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Cash management services


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Cash management services

  1. 1. Presented ByAdnan Abdul KaderPiyush DasZeeshan Mohammad
  2. 2.  What is CMS  Branch Responsibility Need for CMS  Operational Constraint Customer Benefits  Disbursement CMS Structure  Host to Host Connectivity Client Acquisition Process  Correspondent Bank CMS Procedure Services CMS Collection Products  Express Local Collection  Swift Workflow  Max Reach Workflow
  3. 3.  CMS is the process of optimizing receivable and payables ensuring predictability in the cash flows of CMS clients. In a geographically large country like India having a complex financial clearing system, corporate find it increasingly challenging to process collections & payments across dispersed business locations. Cash Management thus means getting funds in time, quick transfers, quick realization of local and outstation instruments, easy disbursements, accounts reconciliation, controlled processes and customized MIS.
  4. 4.  Geographical spread of the country Complex clearing system Delays in cash realizations Uncertainty in cash flows Increased borrowing and associated costs Difficulty in collecting data / MIS on the funds collected
  5. 5.  Assured Credit • Availability of cleared funds variable • Depends on type of cheque viz. Local/Outstation(Branch/Non branch) • Customer gets credit after fixed number of days once instruments are picked up, even if bank is not yet in funds Pooling of funds • Funds collected & deposited in Central Account • Instruments picked up at various locations, sent to appropriate clearing houses, funds collected & credited to customer’s Pooling Account Control Benefits • Corporate to maintain better control over its various Banking and Treasury related activities • Improve speed and ease of reconciliation and reduces the risk of fraud
  6. 6. CMS Sales • Client identification • Understand requirements • Pricing Approval & Offer •Documentation Delivery ChannelsCMS Operations IT Platform Branches CPU 6
  7. 7. Customer Call Get the required line limit approval from Head – CMS (in Understand case of Auto Lines- NLL) / requirements Credit approval process (in case of credit line limit - LL) Collect the information Send the completed documentrequired for pricing set to CMS CPUObtain the pricing approval from Inform the client once the Head - CMS setup is confirmed by Operations and ensure send startup instructions to the Send the Offer customerLetter to the client Make some post delivery calls Collect to ensure that all pickups/MIS Documentation etc is happening in a timely from the Client manner. 7
  8. 8. Cash Management Service Collection or Payment orReceivables Management Payables Management Collection Disbursement Products Products 8
  9. 9.  A Chq is a Local Chq when the Chq Payable SWIFT Outstation cheques drawn On IDBILocation & Deposit Location is the same. locations A Chq is Outstation when the Chq Payable & MAX Outstation cheques drawn On NonDeposit Location are different. REACH IDBI / Corr Bank locations i.e. where partner bank tie up is in placeEXPHV Local High Value Cheques at IDBI Bank Locations REMOTE Outstation Collections in locations beyond IDBI and Partner BankEXPRES Local Collections on IDBI Bank CentrsS LocationsRAPID Local Collections on Non IDBI Bank /REACH Partner Bank Locations CCASH Cash Deposited at IDBI locations(IRR) by CMS ClientsIDBITRF Cheques drawn on IDBI Bank across all NCASH Cash Deposited at Non IDBI Branches Bank but partner bank locations*SPEED Outstation cheques drawn on CBS Networked Bank Branches participating in RBI’s Speed Clearing. 9
  10. 10. Customers deposit localcheques at IDBI branches Cheques areor the cheques are picked sent intoup by the courier clearing Local IDBI Bank Branch Local Clearing Pick Up House Location Funds are credited Pool into a pool account Account as per arrangement. 10
  11. 11. CMS Pool A/C OperationsPick up location SWIFT Chqs from Non IDBI locs sent to CPC MumbaiIDBI Bank BranchesCouriers SWIFT ChequesTo IDBI Bank at Drawee Locations IDBI Bank at Drawee Locations 11
  12. 12. CMS CPC Mumbai Client Credited as per Arrangement.Courier pick-upFrom Clients Office atNon IDBI Centers Chqs from Non IDBI locs sent to CPC Mumbai Max Reach chqs processed by CPC IDBI Bank Branches Mumbai and Couriers IMR Cheques dispatched accordingly to CPC Mumbai. to the Corr Bank CPC or Corr Bank Br. 12
  13. 13.  Accepting & Acknowledging receipt of cash/cheques Sorting of cheques Crossing of Cheques Data entry Return cheque processing Voucher checking report
  14. 14.  High dependency on vendors/service providers Delay in realisation of outstation (remote cheques) due to various reasons Drawee bank not complying with RBI guidelines(14 days norm- payment of interest for delayed credit),non co-operation Cash retention limits of branches, high rejection rates, absence of adequate number of currency chests etc Decentralization of processing at few centres
  15. 15.  PROMPT PAY : Bulk Demand Draft issuance on IDBI Network. Instruments are handed over to the customer/beneficiary. PROMPT PAY PLUS : Bulk Demand Drafts on Correspondent Bank Network. DDs are printed centrally, on the Correspondent bank stationary. QUICK CHEQUE: Cheque Writing/Payable at Par on own bank Network with Facsimile signatures of the client. EXPRO PAY: Bulk Instrument issuance on IDBI Network in the customized format. . The data is uploaded in the Finacle system and instruments are printed centrally and handed over to the customer.
  16. 16.  Last mile connectivity between Banks and Corporate which facilitate high velocity business transaction Features of Host to Host Connectivity:  Facilitates exchange of data  Reduces Infrastructure complexities  Less point of failure  Improved Security  Better transperancy
  17. 17.  To increase the penetration of banking services in the internal part of the country, bank takes services from other institutions Institute Which provides correspondent services are:-  Other Banks  SHG  MFI  CSO
  18. 18.  Advantage to Bank:  Increase penetration  Cost Efficient  Access to a new profitable segment in BOP market Advantage to Correspondent and public:  Source of Revenue Generation  Foster the habit of Savings  Access to banking services like Micro Finance, etc
  19. 19.  Disadvantage of CBS:  The reputation of Bank is at some others hand  Issue relating what these institution can or cannot do (KYC, etc)  In competencies in handling many services Redressal of Grievance:  The name and contact number of grievance redressal should be known to public  There should be a prompt reply to the grievance, if not address in 60 days, complainant has an option to approach Office of Banking Ombudsman
  20. 20.  Correspondent can also be done internationally with foreign banks which doesn’t have a branch in India and the local bank doesn’t have a branch in the foreign bank’s home country RBI permission is not required to set up correspondent service (According to the letter issued by Mr P. Vijay Bhaskar-(Chief General Manager of RBI) to all scheduled commercial bank as on 25th January 2006)