A STUDY ON CASH

MANAGEMENT OF SBI BANK

CHAPTER – 1
INTRODUCTION

• SCOPE
• OBJECTIVES
• IMPORTANCE
• LIMITATIONs
• RESEARCH METHODOLOGY
INTRODUCTION

The most crucial current asset for the business’s operations is cash. Cash is The
primary resource required to keep a business operating, and it is also the Revenue
received when the business sells the items or services it has Generated. The
company’s cash reserves should be sufficient neither too high Nor too low. Even if
an significant amount of money will be sitting around doing Nothing to increase
the company’s profitability, a cash shortage will have a Detrimental impact on the
business’s production activities.

Consequently, keeping a healthy cash position is one of the financial

Management’s primary responsibilities. The total amount of money that a Business
has unrestricted access to at any given time is called cash. Coins, Cash, bank
account policies, and business – owned certificates are all Considered forms of
“cash.” Sometimes, cash is mixed with near – cash assets Like marketable
securities and bank time deposits. The ability to convert near Cash assets into cash
fast is their primary feature. Usually, convertible bonds Are used as an investment
vehicle for extra company funds.

Sometimes, cash is mixed with near-cash assets like marketable securities and
Bank time deposits. The ability to convert nearcash assets into cash fast is their
Primary feature. Usually, convertible bonds are used as an investment vehicle
For extra company funds. The corporation benefits financially from this type of
Investment.
SCOPE

Cash is, first and foremost, a highly valued asset for a corporation. It assists the
Business in meeting its financial responsibilities, including salary, rent, and Costs.
Having enough cash on hand is important for a business, but too much Can be
detrimental. To generate profits, corporations with extra cash should Invest it in
marketable assets. When the business invests, it incurs fixed Transaction expenses.
Effective cash management is crucial for overall Financial management. To make
informed investments, companies should Assess their overall financial needs and
future goals. Effective cash Management is the optimal approach.
OBJECTIVES

• To comprehend State Bank of India’s cash management practices.

• To learn more about the Bank’s current configuration.

• To make recommendations for enhancing the bank’s cash

Management.

• To investigate SBI’s cash outflow and inflow controls.

• Should carefully assess how banks are currently managing their

Finances and decide on the optimal strategy for balancing profitability
And liquidity
IMPORTANCE

• For any kind of organization, cash flow is essential.

• To be able to pay for the goods and services, every company has to have
Cash on hand, or at the absolute least, access to cash.

• The cash flows of the company affect its liquidity.

• The ability to obtain money quickly enough to pay debts is known as

Liquidity. Good cash management can result in more favourable
Conditions for payments as well as lower costs for further borrowing.

• Effective cash management increases the company’s financial flexibility.Any

company’s ultimate objective is to maximize the value to its Shareholders,
often known as the net present value of its future cash Flows.
LIMITATIONS

A small number of participants in the study chose not to answer the

Questionnaire.

• A portion of SBI Account customers had no formal schooling.

• Most people maintain accounts with many banks.

• Absence of PCs and laptops during the study phase.

• The Gap’s matching principle is broken when non- cash transactions

Are completely disregarded.

• Cash management should not be used in place of the profit and loss
Statement.
RESEARCH DESIGN

Research is the systematic process of gathering and evaluating facts in Order to

improve our understanding of a subject that interests or Concerns us. The
framework or blueprint of a study that serves as a Roadmap for gathering and
evaluating data is called a research design. It Acts as a roadmap that needs to be
adhered to in order to finish the Research. Research cannot accomplish its primary
goal without an Appropriate study design. It outlines the steps that must be taken in
order To gather the data required to successfully finish the study. What Information
has to be gathered, where it needs to be gathered, and how It needs to be gathered
are all determined by the project’s main Operational pattern.
RESEARCH METHODOLOGY

DATA COLLECTION SOURCES

Two different kinds of data are employed. These are the two types of data: Primary
and secondary. Information gathered from original sources with a Specific
objective is known as primary data. Information gathered from outside

Sources is referred to as secondary data.

Primary Data

• One of the primary data sources is a research or survey technique.

• As a means of conducting in-person interviews to collect data.

Secondary Data

• Websites, research reports, online publications, and other sources are

Where secondary data can be found.
 CHAPTER – 2
REVIEW OF LITERATURE
REVIEW OF LITERATURE

He association between stock returns and two common performance metrics

Operating income and cash flow from operations was assessed by HOSSIEN
PANAHLAN and Mehdi (2000). There is no connection between operating
Income, cash from operations, and stock returns, as they explicitly state in their
Documents. Examining the thesis variables made this evident. This could be The
outcome of the difference between operating income (gain and loss) and Net
earnings, or it could be the consequence of rumours and news affecting the IRAN
stock. As a result, they continuously looked into the relationship between
Operational income, cash from operations, and stock return. They found that
Earnings items have a greater influence on cash from operations when it comes To
this relationship.
Sandra Cohen (2003) examined the sales, expenses, and financial outcomes of
Accrual accounting with cash accounting statistics to quantify their Relationship.
In the Greek public sector, the cash approach continues to serve As the primary
foundation for choices about resource allocation and Performance assessment. In
the end, the researcher hopes to determine Whether they serve as a fair stand-in for
accrual indicators, which are thou To be more appropriate for these purposes.
Qualitative data indicates that cash-based revenues and expenses as well as The
unique financial circumstances of municipalities account for more than 70% of
accrual accounting revenues and expenses.
In her 2005 study, Linda M. Nichols examined the most effective methods for
Teaching accrual vs cash accounting to students, either directly or indirectly, by
Dissecting the distinctions between operational income collection and cash Flow
from operations. That is expected considering that business Since Students are
accustomed to accrual – based financial statements, the indirect Technique, which
begins with accrual – based income and changes it to be on A cash basis, might aid
them in understanding cash flows.

In the Australian public sector (APS), there were 141 attempts in 2014 to switch
From the cash basis to the collecting technique of accounting. That was not just A
momentous historical event, but it was also a crucial NPM item for Improvement
planning. The researcher in this study found significant instances In these
transitions and examined them via the theoretical framework of the Legitimation
theory developed by AOBERMAS (1976). The main argument of this Paper is that
Australian public sector agencies at various levels of government Are using accrual
accounting as a more effective way to address issues with Economics, rationality,
and legitimacy that are common in welfare state Societies like Australia.
CASH MANAGEMENT TYPES

• PERFORMING ACTIVITY CASH FLOW:

Cash flow from operating activities, which is included on a company’s cash Flow
statement, does not include cash flow from investments.

• Cash Flow Free for Equity:

This sum represents the remaining funds following capital reinvested.

• The Firm’s Free Cash Flow:

This is used in financial appraisal and Modeling. The description of the cash Flow
fluctuations between accounting periods is provided by the term “Net Change in
Cash.
 CHAPTER – 3

INDUSTRY PROFILE
COMPANY PROFILE
INDUSTRY PROFILE

India cannot have a strong economy if its financial system is weak and inefficient.
In addition to being hassle-free, India’s banking system should be prepared to
handle any new difficulties brought on by technology and other internal and
external variables.

India’s banking system has made a number of noteworthy advancements over the
last three decades. The most notable is how far-reaching it is. It is no longer limited
to India’s metropolises and cosmopolitans. In actuality, the Indian banking system
is available even in the most isolated areas of the nation. One of the primary causes
of India’s growth is this. Since 1969, the government’s consistent strategy toward
Indian banks has paid off handsomely, as seen by the nationalization of 14
significant private Indian banks.
Despite its conservatism, India’s first bank opened its doors in 1786. The history of
the Indian Banking System can be divided into three main periods spanning from
1786 to the present. They are listed as follows:
 The early years of Indian banks, from 1786 to 1969.
 Indian banks were nationalized, and this happened before 1991.
 Reforms in the banking sector. With the introduction of Indian, the banking
system entered a new era.
 Reforms in the Banking and Financial Sector Following 1991.
First Phase In 1786, the General Bank of India was founded. Bengal Bank and the
Bank of Hindustan followed. The East India Company founded the Presidency
Banks, which included the Bank of Bengal (1809), the Bank of Bombay (1840),
and the Bank of Madras (1843). Following the 1920 merger of these three banks,
Imperial Bank of India was founded. Initially, the bank’s owners were largely
European private citizens.

In addition to the extremely slow expansion during the first phase, banks also had
recurrent failures between 1913 and 1948. Approximately 1100 banks existed, the
majority of them were little. To simplify the operations and procedures of banks,
the majority of which are tiny. In order to improve the efficiency of commercial
banks, the Indian government created the Banking Companies statute in 1949. This
statute was then amended by Act No. 23 of 1965 to become the Banking
Regulation Act of 1949. The Reserve Bank of India, which oversees the Central
Banking System in India, was given broad authority in this regard.

Following independence, the Indian Banking Sector Reform was significantly

advanced by the The second phase Government. It nationalized Imperial Bank of
India in 1955 and provided wide-ranging banking services, particularly in rural and
semi-urban areas. In order to serve as the primary RBI agent and manage national
banking operations for the federal and state governments, it established the State
Bank of India.
On July 19, 1969, a significant portion of the nationalization process was
completed. In 1960, seven banks that were subsidiaries of State Bank of India were
nationalized. It was the result of Mrs. Indira Gandhi’s efforts as India’s prime
minister at the time. The nation’s fourteen largest commercial banks were
nationalized. In 1980, seven additional banks were included in the second phase of
the nationalization process known as Indian Banking Sector Reform. With this
move, the government of India now owns 80% of the banking industry.

The Public Sector Banks :

 SBI Bank
 Andhra Bank
 Punjab National Bank
 Allahabad Bank

The Private Sector Banks :

 HDFC Bank
 ICICI Bank
 Axis Bank
 Kotak Mahindra Bank
Future Trends:
Over the past few decades, we have witnessed significant technological
advancements in the form of faster computers, smartphones, and the Internet. This
has made communications speedier and significantly less expensive. This will be
necessary in the future to enable reduced mistake rate production and more
efficient corporate operations. As a result, anticipate seeing an increase in the
everyday use of electronic communications to maintain high productivity and strict
cash flow budgets.

Enterprise Diversification Will Increase:

More companies will wish to expand into new industries and provide new Product
and service lines given the status of the economy. Obsolete Enterprises can be
redesigned to offer new services and faster delivery while Preserving customer
happiness, even though they might not be totally closed. Emerging sectors will
continue to grow and evolve due to newer technologies.

Businesses Will Be More Mobile in Future:

Thousands of business applications are currently accessible for usage by
Businesses. These apps allow users to do a variety of things, including banking,
Dining out, shopping, ticket booking, and bill payment. These kinds of apps for
Video advertising will be used by more businesses in the future. Plans for cash
Flow will be created with an organization’s internet adoption in mind, enabling
Economical increases in output and effectiveness.
Availability of Business Credit to Remain Slow:
In the upcoming year, credit availability will not improve, despite government
Pressure on banks to loosen lending standards for companies. SMEs are Currently
receiving less loans from banks and credit agencies. Businesses that Operate on
cash flow estimates must learn to use less credit and budget for less Spending.

Companies Will Invest in Security Concerns:

The likelihood of sensitive data being hacked will rise quickly as we integrate
More smart gadgets into our everyday lives. The current merchant ecosystems And
financial services are ill-equipped to handle these kinds of data security Threats.
Consequently, an increasing number of entities will allocate Substantial financial
resources towards system security, guaranteeing the Smooth and secure operation
of their corporate finance management Protocols.

Businesses Will Opt for External Help:

Businesses will be hiring a number of external independent contractors in lieu Of
their regular internal employees. They will be able to lower payroll tax and Benefit
costs because they will have access to more skilled workers. In the Future, more
competent and skilled workers will choose to work in a setting with Flexible
schedule. Therefore, rather than adding internal staff, cash flow Strategies will
consider outsourcing to outside companies.
COMPANY PROFILE

State Bank of India (SBI) is the largest public sector bank in India and one of the
largest financial institutions in the country. Here’s a brief profile Establishment:
SBI was established in 1955 as the imperial Bank of India and later renamed to
State Bank of India. Ownership by It is a government-owned corporation, with the
Government of India being the largest shareholder.
The SBI offers a wide range of banking products and financial services to
corporate and retail customers. It operates not only in India but also has a
significant international presence through its subsidiaries, branches, and
representative offices worldwide. Its services include personal banking, corporate
banking, international banking, NRI services, loans, investment banking, and
insurance products through its subsidiaries. SBI has a vast network of branches and
ATMs across India and globally, making it accessible to a large customer base.
The bank has been actively modernizing its operations with digital banking
solutions, including internet banking, mobile banking apps, and online transaction
facilities.
Financial Performance: SBI consistently ranks among the top banks in India in
terms of assets, deposits, profits, branches, customers, and employees. Social
Initiatives: Apart from its core banking activities, SBI is involved in various
corporate social responsibility (CSR) initiatives, focusing on education, healthcare,
and rural development.
Overall, SBI plays a crucial role in the Indian banking sector and the country’s
economy, providing financial services to millions of customers across diverse
segments.
State Bank of India (SBI) articulates its vision and mission to guide its operations
and strategic direction. Here are insights into SBI’s vision and mission:

Vision:

SBI’s vision statement emphasizes its aspirations and long-term goals. While exact
wording may vary over time, the essence typically revolves around:

Leadership: Aspiring to be the leading financial institution in India, providing

comprehensive financial services to diverse customer segments.
Excellence: Commitment to excellence in service delivery, innovation, and
customer satisfaction.
Global Presence: Enhancing its global presence and influence as a premier banking
institution.
Social Responsibility: Contributing to national development goals and social
welfare through responsible banking practices and CSR initiatives.

Mission:
SBI’s mission statement outlines its fundamental purpose and strategic priorities.
Key components generally include:

Customer Focus: Prioritizing customer needs and delivering superior financial

products and services.
Innovation: Embracing innovation in banking technology and practices to enhance
efficiency and customer convenience.
Ethical Practices: Conducting business with integrity, transparency, and ethical
standards.
Employee Development: Investing in employee development and creating a
conducive work environment.
Financial Inclusion: Promoting financial inclusion by reaching out to underbanked
and marginalized communities.
Sustainable Growth: Achieving sustainable growth and profitability while
managing risks prudently.

These elements underscore SBI’s commitment to being a customer-centric,

innovative, and socially responsible financial institution. They guide its strategies,
operations, and interactions with stakeholders, aiming to maintain its position as a
leader in India’s banking sector while expanding its influence globally. For the
most current and precise statements, it’s advisable to refer to SBI’s official
communications and corporate publications.
 Chapter : 4
Data Analysis and
Interpretation
1.Which bank do you usually do business with?

0  No. of people

SBI 53%(53)
ICICI 31%(31)
HDFC 10%(10)
Other 6%(6)
Total no.of people 100
Analysis of the above diagram

The data indicates that in Kumaraswamy Layout, over 53% of correspondents use
SBI’s services for everyday transactions, roughly 31% use ICICI Bank’s services,
and only 10% and 6% use HDFC’s and other banks’ services, respectively.
Additionally, based on my sample, it demonstrates that SBI holds the top market
position in Kumaraswamy Layout.
2.Do you know what goods and services SBI offers?

Yes 87%(87)
No 13%(13)
Total no.of people 100
Analysis of the above diagram

According to the data above, the majority of K.S. Layout’s clients (about 87%) are
aware of SBI’s products and services, while the remaining 13 percent are aware of
the actual product they are using.
3.Do you know about SBI’s direct-to-bank offerings?

Yes 65%(65)
No 35%(35)
Total no.of people 100
Analysis of the above diagram

According to the aforementioned data, the majority of the businesses

were happy with their CMS supplier, but they still identified a few areas
that needed improvement. SBI can offer solutions for those areas.
4.Which methods of premium collection are your essentials?

Cash 23%(23)
Cheque 63%(63)
Demand draft 14%(14)
Total no.of people 100
Analysis of the above diagram

Since checks are easier to manage and a safer option than cash when it
comes to payments than demand drafts, the majority of businesses
accept premium payments in the form of checks. SBI can offer the
businesses a range of solutions for collecting checks.
5.Which payment methods do you use most frequently?

Cheque 70%(70)
Cash 20%(20)
Demand draft 10%(10)
Total no.of people 100
Analysis of the above diagram

Similar to premium, the majority of businesses only issue checks for

payments; only in certain situations are payments made in cash or using
debit card.
6.Does the US financial crisis have an impact on how you operate in
India?

Yes 75%(75)
No 25%(25)
Total no.of people 100
Analysis of the above diagram

The pie chart makes it clear that the US financial crisis is having an
impact on people all around the world, including insurance businesses,
which are severely impacted.
 5. CHAPTER

FINDINGS & SUGGESIONS

CONCLUSION
Findings:

 SBI operates a large number of branches and ATMs nationwide,

necessitating robust cash management systems.

 Cash inflows and outflows fluctuate significantly based on

economic conditions, seasons, and local factors.

 Managing risks associated with cash handling, including theft,

fraud, and logistical challenges, is critical.

 SBI has increasingly integrated technology for cash management,

including cash forecasting and real-time monitoring.

 Customers expect reliable access to cash through ATMs and

branches, necessitating effective cash replenishment strategies.
Suggestions:

 Improve cash forecasting accuracy through advanced data

analytics and predictive models to optimize cash inventory levels.

 Optimize the placement and operation of ATMs based on

transaction volumes and customer demographics to reduce cash
handling costs.

 Encourage digital payments to reduce cash dependency and

associated costs while promoting financial inclusion.

 Strengthen security protocols for cash transit operations to mitigate

risks associated with cash handling.

 Continuously train staff on cash management best practices and

technological advancements to enhance efficiency and security.
Conclusion:

Effective cash management is crucial for SBI to maintain operational

efficiency, reduce costs, and enhance customer satisfaction. By
leveraging technology, improving forecasting accuracy, and optimizing
operational processes, SBI can achieve better cash flow management
across its extensive network. Continuous adaptation to technological
advancements and customer preferences will be key in meeting evolving
cash management challenges effectively.