country. Therefore, in order to serve the
economy as a whole and rural sector in particular, the All India Rural
Credit Survey Committee recommended the formation of a state-
partnered and state-sponsored bank.

The All India Rural Credit Survey Committee proposed the take
over of the Imperial Bank of India, and integrating with it, the former
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state-owned or state-associate banks. Subsequently, an Act was passed
in the Parliament of India in May 1955. As a result, the State Bank of
India (SBI) was established on 1 July 1955. This resulted in making
the State Bank of India more powerful, because as much as a quarter
of the resSBIces of the Indian banking system were controlled directly
by the State. Later on, the State Bank of India (Subsidiary Banks) Act
was passed in 1959. The Act enabled the State Bank of India to make
the eight former State-associated banks as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its

operations carried out by the 480 offices comprising branches, sub
offices and three Local Head Offices, inherited from the Imperial
Bank. Instead of serving as mere repositories of the community's
savings and lending to creditworthy parties, the State Bank of India
catered to the needs of the customers, by banking purposefully. The
bank served the heterogeneous financial needs of the planned
economic development.

Branches
The corporate center of SBI is located in Mumbai. In order to
cater to different functions, there are several other establishments in
and outside Mumbai, apart from the corporate center. The bank boasts
of having as many as 14 local head offices and 57 Zonal Offices,
located at major cities throughout India. It is recorded that SBI has
about 10000 branches, well networked to cater to its customers
throughout India.

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ATM Services
SBI provides easy access to money to its customers through more than
8500 ATMs in India. The Bank also facilitates the free transaction of
money at the ATMs of State Bank Group, which includes the ATMs
of State Bank of India as well as the Associate Banks – State Bank of
Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc.
Customer may also transact money through SBI Commercial and
International Bank Ltd by using the State Bank ATM-cum-Debit
(Cash Plus) card.

Personal Banking
 SBI Term Deposits SBI Loan For Pensioners
 SBI Recurring Deposits Loan Against Mortgage Of Property
 SBI Housing Loan Loan Against Shares & Debentures
 SBI Car Loan Rent Plus Scheme
 SBI Educational Loan Medi-Plus Scheme

Other Services
 Agriculture/Rural Banking
 NRI Services
 ATM Services
 D-mat Services
 Corporate Banking
 Internet Banking
 Mobile Banking
 International Banking
 Safe Deposit Locker
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  RBIEFT
 E-Pay
 E-Rail
 SBI Vishwa Yatra Foreign Travel Card
 Broking Services
 Gift Cheques

Organization Structure
1. Pratip Chaudhuri (Chairman)
2. Hemant G. Contractor (Managing Director)
3. Diwakar Gupta (Managing Director)
4. A Krishna Kumar (Managing Director)
5. Dileep C Choksi (Director)
6. S. Venkatachalam (Director)
7. D. Sundaram (Director)
8. Parthasarathy Iyengar (Director)
9. G. D. Nadaf (Officer Employee Director)
10. Rashpal Malhotra (Director)
11. D. K. Mittal (Director)
12. Subir V. Gokarn (Director)

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INTRODUCTION : CASH MANAGEMNT
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.

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

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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 is used 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
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evolve strategies regarding the following fSBI facets of cash
management:

•Optimum Utilisation of Operating Cash

Implementation of a sound cash management programme is based on
rapid generation, efficient utilisation and effective conversation of its
cash resSBIces. 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 resSBIces
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 theautopsies of the businesses that failed, he would find
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that the major reason for the failure was their unability to remain
liquid. Liquidity has an intimate relationship with efficient utilisation
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. Raising
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.

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 CHAPTER –II

RATIONALE & SIGNIFICANCE

Rationale & Significance

The importance of Cash management in any industrial concern cannot

be over stressed. Under the present inflationary condition,
management of Cash is perhaps more important than even
management of profit and this requires greatest attention and efforts .
It needs vigilant attention as each of its components require different
types of treatment and it throws constant attention on exercise of skill
and judgment, awareness of economic trend etc, due to urgency and
complicacy the vital importance of Cash. The anti-inflationary
measure taken up creating a tight money condition has placed working
capital in the most challenging zone of management and it requires a
unique skill for its management. Today, the problem of managing
Cash has got the recognition of separate entity, so its study and
management is of major importance to both internal and external
analyst to judge the current position of the business concerns. Hence,
the present study entitled “A study on Cash Management” has been
taken up.

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 CHAPTER –III

OBJECTIVES OF THE STUDY

TOPIC OF THE STUDY

Study of CASH MANAGEMENT at the State Bank of India

Objectives of a project tell us why project has been taken under

study. It helps us to know more about the topic that is being
undertaken and helps us to explore future prospects of that
organisation. Basically it tells what all have been studied while
making the project.

1.To understand how cash is being managed by SBI

2.To gain knowledge about the system prevailing in Banks.

3.To suggest methods for improving cash management in Banks.

4.To identify cash management policy adopted by SBI

5. To establish the relationship between cash management and growth

of SBI

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 CHAPTER –IV

RESEARCH METHODOLOGY

RESEARCH DESIGN
Research is a systematic process of collecting and analyzing
information (data) in order to increase SBI understanding of the
phenomenon about which we are concerned or interested. A Research
Design is the framework or plan for a study which is used as a guide
in collecting and analyzing the data collected. It is the blue print that
is followed in completing the study. The basic objective of research
cannot be attained without a proper research design. It specifies the
methods and procedures for acquiring the information needed to
conduct the research effectively. It is the overall operational pattern of
the project that stipulates what information needs to be collected, from
which sSBIces and by what method

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary
data. Primary data is defined as data that is collected from original
sSBIces for a specific purpose. Secondary data is data collected from
indirect sSBIces.
PRIMARY SSBICE
These include the survey or questionnaire method, as well as the
personal interview methods of data collection.

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SECONDARY SSBICES
These include books, the internet, company brochures, the company
website, competitor‟s websites etc, newspaper articles etc.

SAMPLING PLAN
Sampling refers to the method of selecting a sample from a given
universe with a view to draw conclusions about that universe. A
sample is a representative of the universe selected for study. The
sample size is 20.

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 CHAPTER –V
Review of literature

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. If at any time a company fails to pay an
obligation when it is due because of the lack of cash, the company is
insolvent. Insolvency is the primary reason firms go bankrupt.
Obviously, the prospect of such a dire consequence should compel
companies to manage their cash with care. Moreover, efficient cash management
means more than just preventing bankruptcy. It improves the profitability and
reduces the risk to which the firm is exposed. Cash management is particularly
important for new and growing businesses.

As Jeffrey P. Davidson and Charles W. Dean indicated in their book

Cash Traps, cash flow can be a problem even when a small business has
numerous clients, offers a superior product to its customers, and enjoys a
sterling reputation in its industry. Companies suffering from cash flow
problems have no margin of safety in case of unanticipated expenses.
They also may experience trouble in finding the funds for innovation
or expansion. Finally, poor cash flow makes it difficult to hire and retain
good employees. It is only natural that major business expenses are incurred in the
production of goods or the provision of services. In most cases, a
business incurs such expenses before the corresponding payment is

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received from customers. In addition, employee salaries and
other expenses drain considerable funds from most businesses. These
factors make effective cash management an essential part of any
business's financial planning. "Cash is the lifeblood of a[store]," wrote

Richard Out calt and Patricia Johnson in Playthings. "Without cash

for inventory, payroll, and other expenses, an emergency is
imminent."When cash is received in exchange for products or services
rendered, many small business owners, intent on growing their
company and tamping down debt, spend most or all of these funds.
But while such priorities are laudable, they should leave room for
businesses to absorb lean financial times down the line. The key to
successful cash management, therefore, lies in tabulating realistic
projections, monitoring collections and disbursements, establishing
effective billing and collection measures, and adhering to budgetary
restrictions.

Capital Structure is a mix of debt and equity capital maintained by a

firm. Capital structure is also referred as financial structure of a firm.
The capital structure of a firm is very important since it related to the
ability of the firm to meet the needs of its stakeholders. Modigliani
and Miller (1958) were the first ones to landmark the topic of capital
structure and they argued that capital structure was irrelevant in
determining the firms value and its future performance. On the other
hand, Lubatkin and Chatterjee (1994) as well as many other studies
have proved that there exists a relationship between capital structure
and firm value.
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Modigliani and Miller (1963)showed that their model is no more
effective if tax was taken into consideration since tax subsidies on
debt interest payments will cause arise in firm value when equity is
traded for debt.

Pinegar and Wilbricht (1989) discovered that principal-agent

problem can be dealt with to some extent through the capital structure
by4 increasing the debt level and without causing any radical increase
in agency costs.

Lubatkin and Chatterjee (1994) argue that increasing the debt to

equity ratio will help firms ensure that managers are running the
business more efficiently. Hence, managers will return excess cash
flow to the shareholders rather than investing in negative NPV
projects since the managers will have to make sure that the debt
obligations of the firm are repaid. Hence, with an increase on debt
level, the lenders and shareholders become the main partiesin the
corporate governance structure. Thus, managers that are not able to
meet the debt obligations can be replaced by more efficient managers
who can better serve the shareholders.

Warner (1977) argues that the potential bankruptcy costs a firm

might face are reflected in its share price and this is taken into
consideration by investors when they make investment decisions.
Bankruptcy costs refer to the costs associated with declining credit
terms with customers and suppliers. It can be argued that suppliers
would not be willing to give long term credit terms to the firm as the
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latter faces the risk of default and similarly, customers would avoid
buying products and services from a firm facing a high risk of default
since warranties and other after sales services will be void or at risk.

Lang, Stulz and Walking (1991) uses the Tobins q as a proxy to

determine the quality of investment. Firms with a high µq showed that
firms were using their free cash flows to invest in positive NPV
projects whereas firms with low µq showed that firms were investing
in negative NPV projects and therefore, the free cash flows should
instead be paid out dividends to the shareholders. As a whole, this
study is in line with the free cash theory and was considered as very
reliable among economists.

Jensen (1989) states that when free cash flows are available to top
managers, they tend invest in negative NPV projects instead of paying
out dividends to shareholders. He argues that the compensation of
managers with an increase in the firms turnover. Hence the objective
of the company is to increase the size of the firm by investing in all
sorts of projects even if these projects have a negative NPV.

Dorff (2007) argued that compensation of managers tend to increase

when there is an increase in the firms turnover. Therefore, linking the
ownership structure to management can solve the
principalagent problem. This is in line with Smith (1990) who carried
a study on 58 Management Buy outs of public companies during the
period of 1977 to 1986. His findings revealed that there exists a
positive relationship between management ownership and the
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performance of the firm. This study also provide empirical evidence
that increase in operating profits result from the decrease in operating
costs and the proper management of working capital of the firms. This
is in line with Lichtenberg and Siegel (1990)

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 cSBIse. 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 exceeds 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

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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
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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 PLANNING
Cash flows are inseparable parts of the business operations of firms. A
firm needs cash to invest in inventory, receivable and fixed assets and
to make payment for operating expenses in order to maintain growth
in sales and earnings. It is possible that firm may be taking adequate
profits, but may suffer from the shortage of cash as its growing needs
may be consuming cash very fast. The„ cash poor‟ position of the firm
can be corrected if its cash needs are planned in advance. At times, a
firm can have excess cash with it if its cash inflows exceed cash
outflows. Such excess cash may remain idle. Again, such excess cash
flows can be anticipated and properly invested if cash planning is
resorted to.
Cash planning is a technique to plan and control the use of cash. It
helps to anticipate the future cash flows and needs of the firm and
reduces the possibility of idle cash balances (which lowers firm‟s
profitability) and cash deficits (which can cause the firm‟s
failure).Cash planning protects the financial condition of the firm by
developing a projected cash statement from a forecast of expected
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cash inflows and outflows for a given period. The forecasts may be
based on the present operations or the anticipated future operations.
Cash plans are very crucial in developing the operating plans of the
firm. Cash planning can be done on daily, weekly or monthly basis.
The period and frequency of cash planning generally depends upon
the size of the firm and philosophy of management. Large firms
prepare daily and weekly forecasts. Medium-size firms usually
prepare weekly and monthly forecasts. Small firms may not prepare
formal cash forecasts because of the non-availability of information
and small-scale operations. But, if the small firm prepares
cash projections, it is done on monthly basis. As a firm grows and
business operations become complex, cash planning becomes
inevitable for its continuing success.

Cash Forecasting and Budgeting

Cash budget is the most significant device to plan for and control
cash receipts and payments. A cash budget is a summary statement of
the firm‟s 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. This
information helps the financial manager to determine the future cash
needs of the firm, plan for the financing of these needs and exercise
control over the cash and liquidity of the firm. The time horizon of the
cash budget may differ from firm to firm. A firm whose business is
affected by seasonal variations may prepare monthly cash budgets.
Daily or weekly cash budgets should be prepared for determining cash
requirements if cash flows show extreme fluctuations. Cash budgets
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for a longer intervals may be prepared if cash flows are relatively
stable.
Cash forecasts are needed to prepare cash budgets. Cash
forecasting may be done on short or long-term basis. Generally,
forecasts covering periods of one year or less are considered short-
term; those exceeding beyond one year are considered long term.
Short-term Cash Forecasts
It is comparatively easy to make short-term cash forecasts. The
important functions of carefully developed short-term cash forecasts
are:
•To determine operating cash requirements
•To anticipate short-term financing
•To manage investment of surplus cash.

The short-term forecast helps in determining the cash requirements for

a predetermined period to run a business. If the cash requirements are
not determined, it would not be possible for the management to know-
how much cash balance is to be kept in hand, to what extent
bank financing be depended upon and whether surplus funds would be
available to invest in marketable securities. To know the operating
cash requirements, cash flow projections have to be made by a firm.
As stated earlier, there is hardly a perfect matching between cash
inflows and outflows. With the short-term cash forecasts, however,
the financial manager is enabled to adjust these differences in favor of
the firm. It is well known that, for their temporary financing needs,
most companies depend upon banks. One of the significant roles of
the short-term forecasts is to pinpoint when the money will be needed
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and when it can be repaid. With such forecasts in hand, it will not be
difficult for the financial manager to negotiate short-term financing
arrangements with banks. This in fact convinces bankers about the
ability of the management to run its business. The third function of the
short-term cash forecasts is to help in managing the investment
of surplus cash in marketable securities. Carefully and skillfully
designed cash forecast helps a firm to:
(i) select securities with appropriate maturities and reasonable risk,
(ii) avoid over and under-investing and
(iii) maximize profits by investing idle money.
Short-run cash forecasts serve many other purposes. For example,
multi-divisional firms use them as a tool to coordinate the flow of
funds between their various divisions as well as to make financing
arrangements for these operations. These forecasts may also be useful
in determining the margins or minimum balances to be maintained
with banks. Still other uses of these forecasts are:
•Planning reductions of short and long-term debt
•Scheduling payments in connection with capital expenditures
programmes
•Planning forward purchases of inventories
•Checking accuracy of long-range cash forecasts
•Taking advantage of cash discounts offered by suppliers
•Guiding credit policies

Short-term Forecasting Methods

Two most commonly used methods of short-term cash forecasting are:
•The receipt and disbursements method
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•The adjusted net income method.
The receipts and disbursements method is generally employed to
forecast for limited periods, such as a week or a month. The adjusted
net income method, on the other hand, is preferred for longer
durations ranging between few months to a year. Both methods have
their pros and cons.The cash flows can be compared with budgeted
income and expenses items if the receipts and disbursements approach
is followed. On the other hand, the adjusted income approach is
appropriate in showing a company‟s working capital and future
financing needs.

Receipts and disbursements method:

Cash flows in and out in most companies on a continuous basis. The
prime aim of receipts and disbursements forecasts is to summarize
these flows during a predetermined period. In case of those companies
where each item of income and expense involves flow of cash, this
method is favSBIed to keep a close control over cash. Three broad
sSBIces of cash inflows can be identified: (i) operating, (ii) non-
operating, and(iii) financial. Cash sales and collection from customers
form the most important part of the operating cash inflows.
Developing a sales forecast is the first step in preparing cash forecast.
All precautions should be taken to forecast sales as accurately as
possible. In case of cash sales, cash is received at the time of sale. On
the other hand, cash is realized after sometime if sale is on credit. The
time realizing cash on credit sales depends upon the firm‟s credit
policy reflected in the average collection period. It can easily be noted
that cash receipts from sales will be affected by changes in sales
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volume and the firm‟s credit policy. To develop a realistic cash
budget, these changes should be accounted for. If the demand for the
firm‟s products slackens, sales will fall and the average collection
period is likely to be longer which increases the chances of bad debts.
In preparing cash budget, account should be taken of sales discounts,
returns and allowances and bad debts as they reduce the amount of
cash collections from debtors. Non-operating cash inflows include
sale of old assets and dividend and interest income. The magnitude of
these items is generally small. When internally generated cash flows
are not sufficient, the firm resorts to external sSBIces. Borrowings and
issuance of securities are external financial sSBIces. These constitute
financial cash inflows.
The next step in the preparation of a cash budget is the estimate of
cash outflows. Cash out flows include:
(i) operating outflows: cash purchases, payment of payables, advances
to suppliers, wages and salaries and other operating expenses,
(ii) capital expenditures,
(iii) contractual payments: repayment of loan and interest and tax
payments; and
(iv) discretionary payments: ordinary and preference dividend.

In case of credit purchases, a time lag will exist for cash payments.
This will depend on the credit terms offered by the suppliers. It is
relatively easy to predict the expenses of the firm over short run.
Firms usually prepare capital expenditure budgets; therefore, capital
expenditures are predictable for the purposes of cash budget.
Similarly, payments of dividend do not fluctuate widely and are paid
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on specific dates. Cash out flow can also occur when the firm repays
its long-term debt. Such payments are generally planned and,
therefore, there is no difficulty in predicting them. Once the forecasts
for cash receipts and payments have been developed, they can be
combined to obtain the net cash inflow or outflow for each month.
The net balance for each month would indicate whether the firm has
excess cash or deficit. The peak cash requirements would also be
indicated. If the firm has the policy of maintaining some minimum
cash balance, arrangements must be made to maintain this minimum
balance in periods of deficit. The cash deficit can be met by
borrowings from banks. Alternatively, the firm can delay its capital
expenditures or payments to creditors or postpone payment of
dividends. One of the significant advantages of cash budget is to
determine the net cash inflow or out flow so that the firm is enabled to
arrange finances. However, the firm‟s decision for appropriate
sSBIces of financing should depend upon factors such as cost and
risk. Cash budget helps a firm to manage its cash position. It also
helps to utilize ideal funds in better ways. On the basis of cash budget,
the firm can decide to invest surplus cash in marketable securities and
earn profits. The virtues of the receipt and payment methods are:
•It gives a complete picture of all the items of expected cash flows.
•It is a sound tool of managing daily cash operations. This method,
however, suffers from the following limitations:
•Its reliability is reduced because of the uncertainty of cash forecasts.
For example, collections may be delayed, or unanticipated demands
may cause large disbursements.

Page | 26
•It fails to highlight the significant movements in the working capital
items.
Adjusted net income method:
This method of cash forecasting involves the tracing of working
capital flows. It is sometimes called the sSBIces and uses approach.
Two objectives of the adjusted net income approach are:
(i) to project the company‟s need for cash at a future date and
(ii) to show whether the company can generate the required funds
internally, and if not, how much will have to be borrowed or raised in
the capital market
.As regards the form and content of the adjusted net income forecast,
it resembles the cash flow statement discussed previously. It is, in fact
a projected cash flow statement based on proforma financial
statements. It generally has three sections: sSBIces of cash, uses of
cash and the adjusted cash balance. This procedure helps in adjusting
estimated earnings on an accrual basis to a cash basis. It also helps in
anticipating the working capital movements. In preparing the adjusted
net income forecasts items such as net income, depreciation, taxes,
dividends etc., can easily be determined from the company‟s annual
operating budget. Normally, difficulty is faced in estimating working
capital changes; especially the estimates of accounts receivable
(debtors) and inventory pose problem because they are influenced by
factors such as fluctuations in raw material costs, changing demand
for the company‟s products and possible delays in collections. Any
error in predicting these items can make the reliability of forecast
doubtful. One popularly used method of projecting working capital is
to use ratios relating accounts receivable and inventory to sales. For
Page | 27
example, if the past experience tells that accounts receivable of a
company range between 32 percent to 36 percent of sales, an average
rate of 34 percent can be used. The difference between the projected
figure and that on the books will indicate the expected increase or
decrease in cash attributable to receivable. The benefits of the
adjusted net income method are:
•It highlights the movements in the working capital items, and thus
helps to keep a control on s firm‟s working capital.
•It helps in anticipating a firm‟s financial requirements. The major
limitation of this method is:
•It fails to trace cash flows, and therefore, its utility in controlling
daily cash operations is limited

Long-term Cash Forecasting

Long-term cash forecasts are prepared to give an idea of the
company‟s financial requirements in the distant future. They are not
as detailed as the short-term forecasts are. Once a company has
developed long-term cash forecast, it can be used to evaluate the
impact of, say, new product developments or plant acquisitions on the
firm‟s financial condition three, five, or more years in the future. The
major uses of the long-term cash forecasts are:
•It indicates as company‟s future financial needs, especially for its
working capital requirements.
•It helps to evaluate proposed capital projects. It pinpoints the cash
required to finance these projects as well as the cash to be generated
by the company to support them.

Page | 28
 CHAPTER –VI
DATA COLLECTION & ANALYSIS

CASH MANAGEMENT AT STATE BANK OF INDIA

Cash Management

As part of State Bank's global transaction solutions to Corporates and

Institutions, we provide Cash Management, Securities Services and
Trade Services through SBI strong market networks in Asia. Theye
are committed to providing 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 clients need
For Corporates
State Bank is highly recognized as a leading cash management
supplier across the emerging markets. Cash Management Services
cover local and cross border Payments, Collections, Information
Management, Account Services and Liquidity Management for both
corporate and institutional customers. With State Bank's Cash
Management services, always know the exact financial position.
Customers have the flexibility to manage clients company's complete
financial position directly from clients computer workstation.
Customers will also be able to take advantage of SBI outstanding

Page | 29
range of Payments, Collections, Liquidity and Investment Services
and receive comprehensive reports detailing clients transactions. With
State Bank, customer have everything it takes to manage clients cash
flow more accurately.
 Payments Services
 Collection Services
 Liquidity Management

For Financial Institutions

Standard Chartered is highly recognized as a leading cash

management supplier across the emerging markets. SBI Cash
Management Services cover local and cross border Payments,
Collections, Information Management, Account Services and
Liquidity Management for both corporate and institutional customers.
If customer are looking for a correspondent banking partner customer
can trust, Standard Chartered can help customer. SBI have more than
500 offices located in 50countries throughout the world and, with 150
years of on-the-ground experience, SBI can help their bank clients
with all their cash management needs.

 Clearing Services

 Asian Gateway

Payment Services

Global payments solution for efficient transaction processing

Looking to outsSBIce clients payments to enable

Page | 30
  Efficient processing of all clients payables in the most cost
effective way

 Straight through processing both at clients end as well as clients

bank's back-end

 Efficient payables reconciliation with minimal effort and delay

 Quick approval of payments from any location

 Minimum hindrance to automation due to local language

difficulties

 Centralized management of payables across departments,

subsidiaries and countries

SBI Solution

State Bank's Straight Through Services (STS) Payments Solution can

be tailored to the different payment needs of companies, whatever
industry, size or country customer may be in. With a comprehensive
End-to-end Payment Processing Cycle, STS allows companies to
process a variety of payment types, whether they be domestic or
international, local or central in different countries, all in a single
system file. To realise the benefits of STS, please contact clients local
Relationship Manager or Cash Management representative.

Page | 31
SBI Coverage

SBI are the foreign bank having the largest geographical

representation in the country. We are the only bank which provides
draft status to customer on the website.

Collection Services
Comprehensive receivables management solution State Bank
understands that operating and sustaining a profitable business these
days is extremely tough. In an environment of constant changes and
uncertainties, most businesses face challenges of costs and efficiency.
Key concerns include:
 Receivables Management - ensuring receivables are collected in
an efficient and timely manner to optimise utilisation of funds.
 Risk Management - ensuring effective management of debtors
to eliminate risk of returns and losses caused by defaulters and
delayed payments
 Inventory Management - ensuring efficient and quick
turnaround of inventory to maximise returns.
 Cost Management - reducing interest costs through optimal
utilisation of funds

SBI Solution
The State Bank Collections Solution leverages the Bank's extensive
regional knowledge and widespread branch network across SBI key
markets to specially tailor solutions for clients regional and local
collection needs. This Collections Solution, delivered through a
standardised international platform, has the flexibility to cater to
Page | 32
clients local needs, thus enabling customer to meet clients objectives
of reducing costs and increasing efficiency and profitability
through better receivables and risk management. The key components
of SBI solution include the following:
 Extensive Clearing Network
 Guaranteed Credit
 Comprehensive MIS
 System Integration
 OutsSBIcing of Collection

Liquidity Management
Solutions for efficient management of clients funds A corporate
treasurer's main challenge often revolves around ensuring that the
company's cash resSBIces are utilised to their maximum advantage.
Customer need a partner bank that can help customer:
 Maximise interest income on surplus balances; minimise
interest expense on deficit balances for domestic, regional and
global accounts
 Minimise FX conversion for cross-currency cash concentration
 Customise liquidity management solutions for different entities
in different countries
 Centralise information management of consolidated account
balances
SBI Solution
With SBI global experience and on-the-ground market knowledge,
State Bank will help customer define an overall cash management

Page | 33
strategy which incorporates a liquidity management solution that best
meets clients need
Key Features
Based on clients needs and the regulatory environment that customer
are in, customer can choose any of the following features:
 Physical Sweeping
 Notional Pooling

Liquidity Management in SBI

Measuring and managing the liquidity needs are vital for effective
operation of commercial banks. By assuring a bank's ability to meet
its liabilities as they become due, liquidity management can reduce
the probability of an adverse situation developing. The importance
of liquidity transcends individual institutions, as liquidity shortfall in
one institution can have repercussions on the entire system. Bank
managements should measure, not only the liquidity positions of
banks on an ongoing basis, but also examine how liquidity
requirements are likely to evolve under different conditions. Banks are
in the business of maturity transformation. They lend for longer time
periods, as borrowers normally prefer a longer time frame. But their
liabilities are typically short term in nature, as lenders normally prefer
a shorter time frame (liquidity preference). This results in long-term
interest rates typically exceeding short-term rates. Hence, the
incentive for banks for performing the function of financial
intermediation is the difference between interest receipt and interest
cost which is called the interest spread. It is implicit, therefore, that

Page | 34
banks will have a mismatched balance sheet, with liabilities greater
than assets in short term, and with assets greater than liabilities in the
medium and long term. These mismatches, which represent liquidity
risk, are with respect to various time horizons. Hence, the
overwhelming concern of a bank is to maintain adequate liquidity.
Liquidity has been defined as the ability of an institution to replace
liability run off and fund asset growth promptly and at a reasonable
price. Maintenance of superfluous liquidity will, however, impact
profitability adversely. It can also be defined as the comprehensive
ability of a bank to meet liabilities exactly when they fall due or when
depositors want their money back. This is a heart of the banking
operations and distinguishes a bank from other entities.

Cash Reserve Ratio

A scheduled bank is under the obligation to keep a cash reserve called

the Statutory Cash Reserve, with the Reserve Bank of India (RBI)
under Section 42 of the Reserve Bank of India Act, 1934. Every
scheduled bank is required to maintain with the Reserve Bank an
average daily balance equal to least 3% of its net demand and time
liabilities. Average daily balances mean the average of balances held
at the close of business on each day of the fortnight. The Reserve
Bank is empowered to increase the rate of Statutory Cash Reserve
from 3% to 20% of the Net Demand and Time Liabilities (NDTL).

Page | 35
Statutory Liquidity Ratio
Section 24(2A) of Banking Regulation Act, 1949, requires every
banking company to maintain in India in Cash, Gold or
Unencumbered Approved Securities or in the form of net balance
incurrent accounts maintained in India by the bank with a nationalized
bank, equivalent to an amount which shall not at the close of the
business on any day be less than 25% or such other percentage not
exceeding 40% as the RBI may from time to time, by notification in
the Gazette of India, specify, of the total of its demand and time
liabilities in India as on the last Friday of the second preceding
fortnight, which is known as SLR. At present, all Scheduled
Commercial Banks are required to maintain a uniform SLR of 25% of
the total of their demand and time liabilities in India as on the last
Friday of the second preceding fortnight which is stipulated under
Section 24 of the RBI Act, 1949.RBI can enhance the stipulation of
SLR (not exceeding 40%) and advise the banks to keep a large portion
of the funds mobilized by them in liquid assets, particularly
government and other approved securities. As a result, funds available
for credit would get reduced. All banks have to maintain a certain
portion of their deposits as SLR and have to invest that amount in
these Government securities. Government securities are sovereign
securities. These are issued by the RBI on behalf of the Government
of India, in lieu of the Central Government's market borrowing
program. The term government securities include:
Government Dated Securities, i.e., Central Government Securities
State Government Securities Treasury Bills

Page | 36
The Central Government borrows funds to finance its fiscal deficit.
The market borrowing of the Central Government is raised through
the issue of dated securities and 364 days Treasury Bills, either by
auction or by floatation of fixed coupon loans. In addition to the
above, Treasury Bills of 91 days are issued for managing the
temporary cash mismatches of the government. These do not form
part of the borrowing program of the Central Government. Based on
the required CRR and SLR per day, the treasury department of the
bank ensures that sufficient balance is maintained in the Reserve Bank
(at its different branches). The fund manager calculates on a daily
basis the RBI balances based on opening RBI balances and taking into
account various inflows and outflows during the day. The fund
manager takes the summary of inflows and outflows and the net effect
is added to/subtracted from the opening RBI balances. By this
method, an RBI balance of all the 14 days is arrived at. For instance,
on the opening day of the fortnight, if there is an anticipated surplus,
banks can generally lend it at an average, subject to subsequent
inflows/outflows. Conversely, for a shortfall, the bank may borrow the
required amount in call/repo/Collateralized Borrowings and Lending
Obligations (CBLO)markets on a daily basis. Successful functioning
of the funds department depends mostly on the prompt collection
of information from branches/other departments regarding the
inflow and outflow of funds. The information should also be collected
accurately and collated properly/correctly. Improper maintenance of
liquidity and CRR position by the fund manager may lead to either a
default or an excess which does not earn any interest for the bank.

Page | 37
A Framework for Measuring and Managing Liquidity
Measuring and managing liquidity needs are vital for effective
operation of commercial banks. By assuring a bank's ability to meet
its liabilities as they become due, liquidity management can reduce
the probability of an adverse situation developing. The importance of
liquidity transcends individual institutions, as liquidity shortfall in one
institution can have repercussions on the entire system. Bank
managements should measure not only the liquidity positions of banks
on an ongoing basis, but also examine how liquidity requirements are
likely to evolve under different assumptions. Experience shows that
assets like government securities and other money market
instruments, which are generally treated as liquid could also become
illiquid when the market and players are unidirectional. Therefore,
liquidity has to be tracked through maturity or cash flow mismatches.
The framework for assessing and managing bank liquidity has three
dimensions:
 Measuring and managing net funding requirements
 Managing market access and
 Contingency planning.

Page | 38
Q.1 On which bank you depend for regular transaction ?
Bank No.of Respondents Percentage
SBI 55 55%
HDFC 25 25%
ICICI 15 15%
Other 5 20%

20%

55%
15% SBI
HDFC
ICICI
25% Other

Analysis of the above diagram

It has been observed that approximately 55% correspondents are using

the service of SBI for their daily transaction, around 25 % of people
are using HDFC Bank for their transaction and only 15% & 5% of
people are using ICICI & other Bank service respectively in
Bhandara. It also shows that SBI have the highest market position in
Bhandara as per my sample.

Page | 39
Q2. Are customer aware of products & services provided
by SBI

Response No.of Respondents Percentage

Yes 85 85%

No 15 15%

15%

Yes
No
85%

Analysis of the above diagram

From the above data it is clear that most of the customers (around
85%) of Bhandara have the idea about the product & services of SBI,
the rest 15% have the no idea about the product they are using.

Page | 40
Q3. Are customer aware of SBI’s straight to bank
services?

Response No.of Respondents Percentage

Yes 60 60%

No 40 40%

40%

Yes
60%
No

Analysis of the above diagram

It‟s very good for SBI as most of the companies are aware of the cash
management services provided by the bank. The bank can look into
companies as to propose its services to the concerned company
personals.

Page | 41
Q4. Are customer satisfied with clients company services

Response No.of Respondents Percentage

Yes 70 70%
No 30 30%

30%

Yes

70% No

Analysis of the above diagram

From the above analysis it can be interpreted that most of the
companies were satisfied by their CMS provider but still they found
few areas of improvement, SBI can give solutions for those areas.

Page | 42
Q5. What are clients main modes of premium collection?

Response No.of Respondents Percentage

Cash 25 25%
Cheque 65 65%

Demand Draft 10 10%

10%
25%

Cash
Cheque

65% Demand Draft

Analysis of the above diagram

Most of the companies accept premium in the form of cheque as it‟s a
safer instrument than cash and is easily handled as compared to
demand draft SBI can provide various cheque collections options to
the companies.

Page | 43
Q6. What are clients main modes making payments

Response No.of Respondents Percentage

Cash 70 70%
Cheque 20 20%

Demand Draft 10 10%

10%

20%
Cash
Cheque
70%
Demand Draft

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.

Page | 44
Q7. Does the financial crisis in US affecting clients
functioning here in INDIA?

Response No.of Respondents Percentage

Yes 75 75%

No 25 25%

25%

Yes
No
75%

Analysis of the above diagram

From the pie chart its quite evident that the financial crisis in US are
affecting people globallyand even insurance companies are gravely
affected by the crisis

Page | 45
 CASE STUDY (STATEBANK OF INDIA)

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 turnover of the each depots
and number of retailers in each cities are as follows

Page | 46
The requirements of the ABC Ltd. are as follows:1.All money should
be ABC Ltd. a/c at Delhi.2.All money should 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
o Date
o Reason
o Location
o Amount
1.CSB Iier pick-up service at each location.
2.Monthly reports of each location about sales, collection,
expenditures etc.
3.Other MIS reports

ANALYZING PROCESS:
These are the conditions and facts of the organisation.
Now, what the bank will do?
I have taken the case of STATE BANK OF INDIA CMS

Page | 47
This is regarding how the bank makes deal with the company. The
STATE BANK OF INDIA will analysis 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:
o In 10 locations of the company, the bank has its own presence.

o In 2 locations of the company, the bank has tie-up with

correspondent bank
o And in remaining 4 locations, the bank has no presence as well
as no tie-up with any other bank.

How the bank makes allocation of the different instruments?

The bank broadly categorized the instruments into two types:
I. Local Cheque Collections (LCC)
LCC are the cheques, which are drawn and deposited at the same
location.
Eg.A Cheque drawn at Jaipur must be deposited at Jaipur only. The
LCC is again categorized 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 tie up with
correspondent Bank.

Page | 48
II.Upcountry Cheque Collections (UCC)
The UCC are the cheques, which are drawn and deposited at different
locations.
Eg. A Cheque drawn at Jaipur is deposited at Delhi. The UCC is again
categorized into two types:
1)UCC BRN
An upcountry Cheque which is drawn at one location and deposited at
another location wherethe 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 banks neither have its own presence nor
have tie-up with correspondent bank.

PRICING:
Pricing is competitive; varies from centre to center. It also varies from
instruments to instruments. Special pricing can be worked out taking
into account the volume of funds & the centres. The pricing part of the
CMS is very complex. Normally, the STATE BANK of INDIA 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 PSU banks.
The RBI has presence in 15 cities in India while SBI has 938 locations
Page | 49
in India including its associates. Other cities where clearing house is
not there, the clearing is done through Correspondent Bank, mostly
these are PSU 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 SBI has to debit its
customer‟s account on the next day basis irrespective of days to clear

In this case, the bank charges interest on the money which it gives in
form of “Credit against Un cleared Cheque”, to the company. When it
comes to the Correspondent bank, the bank has to pay extra charges to
these banks.
2)Overheads:
The bank takes into account the overheads charges, which it occurs in
the process. The o/hs charges include salary, administration charges,
maintenance etc.

3)Margin:
After including the transaction and other overheads 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 cSBI charges return

Page | 50
cheques etc. also considered. Pricing in CMS in generally negotiable
between the company and the Bank.
o Exclusive CMP desks with infrastructure
o Debit Transfers
o CSBIier pick-up at branches
o No collection a/cs needed at branches
o Customized Reports
o Transmission of data through Internal LAN system
o Direct credit to accounts
o Benefits to Customers:
o Centralized Control of cash
o Cost reduction
o Enhanced Liquidity
o Interchange of Information between treasury & operating units
o Reduced excess cash balance
o Cash forecasting & scheduling
o Effective control over disbursements
o Timely & effective investments

Page | 51
 CHAPTER –VII
CONCLUSION
The study allowed us get answers regarding the service awareness
among people and the problems it faces. The key findings and
analysis of the survey showed the following

o A large number of clients and customers call the branch

frequently to handle banking issues , this shows the keenness of
the customers to call the branch for almost every small issue.
The service Straight2bank does provide an answer to the
problem of the customers. The service provided by staright to
bank does offer the main requirements of the customers for
which they visit or call the branch

o All the respondents wanted to carry out the banking needs at

their convenience. This means the service caters the banking
needs that customers generally require and its main benefit of
banking while sitting at office is desired by one and all, thereby
proving that the service does have the potential usage Few of
the respondents were aware about the service which was
desired by 100%respondents clearly showing that there has
been a falter in its promotion and awareness strategies.

o Customers were not aware that the service was a free one, this
is clear that almost all the attributes of the services are

Page | 52
 favorable to the customers still customers are not using the
service and are not even aware of it.

Almost all customers once educated about the service readily enrolled
for it whereas a mere portion did not trust the bank and thought that
the bank would have some hidden charges that they are not putting
forward Many clients who enrolled for the staright to bank service
would have problems using it as the drop boxes are not strategically
placed many areas do not even have drop box facility; State Bank
must look into the policies of installing the drop box. They should
assign it to the regional office or allow branches to put up boxes
where the branch thinks it would be optimally utilized no matter
which area of the city as of now that branches are allowed to put up
drop boxes in a radius which falls in close by areas to the branch. A
customer who lives close by to the branch would not use this service
whereas customers who are far of require the service, however the
branch cannot provide them with the facility as they cannot install the
boxes in that area and it is the duty of the local branch of that area
to put up boxes which is not happening they hardly know where
customers of the other branch are located

Page | 53
 CHAPTER –VIII
SUGGESTIONS
We suggest following measures, which State Bank could take so as to
take on heavy competition from HDFC and ICICI Bank:

 Try to reduce cost, so that benefits can be passed on to customers.

Senior managers at SBI keep on telling that it is difficult to reduce
cost, because of services we provide. But the fact is, India being a
price sensitive market; people at times go for monetary benefits
rather than for long-term non- monetary benefits. If charges can‟t be
reduced because of costs involved, make the services customized, so
that services are provided to only those customers who are willing to
pay the price for services they are getting and let the other customers
enjoy costs benefits without getting services.

 SBI should provide competitive prices as nowadays a lot business is

being acquired by AXIS bank and HSBC bank and SBI is facing a lot
competition from these banks.

 SBI should contact with their clients regularly for knowing the
problems faced by them. This will help SBI in providing best
services to customers. This will result in additional customer base by
getting further references from satisfied clients.

 SBI should focus on getting the business other business clients other
than its existing customers as it would help them to increase their
business opportunities.

Page | 54
 CHAPTER –IX

LIMITATIONS OF THE STUDY

Following are the limitations faced by me during this project:

The allotted time period of 8 weeks for the study was relatively
insufficient, keeping in mind the long duration it can take at times, to
close a particular corporate deal.

The study might not produce absolutely accurate results as it was

based on a sample taken from the population.

It was difficult getting time and access to senior level Finance/HR
managers (who had to be talked to, to get required information) due to
their busy schedules and prior commitments.

A few of the managers refrained from giving the required

information as he considered me to be from their confidential domains

Page | 55
 CHAPTER –X

BIBLIOGRAPHY

Books :

Name of Book Author Publication

Ratio Analysis Fundamentals Axel Tracy Bidi Capital Pub

Management Accounting R.S.N.Pillai S.chand Pub.

Financial Management I.M.Pande HPH

Internet websites :
www.google.com

www.sbibank.com

www.investopedia.com

Other :

Articles & Journals

Page | 56