CASH MANAGEMENT PRODUCTS

OFFERED BY SBI AND ICICI AND

OBSERVATIONS

Jeresh Charles
18KA
FM 2 Assignment
 Cash Management Product (CMP) services provided by SBI.
Cash Management service to Corporates under the name SBI FAST (Funds available in shortest time)

Advantages of SBI FAST:

1. Optimisation of cash collection and predictability

2. Quick transfers, account reconciliation and customised MIS
3. Eliminates delays inherent in traditional fund transfers.
4. File upload facility (host to host transfer) which leads to inherent cost reduction and
enhanced liquidity.
A) Local collection
• Depending on the clearing practices prevailing at the various centres (i.e.
Day-0, Day-1, or Day-2), credit is afforded, as mandated, to the client's main
account at the pooling centre the same day as the proceeds are cleared.
• Convenient collecting locations
• Client does not need to have any account at the centre where the facility is
operated.
• Instruments deposited at collection centres wither through distributors/
dealers/ representatives/ couriers.
• Collection of instruments general/MICR clearing from local branch or
another bank branch.
• Centralised Reconciliation Support
B) Outstation cheques collection
• Paid the same day at concessional charges and cheques drawn on other
banks are credited after clearance. On selective basis and with Regional
Manager’s recommendations credits can be afforded on Guaranteed Credit
(GC facility) basis provided necessary limits are carved out by the branch
where CC is maintained.
C) Cash collection
• Cash pick up facility at major centre.
• Facility of Cash deposits at CMP centre with software which facilitates
automatic pooling of funds with MIS.
D) Uncleared funds
• Option of credit against uncleared funds available at banks discretion
• Limit is required to be carved out for this facility.
E) Balance sweep
• Transfer of day-end-balances in collection accounts maintained at various
CMP centres across the country to the pooling account.
• Client can use the account for crediting outstation and local collections and
managing payments and the residual balance at the end of the day swept to
the main account.
• Swept balances can be swept back to the respective accounts by reverse
sweep at the end of the day.
F) Debit transfers
 • Debit balances in operating account where drawals are permitted up to a
pre- fixed daylight limit, maintained at CMP centres 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) Customised MIS
• Daily presentation/ credits/ return reports provided to representative or
dealer at the local centre.
• Daily location wise or product wise presentation/ credit/ return report
provided to corporate office through emails.
• Customised weekly/ monthly consolidated report compatible with clients
accounting system.
• Daily credit forecast report.
H) Electronic Collections
1. Direct Debit
• Collection of invoice payment from Dealers, SIP/Premium.
• Payment can be pulled from any account.
• Mandate of account holder is required and validated by SBI
2. RTGS/ NEFT receipts
• Dealer codes are set up by the corporate
• Funds received through RTGS/NEFT are credited to corporate
pooling accounts.
• MIS is generated giving dealer name, invoice number and amount.
I) Payments
A) Real time gross settlement
• Inter bank product- settlement through RBI.
• Minimum Transaction Amount = 2 Lakhs
• 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 Electronics Fund Transfer
• Interbank product – settlement through RBI
• For amounts less than 2 lakhs
• Settlement on the same 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 centres across India through NECS
(National Electronic Clearing Service) for banks on corporate
banking.
• Useful for payment of interests/ dividend/ salary/ pension to many
investors/ shareholders/ employees/ ex-employees.
D) Direct Credit
• Intra-Bank of SBI for electronic payment that uses ' Core Power '.
• Settlement online and available between branches
 • Can be used for payment for Purchases, Rent, Incentives, Salaries
etc.

E) Drafts
• Meets bulk drafts requirements on Day 0.
• Fax signature available up to Rs. 5 lakhs
• Printed with forwarding letter.
• Provision for direct despatch to beneficiary.
F) Multi-city cheques- corporate cheque payable at par
• Clients Fax signature affixed for amount up to Rs. 5 lakhs
• Printed with customised forwarding letter.
• Direct despatch on selective basis.
• Maximum amount on cheque – no limit.
G) Dividend Warrants
• All electronic and paper modes available with widest reach.
• Direct Access
• RTGS/ NEFT enabled banks.
• Validation of instrument number and amount at time of payment
• Regular paid/ unpaid services.

PRICING

The pricing of the product is competitive, but volume driven and depends on the location, type of
facilities and number of individual instruments.

Cash Management Product (CMP) services provided by ICICI.

Cash Management Services (CMS)

ICICI Bank's Cash Management Services offers a full range of products and services to efficiently
process your receivables and payables. They cater to all cash management requirements to optimise
cash flow position and to facilitate effective management of your business operation.

Benefits of Cash Management Services

1.Leverage of vast network of locations within India

2.Wide range of CMS products
3.Efficient logistics support and advanced technology support
4.Ensuring timely deposit of collections and timely execution of disbursement
requests.
A) Eazypay- Mobile Payment App

Eazypay is a one-stop solution for all merchants to collect payments from their customers. It is a
mobile based application which allows one to quickly raise an invoice and customers can pay
immediately through any convenient payment mode – Unified Payment Interface (UPI), Credit Card,
Debit Card, Internet Banking or Pockets wallet.
Benefits to shop owner:

1. Reduction in cash transactions

2. 24×7 instant credit through UPI and Pockets
3. Facilitates collection from multiple modes of payments.
4. Sub merchant option to enable employees to collect on your behalf.
5. Transaction history available- No need to keep physical receipts.
6. Hassle-free reconciliation
7. Flexibility to collect payment anytime through UPI.
8. Saves time- No need to be physically present for transactions.
9. Scan-n-Bill: Scan the barcodes of FMCG merchandise from smartphones, using the Eazypay
app, and generate invoices digitally.
10. Supports cash and credit sales: The app also allows one to tag payments as ‘paid by cash’ or
‘sold on credit’.
11. Integrated sales dashboard: The app features an in-built sales dashboard which displays a
comprehensive summary of the products sold, thereby providing critical insights on
purchase patterns.
12. Queries and support requests: Answers to queries by raising support requests directly from
the app.
13. Collecting payments through a card-swipe machine: Collect payments using three different
kinds of card-swipe machines. All three devices support magnetic stripe (swipe) as well as
chip-based (insert/ dip) cards based on the Visa, Mastercard and RuPay platforms and are
delivered within a few working days.

Benefits to Payers:

1. Cashless Transaction
2. Instant confirmation to Payer
3. Pay from any Bank.
4. Alerts to customers through e-mail / SMS for collect request.
5. Saves time- No need to be physically present for transactions.
6. Flexibility to pay through any mode- UPI, Internet Banking, Cards and Pockets

B) Cash Collection

ICICI Bank arranges for the collection of cash from the client’s premises and can process them under
Cash Management Services (CMS). Comprehensive Management Information System (MIS) is
available to capture note denominations and other details. It also ensures timely collection from
single or multiple pick up locations, on daily or On-call basis.

Benefits

1. Minimisation of operational risk

2. Reduction in cost
3. Efficient logistic support
4. Customised MIS
 5. Available on routine as well as on call basis

C) Cheque Collection

Cheque Collection helps to manage client’s cheque inflow by providing it with collection reports to
monitor the status of cheque clearing and to facilitate easy reconciliation of account receivables.

Benefits of Cheque Collection

1. Capability to process cheque drawn at any location.

2. Instrument level information on the amounts deposited at multiple locations.
3. Efficient logistic support
4. Ensuring timely deposit of collections
5. Customised MIS
6. Available on routine as well as on call basis
7. Direct deposit of CMS cheques across 2,547 branches instead of vendor pick up.

D) E-Collections

E-Collection facilitates customers to get the Payer details and credit information for recurring inward
Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) transactions in the
current account.

Benefits

1. Facilitates online and prompt availability of funds.

2. Customised MIS for quick reconciliation
3. Option of sending payment confirmation to the Payers.
4. MIS reporting at hierarchy/ structure level and options of validation

Leveraging on an excellent technology platform, ICICI Bank offers bulk disbursement solutions for
making payments to channel partners through multiple modes like paper based and electronic
modes of payments. ICICI Bank’s ‘Payable at Par’ solutions facilitate payment of dividend and
interest.

E) Internet Based Cheque Writing

Cheque printing facility at premises or at branches, based on information uploaded through

Corporate Internet Banking.

Benefits

1. Payment File can be approved by clients from remote location.

 2. Digital signature means no variation while issuing cheques.
3. Vendor satisfaction as payment would be received by them even if the client is unavailable.
4. Increased security owing to payment file upload through Corporate Internet Banking.

F) Bulk NEFT/RTGS/Fund Transfer

Electronic modes of payment solutions offered by ICICI Bank include Funds Transfer, Real Time Gross
Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

Benefits

1. Cost effectiveness
2. Fast turnaround time
3. Single file upload to effect multiple modes of payments.
4. Completely secured and works on pre-defined authorisation matrix.
5. Single and customised payment file upload formats
6. Reverse MIS integration with leading ERPs

G) I-Sure Pay

Facilitates customers to deposit cash, transfer cheques, clearing cheques, Demand Drafts, Pay
Orders, and debit instructions at any ICICI Bank branch with the benefit of acknowledgement on a
real-time basis, on successful validation of the customer details in the Payee institution’s systems.

Benefits for user

1. Assurance of correct payment from genuine customer

2. Flexibility in decision making whether to ‘Accept’ or ‘Reject’ the payment
3. Cost of handling and carrying cash and/or cheques is saved.
4. Account is credited as soon as cash is received and ‘on realization’ in case of cheque.
5. Customised acknowledgement receipt
6. Real time XML alert to client server for database updation
7. No manual reconciliation needed.

Benefits to payers

1. Free of cost service

2. Available at all ICICI Bank branches
3. On-the-spot receipt generation
4. Flexibility to opt for partial payment.
5. No need of internet connectivity.
 H) Cash Deposit Machine (CDM)

For businesses with high cash collections, ICICI can deploy easy to operate CDMs at specified place.
The end to end process flow can be customised to meet client needs.

I) NACH

NACH launched by NPCI is a centralised system which aims at facilitating interbank high volume low
value debit/credit transactions, which are repetitive in nature, electronically using the NPCI service.

Observations
In a banking institution, the term Cash Management refers to the day-to-day administration of
managing cash inflows and outflows. Because of the multitude of cash transactions daily, they must
be managed. The ultimate goal of cash management is to maximize liquidity and minimize the cost
of funds.

Cash management is a core service provided by banks to their entire corporate and financial
institution client base. The client base starts at the sole trader level, progresses through SME and
MME clients, all the way to the largest and most complex of global corporates/financial institutions.
All clients of a bank have a need for some part of the bank’s product and service suite in the field of
cash management.

The field of cash management has become even more important for banks since the financial crisis
of 2008. The reason for this is that as well as generating sizable fee income for a bank, this product
suite also generates the cheapest and most stable form of liquidity a bank can find. This source of
liquidity, which is required so a bank can offer any of its debt services, is in short supply, so having a
strong suite of cash management products combined with a sales force that is able to articulate their
bank’s proposition to a client base is imperative these days.

Importance of Cash Management

It is vital a bank’s sales force team can converse professionally with their client base about cash
management. This ensures that the bank’s team understands what is driving their client’s thinking in
this field, which stems from a corporate treasurers’ number one priority being to ensure that their
company is always able to meet its obligations in full, wherever, whenever and in whichever
currency they fall due, on the due date. This leads to how a client’s treasury team review this area of
banking, with ‘risk management’ being their main objective, followed by scalable, transparent
solutions that provide the client with visibility of what is happening.

Further principles ensure a banker can discuss with a company that operates a retail business in one
town, to an organisation that handles occasional high-value payments prior to letting goods leave a
factory, to a multi-national corporate operating in various geographies and currencies, to a
sophisticated financial institution that is doing thousands of high-value settlement trades that need
reconciling prior to releasing the other side of a trade.
What Makes a Strong Cash Management System?

The foundations of any good cash management proposition, from both the banks and the client’s
perspective, are summarized into the bank account and the transaction processing parts of cash
management, reviewing how these principles are done on a single currency, single financial centre
basis all the way through to multiple across currencies across many geographies’ basis.

Another component of cash management reviews how a bank can maximize its worth to its clients
by offering liquidity solutions, both on a domestic and global basis, as well as whether the client is
net long or short of funds. This also looks at how technology is used to automate these functions at
the treasury on the client site, as well as how banks use technology to minimize their costs.

More Services Offered

Other services which sit alongside cash management include transactional foreign exchange, trade
and working capital, security services and asset management. These must also be used as part of a
solution suite to meet the needs of a bank’s client base.

The integration on FX, trade etc., into the cash management solutions is what makes a client’s
treasury team feel as though their needs have been met and ensures a bank continues to benefit
from a stable, lengthy, and healthy relationship with its client base.

Cash Management Products for Business

Banks recognize that every business client is unique and requires specific banking solutions. Cash
Management products are an integral part of a well-run business. Relationship Bankers are
committed to collaborating to design a product and service package that specifically meets daily
operational cash flow and investment needs. Through this customization of services, businesses will
be able to manage liquidity, utilize cash efficiently and streamline banking. These solutions will also
save time and increase staff productivity.

The common CMP provided for businesses include.

A) Commercial Analysis Checking

Maximizing and controlling cash flow begins with choosing the right checking account for businesses.
This account is designed for businesses with higher monthly transaction volume and balances. The
account earns a credit towards bank service fees at a competitive rate. Activity in all deposit
accounts owned by the same customer and operating under the same tax identification number can
be combined each month for calculation of service fees.

At month end, an earnings credit is calculated from the total monthly average ledger balance in all
the customer’s accounts and the accumulated service fees are deducted from these earnings. If the
combined earnings credit is greater than the combined fees, no service fee is due. If the net charges
are greater than the earnings credit, that amount will be debited from the account.

Earnings credit is calculated on the monthly average ledger balance less the reserve requirement.

B) Account statement cycles at the end of the month

An analysis statement is prepared separately from the cycled statement and is processed the
following month. The net charge detailed in the analysis statement is assessed by the middle of the
following month.

C) Merchant Service Processing

Provides a fast and cost-effective way to service credit card/merchant processing needs. Banks may
work with a third-party provider that has similar business beliefs and strategies: high-touch service
at a reasonable cost.

D) Simple application process

1. All supplies shipped directly to client.
2. The bank will assist with onsite set-up services, if needed
3. Transactions are credited within 24-48 business hours.

E) Business Debit/ATM Card

The Business Debit Card is a great tool. All purchases are itemized on your monthly business
checking account statement and are available to view through online banking.

F) Online Banking & Bill Payment

A secure Online Banking system for those business clients that want access to account and
transaction information but do not have cash management needs. Online banking provides the
ability to:

1. Access accounts 24 hours a day, 7 days a week

2. View account balances and transaction history
3. View images of checks and deposit slips
4. Access online statements
5. Transfer funds
6. Stop payments.
7. Order checks
8. Reconcile accounts and download account information into financial/tax software.
9. Utilize Online Bill Payment—a simple, easy, and secure way to pay virtually any bill without
the need for buying stamps or writing cheques.
10. Online Banking and Bill Payment is provided at no cost.

G) Online Cash Management Banking

Online Cash Management Banking platform provides advanced banking technology and enhanced
security features allowing easy management of money and maximize cash flow. Administrative
security and unlimited functionality are hallmarks of this product. This online Cash Management
system has all the features of Online Banking and Bill Payment plus.
1. Initiate Domestic Wire Transfers
2. Originate Automated Clearing House transactions for payroll deposits or make payments to
other companies.
3. Online Tax Payments
4. Positive Pay and account reconciliation to assist you in preventing check fraud.