Introduction

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
 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 course. 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 exceed 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 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 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 projecte
d cashstatement from a forecast of expected 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 for a longer intervals may be prepared if cash flows are relatively stable.

Cash forecasts are needed to prepare cash budgets. There are two types of cash
forecasting:

1 Short-term Cash Forecasting

2 Long-term Cash Forecasting

Short-term Cash Forecasts

Generally, forecasts covering periods of one year or less are considered short-term
cash forecasting. 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.

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.

Methods of Short-term Cash Forecasting:

Two most commonly used methods of short-term cash forecasting are:

• The receipt and disbursements method

• 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.

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 capitalr
equirements.

• 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.

• It helps to improve corporate planning. Long-term cash forecasts compel each

division to plan for future and to formulate projects carefully.

Long-term cash forecasts may be made for two, three or five years. As with the
short-term forecasts, company’s practices may differ on the duration of long-term
forecasts to suit their particular needs.

The short-term forecasting methods, i.e., the receipts and disbursements method
and the adjusted net income method, can also be used in long-term cash
forecasting. Long-term cash forecasting reflects the impact of growth, expansion or
acquisitions; it also indicates financing problems arising from these developments.
 Cash Management
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 [Link]
some time now, technology has been the key driving force behind every successful
bank. In such an environment, the ability to recognize and capture market share
depends entirely on the bank’s competence to evolve technically and offer the
customer a seamless process flow. The objective of a cash management system is
to improve revenue, maximize profits, minimize costs and establish efficient
management systems to assist and accelerate growth.

Cash Management in India

The Reserve Bank of India (RBI) has placed an emphasis on upgrading

technological infrastructure. Electronic banking, cheque imaging, enterprise
resource planning (ERP), real time gross settlement (RTGS) is just few of the new
initiatives.

The evolution of payment systems such as RTGS has posed some tough challenges
for cash management providers. It is important that banks now look towards a shift
to fees from float although all those cash management providers who have factored
in float money in their product pricing might take a hit. But of course there are
opportunities also attached like collection and disbursal of payments on-line across
the banks.

There are a number of regulatory and policy changes that have facilitated an
efficient cash management system (CMS). Fox example, the Enactment of
Information Technology Act gives legal recognition to electronic records and
digital signatures. The establishment of the Clearing Corporation of India in order
to establish a safe institutional structure for the clearing and settlement of trades in
foreign exchange (FX), money and debt markets has indeed helped the
development of financial infrastructure in terms of clearing and settlement. Other
innovations that have supported in streamlining the process are:

Introduction of the Centralized Funds Management Service to facilitate better

management of fund flows.

Structured Financial Messaging Solution, a communication protocol for intra-bank

and interbank messages.

Today, treasurers need to ensure that they are equipped to make the best decisions.
For this, it is imperative that the information they require to monitor risk and
exposure is accurate, reliable and fast. A strong cash management solution can
give corporates a business advantage and it is very important in executing the
financial strategy of a company. The requirement of an efficient cash management
solution in India is to execute payments, collect receivables and managing
liquidity.
 Facts 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 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 issued 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 evolve strategies regarding the following four facets of cash
management:

Optimum Utilization of Operating Cash

Implementation of a sound cash management programme is based on rapid

generation, efficient utilization and effective conversation of its cash resources.
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 resources 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

the autopsies of the businesses that failed, he would find that the major reason for
the failure was their inability to remain liquid. Liquidity has an intimate
relationship with efficient utilization 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 center. 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. Rising of funds at minimum cost is one of the
important facts 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.
 The Importance of cash management
Cash is crucial for every business. Every company has to have cash on hand or at
least access to cash in order to be able to pay for the goods and services it uses, and
consequently, to stay in business. By ensuring the company with the necessary
funds for supporting its everyday operations, cash management becomes a vital
function for the company. Cash flows have an impact on the company’s liquidity.
Liquidity is the ability of the company to pay its obligations when they come due.
It is comprised of: cash on hand, assets readily convertible into cash, as well as
ready access to cash from external sources, such as bank loans (Coyle, 2000, p. 3).
If cash flows and liquid funds are not effectively and successfully planned and
managed, a company may not be able to pay its suppliers and employees in a
timely manner. It may be profitable according to its financial statements, but in
fact, this company will not be able to pay its obligations when they come due.
Moreover, lack of liquidity will incur increased costs in the form of interest
charges on loans, late payment penalties and losing supplier discounts for paying
obligations on time. Proper cash management can avoid the costs of additional
funding and can provide the opportunity for more favorable terms of payment. In
the worst case scenario, if the liquidity shortage continues for the longer term, the
company might face no access to external resources, ending into insolvency.
Therefore, once again, it follows that cash management has a critical importance
for the life of every company.5 another benefit of cash management to the
company is that it makes the company financially flexible. Ready access to cash
enables the company to undertake expenditure decisions if and whenever it wishes,
without the trouble and constraint of finding new financial support. The ultimate
goal of every company is maximizing shareholder value, i.e. maximizing the net
present value of future cash flows. Cash management contributes to attaining that
goal as well. If a firm keeps high levels of cash, it increases its net working capital
and the costs of holding cash, both of which decrease the value of the firm. Cash
management influences the value of the firm by limiting cash levels so that an
optimal balance between the costs of holding cash and the costs of inadequate cash
is achieved. “In addition, cash management influences firm value, because its cash
investment levels entail the rise of alternative costs, which are affected by net
working capital levels. Both the rise and fall of net working capital levels require
the balancing of future free cash flows, and in turn, result in firm valuation
changes”.
LITERATURE REVIEW

Davidson (1992) defined cash management as a term which refers to the collection
concentration and disbursement of cash. It encompasses a company’s level of
liquidity, management of cash balance and short term strategies. Weak cash flow
makes it difficult to hire and retain good employees (Beranek, 2000). Ross (2000)
says that, 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 received from customers. In
addition, employee salaries and other expenses drain considerable funds from most
business. These make effective cash management an essential part of the business
financial planning. Vanhorne (2001) says that, a common cash management tool
found in companies is a cash budget. Most companies prepare budgets on the
departmental level and roll these individual budgets into one master budget.
Creating several smaller budgets, can help managers determine which operations
use more cash and struggle to stay on the projected budget amounts. This
discovery gives managers an idea of when improvements needed to correct the
company’s cash flow problems. Therefore, cash budgeting is another aid to an
effective cash management. Pindado (2004) also defines cash management as part
of working capital that makes up the optimal level needed by a company. Bort
(2004) noted that, cash management is of importance for both new and growing
businesses. Companies may suffer from cash flow problems because of lack of
margin of safety in case of anticipated expenses such that they experience
problems in finding the funds for innovation or expansion According to Bort
(2004) cash is the lifeblood of the business. The key to successful cash
management lies in tabulating realistic projections, monitoring collections and
disbursements, establishing effective billing and collection measures, and adhering
to budgetary parameters because cash flow can be a problem to the business
organization. According to Moffet (2004), postponing capital expenditure is one
method that can ease cash shortage hence, suggests efficient cash management.
Kirkman (2006) states that, some capital expenditures are more important and
urgent than others hence, it might be imprudent to postpone expenditure on fixed
assets which are needed for the development and growth of business. On the other
hand, some expenses are routine and might be postponable without serious
consequences. When a lot of cash is used to pay for fixed assets, the company may
come up against a cash crunch that prevents it from paying suppliers, buying
materials and even paying salaries. It’s a good idea, to maintain a level of working
capital that allows making through those crunch times and continuing to operate
the business.
 HISTORY OF BANK OF INDIA
Bank of India was founded on 7th September, 1906 by a group of eminent
businessmen from Mumbai. The Bank was under private ownership and control till
July 1969 when it was nationalized along with 13 other banks.

Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and 50
employees, the Bank has made a rapid growth over the years and blossomed into a
mighty institution with a strong national presence and sizable international
operations. In business volume, the Bank occupies a premier position among the
nationalized banks.
The Bank has 3752 branches in India spread over all states/ union territories
including specialized branches. These branches are controlled through 50 Zonal
Offices. There are 29 branches/ offices (including five representative offices) and 3
Subsidiaries and 1 joint venture abroad.
The Bank came out with its maiden public issue in 1997 and follow on Qualified
Institutions Placement in February 2008. . Total number of shareholders as on
30/09/2009 is 2, 15,790.
While firmly adhering to a policy of prudence and caution, the Bank has been in
the forefront of introducing various innovative services and systems. Business has
been conducted with the successful blend of traditional values and ethics and the
most modern infrastructure. The Bank has been the first among the nationalized
banks to establish a fully computerized branch and ATM facility at the Mahalaxmi
Branch at Mumbai way back in 1989. The Bank is also a Founder Member of
SWIFT in India. It pioneered the introduction of the Health Code System in 1982,
for evaluating/ rating its credit portfolio.
The Bank's association with the capital market goes back to 1921 when it entered
into an agreement with the Bombay Stock Exchange (BSE) to manage the BSE
Clearing House. It is an association that has blossomed into a joint venture with
BSE, called the BOI Shareholding Ltd. to extend depository services to the stock
broking community. Bank of India was the first Indian Bank to open a branch
outside the country, at London, in 1946, and also the first to open a branch in
Europe, Paris in 1974. The Bank has sizable presence abroad, with a network of 29
branches (including five representative offices) at key banking and financial
centers viz. London, New York, Paris, Tokyo, Hong-Kong and Singapore. The
international business accounts for around 17.82% of Bank's total business.

The Bank has a strong position in financing foreign trade. Over 270 branches
provide export credit. The expertise in this area has enabled the Bank to achieve a
leading position in providing export credit in certain areas like diamond export.
The Bank has identified specialized target groups to develop core advantage for
future growth. The Bank has specialized branches comprising of Corporate
Banking Branches to undertake very large credit business, Overseas Branches
specializing in Foreign Exchange Business, NRI Branches which specially cater to
the requirements of Non-Resident Indians, Capital Market Branches which
undertake all activities relating to capital market such as collection of applications,
processing of refund orders, Merchant Banking etc. Commercial &Personal
Banking Branches cater to the requirements of high net worth customers. Apart
from this, the Bank also has specialized Branches for Asset Recovery, Small Scale
Industries, Hi-tech Agriculture Finance, Lease Finance and Treasury. To
effectively meet the ever-growing challenges and competition, the Bank has made
a good headway in bringing about technological up gradation. MIS and critical
functions of controlling offices have been computerized. At present, the operations
at about 2618 branches are totally computerized. 26 branches operate in partially
computerized mode besides these 1019 branches and 31 extension counters are
migrated to Core Banking Solution. New facilities such as, Telebanking, ATM &
Signature Retrieval Systems have been introduced in a progressing manner to add
value to services. Telebanking facilities with Fax on Demand facility, Remote
Access Terminals for Corporate Customers are now available at many branches.
The Bank has installed ATMs in Mumbai and other centers in the country. The
Bank is a member of the RBI's VSAT Network and has installed 39 VSATs linking
strategic branches/offices. The Bank is making a paradigm shift from branch
automation to bank automation and is in the process of implementing a Multi-
Branch Banking Project that facilitates City-wise Connectivity of Computerized
Branches. The Bank is in the process of installing BOINET, a Wide Area Network
for providing an inter- and intra-city connectivity, as a part of enhancing its
decision support system.

The Bank's corporate personality and philosophy are fully reflected in the emblem,
which is a five-pronged Star -- a harmonious blend of traditional and the
functional. The elongated prong pointingupwards conveys the Bank's drive to
achieve ascending goals. The Star is a beacon and guide to those in need of
direction.
BANK’S NEW INITIATIVES
ACQUISITION

The Bank has finalized acquiring 76% stake in P T Bank SwadesiTbk, a listed
Bank in Indonesia and the formalities to take over the management of the said
Bank is in final stages

JOINT VENTURE

Bank entered into an arrangement with Dai-Ichi Mutual Life Insurance Company,
second largest Japanese company in the field of Life Insurance (sixth largest in the
world) and Union Bank of India for setting up a Joint Venture Life Insurance
Company with capital stake of 51%, 26%, and 23% respectively. Formalities for
incorporation of JV Company are in advanced stage.

BRANCH EXPANSION

Bank opened 63 new branches and converted 41 Extension counters to full-fledged

branches. Total number of domestic outlets is 2845.

INTERNATIONAL OPERATIONS

 Bank has taken over management of Almana Exchange House in Doha

Qatar.
 Arrangements with Bank Azizi, Kabul in Afghanistan made for money
remittance to India.
 Bank’s International Operations contribute 20% of Bank’s total Business.
 Bank is holding approval of Reserve Bank of India for setting up:
 Subsidiaries in Tanzania and Canada,
 Branches in DIFC (Dubai) and Dhaka (Bangladesh),

 BACK OFFICE SERVICES OF BANK
Delegation of powers

Bank will ensure that authorities at various levels will be empowered with
adequate powers to take prompt decisions with regard to sanctioning of loans and
advances, issuance of guarantees, settlement of claims of deceased depositors,
issuance of duplicate demand drafts,deposit receipts, other claims and
administrative matters concerning customer service.

Reorganization

In order to facilitate quick decision-making and to suit the changing requirements,

the organizational structure has been revamped. More specialized branches like
Personal Banking Branches, Corporate Branches, Small Scale Industries Branches,
Hi-tech Agricultural Finance Branches, Housing Finance Branches, Capital Market
Branches, Overseas and NRI Branches have been opened at important centers. in
all business operations at all stages. Customers will be educated about the various
products and facilities available. A uniform strategy will always be adopted to
eliminate any possibility of discrimination on caste, creed and religion or economic
status of the clients. Secrecy norms will be simultaneously observed to protect the
interests of our customers.

Surveys by outside agencies

All steps will be taken by bank to improve Customer Service and enhance
customer satisfaction. Towards this end, bank services will be got evaluated
through outside reputed marketing agencies with a view to assessing the quality of
services extended at the branches and to ensure that bank customer service match
the expectations of bank’s various clientele.
Cash Management Services generally offered by banks

The following is a list of services generally offered by banks and utilized by larger
businesses and corporations:

Account Reconcilement Services: Balancing a checkbook can be a difficult process

for a very large business, since it issues so many checks it can take a lot of human
monitoring to understand which checks have not cleared and therefore what the
company’s true balance is. To address this, banks have developed a system which
allows companies to upload a list of all the checks that they issue on a daily basis,
so that at the end of the month the bank statement will show not only which checks
have cleared, but also which have not. More recently, banks have used this system
to prevent checks from being fraudulently cashed if they are not on the list, a
process known as positive pay

Advanced Web Services: Most banks have an Internet-based system which is more
advanced than the one available to consumers. This enables managers to create and
authorize special internal logon credentials, allowing employees to send wires and
access other cash management features normally not found on the consumer web
site.

Armored Car Services: Large retailers who collect a great deal of cash may have
the bank pick this cash up via an armored car company, instead of asking its
employees to deposit the cash.

Automated Clearing House: services are usually offered by the cash management
division of a bank. The Automated Clearing House is an electronic system used to
transfer funds between banks. Companies use this to pay others, especially
employees (this is how direct deposit works). Certain companies also use it to
collect funds from customers (this is generally how automatic payment plans
work). This system is criticized by some consumer advocacy groups; because
under this system banks assume that the company initiating the debit is correct
until proven otherwise.

Balance Reporting Services: Corporate clients who actively manage their cash
balances usually subscribe to secure web-based reporting of their account and
transaction information at their lead bank. These sophisticated compilations of
banking activity may include balances in foreign currencies, as well as those at
other banks. They include information on cash positions as well as 'float' (e.g.,
checks in the process of collection).Finally, they offer transaction-specific details
on all forms of payment activity, including deposits, checks, wire transfers in and
out, ACH (automated clearinghouse debits and credits), investments, etc.

Cash Concentration Services: Large or national chain retailers often are in areas
where their primary bank does not have branches. Therefore, they open bank
accounts at various local banks in the area. To prevent funds in these accounts
from being idle and not earning sufficient interest, many of these companies have
an agreement set with their primary bank, whereby their primary bank uses the
Automated Clearing House to electronically "pull" the money from these banks
into a single interest-bearing bank account.

Lockbox services: Often companies (such as utilities) which receive a large

number of payments via checks in the mail have the bank set up a post office box
for them, open their mail, and deposit any checks found. This is referred to as a
"lockbox" service.

Positive Pay: Positive pay is a service whereby the company electronically shares
its check register of all written checks with the bank. The bank therefore will only
paychecks listed in that register, with exactly the same specifications as listed in
the register (amount, payee, serial number, etc.). This system dramatically reduces
check fraud.

Sweep Accounts: are typically offered by the cash management division of a bank.
Under this system, excess funds from a company's bank accounts are automatically
moved into a money market mutual fund overnight, and then moved back the next
morning. This allows them to earn interest overnight. This is the primary use of
money market mutual funds.

Zero Balance Accounting: can be thought of as somewhat of hack. Companies with

large numbers of stores or locations can very often be confused if all those stores
are depositing into a single bank account. Traditionally, it would be impossible to
know which deposits were from which stores without seeking to view images of
those deposits. To help correct this problem, banks developed a system where each
store is given their own bank account, but all the money deposited into the
individual store accounts are automatically moved or swept into the company's
main bank account. This allows the company to look at individual statements for
each store. U.S. banks are almost all converting their systems so that companies
can tell which store made a particular deposit, even if these deposits are all
deposited into a single account. Therefore, zero balance accounting is being used
less frequently.

Wire Transfer: A wire transfer is an electronic transfer of funds. Wire transfers can
be done by a simple bank account transfer, or by a transfer of cash at a cash office.
Bank wire transfers are often the most expedient method for transferring funds
between bank accounts. A bank wire transfer is a message to the receiving bank
requesting them to effect payment in accordance with the instructions given. The
message also includes settlement instructions. The actual wire transfer itself is
virtually instantaneous, requiring no longer for transmission than a telephone call.
Controlled Disbursement: This is another product offered by banks under Cash
Management Services. The bank provides a daily report, typically early in the day,
that provides the amount of disbursements that will be charged to the customer's
account. This early knowledge of daily funds requirement allows the customer to
invest any surplus in intraday investment opportunities, typically money market
investments. This is different from delayed disbursements, where payments are
issued through a remote branch of a bank and customer is able to delay the
payment due to increased float time. In the past, other services have been offered
the usefulness of which has diminished with the rise of the Internet. For example,
companies could have daily faxes of their most recent transactions or be send of
images of their cashed checks.
 CORPORATE SOCIAL RESPONSIBILITY FOLLOWED
BY BANK:
Bank as part of its centenary celebrations promoted a Trust, ‘ABHAY’, to offer
credit counseling services, free of cost, with the following objectives:

Advising on gaining access to structured financial system including banking

Counseling people who are struggling to meet the repayment obligations and
helping debt resolution

Helping in rehabilitation of borrowers in distress

Bank has pioneered a Mega Project for Integrated Development of 129 villages in
78Districts and 17 States covering 60,000 households, identified for holistic
development and showcased as Model Villages. The Bank has so far extended
financial assistance over Rs.150 crores to the rural households in the identified
villages. An evaluation study conductedin select villages has revealed that there is
20-25% improvement in the household income after the implementation of the
scheme.
 MISSION AND VISION OF BANK OF INDIA
MISSION
To provide superior, proactive banking services to niche markets globally, while
providing cost-effective, responsive services to others in our role as a development
bank, and in so doing, meet the requirements of our stakeholders.

VISION

To become the bank of choice for corporates, medium businesses and upmarket
retail customers and to provide cost effective developmental banking for small
business, mass market and rural markets.