Cash Management Services

Presented ByAdnan Abdul KaderPiyush DasZeeshan Mohammad

Agenda

What is CMS Need for CMS Customer Benefits CMS Structure Client Acquisition Process CMS Procedure CMS Collection Products

Express Local Collection

Swift Workflow

Max Reach Workflow

Branch Responsibility Operational Constraint Disbursement Host to Host Connectivity Correspondent Bank

Services

What is CMS

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.

Need For CMS

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

Customer Benefits 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

CMS Structure

6

IT Platform

CMS Sales• Client identification

• Understand requirements• Pricing Approval & Offer

• Documentation

CMS OperationsCPU

Delivery Channels

Branches

Client Acquisition Process

7

Customer Call

Understand requirements

Collect the information required for

pricingObtain the

pricing approval from Head - CMS

Send the Offer Letter to the

client

Collect Documentation from the Client

Get the required line limit approval from Head – CMS

(in case of Auto Lines- NLL) / Credit approval process (in case of credit line limit - LL)

Send the completed document set to CMS CPU

Inform the client once the setup is confirmed by

Operations and ensure send startup instructions to the

customer

Make some post delivery calls to ensure that all

pickups/MIS etc is happening in a timely manner.

CMS Products

8

Cash Management Service

Collection or Receivables Management

Payment or Payables Management

Collection Products

DisbursementProducts

CMS Collection Products

9

EXPHV Local High Value Cheques at IDBI Bank Locations

EXPRESS

Local Collections on IDBI Bank Locations

RAPID REACH (IRR)

Local Collections on Non IDBI Bank / Partner Bank Locations

IDBITRF Cheques drawn on IDBI Bank across all Branches

*SPEED Outstation cheques drawn on CBS Networked Bank Branches participating in RBI’s Speed Clearing.

CCASH Cash Deposited at IDBI locations by CMS Clients

NCASH Cash Deposited at Non IDBI Bank but partner bank locations

SWIFT Outstation cheques drawn On IDBI locations

MAX REACH

Outstation cheques drawn On Non IDBI / Corr Bank locations i.e. where partner bank tie up is in place

REMOTE Outstation Collections in locations beyond IDBI and Partner Bank Centrs

A Chq is a Local Chq when the Chq Payable Location & Deposit Location is the same.

A Chq is Outstation when the Chq Payable & Deposit Location are different.

Local Products

Express: Local Collection on IDBI Network

10

Pick Up Location

Local IDBI Bank Branch

Pool Accoun

t

Local Clearing House

Customers deposit local cheques at IDBI branches or the cheques are picked up by the courier

Cheques are sent into clearing

Funds are credited into a pool account as per arrangement.

Swift Workflow

11

Pick up location

CMSOperations

IDBI Bank Branches Couriers SWIFT Cheques To IDBI Bank at Drawee Locations

SWIFT Chqs from Non IDBI locs sent to CPC Mumbai

IDBI Bank at Drawee Locations

Pool A/C

Max Reach Work Flow

12

Max Reach chqs processed by CPC Mumbai and dispatched accordingly to the Corr Bank CPC or Corr Bank Br.

Client Credited as per Arrangement.Courier pick-up

From Clients Office at Non IDBI Centers

CMSCPC

Mumbai

IDBI Bank Branches Couriers IMR Cheques to CPC Mumbai.

Chqs from Non IDBI locs sent to CPC Mumbai

Branch Responsibility

Accepting & Acknowledging receipt of cash/cheques

Sorting of cheques

Crossing of Cheques

Data entry

Return cheque processing

Voucher checking report

Operational Constraint

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

Disbursements

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.

Host to Host Connectivity

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

Correspondent Bank Services

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

Correspondent Bank Services

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

Correspondent Bank Services 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

Correspondent Bank Services

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)