Page 149 - DCOM208_BANKING_THEORY_AND_PRACTICE

Banking Theory and Practice Mahesh Kumar Sarva, Lovely Professional University

Notes Unit 9: Cash Management System

CONTENTS
Objectives
Introduction

9.1 Concept of Cash Management Services (CMS)
9.2 Evolution and Need of Cash Management Services (CMS)
9.2.1 Need of CMS

9.3 Concept of Cash Management Services for Corporate Entity in India
9.4 Summary
9.5 Keywords
9.6 Review Questions
9.7 Further Readings

Objectives

After studying this unit, you will be able to:
Explain the concept of Cash Management Services

Discuss the evolution and need for CMS
Discuss the concept of CMS for Indian corporate entity
Introduction

In the previous unit, we dealt with the concept of various banking systems such as corporate
banking, retail banking, merchant banking and treasury management. This unit will help you
to understand the concept of cash management services provided by banks to several corporate
entities. To execute, collect receivables and manage liquidity, efficient cash management
processes are mandatory. The most significant players in the Indian financial market are the
banks. They are the biggest providers of credit, and also attract most of the savings from the
population. The banking industry, mostly dominated by public sector, has so far acted as an
efficient partner in the growth and the development of the country. Public sector banks have
long been the supporters of agriculture and other priority sectors. They act as crucial channels of
the government in its attempts to ensure equitable economic development.

Cash Management services is a newcomer in the Indian Banking Scenario. CMS is a mechanism
to efficiently handle cash flow in order to cut-down risks, minimize costs and maximize profits.
Generally Cash Management constitutes integrated collection, payments, liquidity management,
and receivables functions. Speedy collection of outstation instruments is one of the major products
under CMS.
9.1 Concept of Cash Management Services (CMS)

Cash management is a term which pertains to the collection, concentration, and disbursal of
cash. It comprehends a bank’s degree of liquidity, its management of cash balance, and its
short-term investment schemes.

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