JAIIB PPB Paper-2 Module-A Unit 11: Cash Management Services and Its Importance

02/03/2023

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JAIIB Paper 2 (PPB) Module A Unit 11: Cash Management Services and Its Importance Aspects (New Syllabus)

The Institute of Indian Banking and Finance (IIBF) recently announced the updated syllabus and exam pattern for the JAIIB Exam 2023. The JAIIB 2023 will include four papers, with Paper 2 (Principles & Practices of Banking) covering Unit 11: Cash Management Services and Its Importance. This unit is crucial for candidates to understand thoroughly as it will impact their performance in the exam.

To aid candidates in comprehending the topic, we will provide all necessary details related to Unit 11: Cash Management Services and Its Importance of JAIIB Paper 2 (PPB) Module A: General Banking Operations. We highly recommend candidates refer to this article and use our Online Mock Test Series to improve their knowledge of Foreign Currency Accounts for Residents and Other Aspects.

For JAIIB Certification Examination 2023 candidates, understanding each unit in the syllabus, including the Marketing unit, is critical. This unit is essential in the banking industry, and candidates must prepare adequately to excel in the exam and establish a successful career in the banking sector.

Cash Management

Cash Management: It refers to the collection, concentration, and disbursement of cash. Fundamental objective of cash management is ‘Optimisation of liquidity through improved flow of funds’.

Importance Of Cash Management System

For A Corporate Entity

Good cash management is a conscious process of-

Knowing when, where, and how a company’s cash needs will occur
Knowing which are the best sources for meeting additional cash needs
Being prepared to meet these needs when they occur by keeping good relationships with bankers and other creditors.

Scientific cash management results in: significant savings in time; decrease in interest costs; less paper work; and greater accounting accuracy.

Benefits for Proper cash management system:

Creates more control over time and funds
Provides timely access to information
Enables easy employee related payments
Supports electronic payments
Produces faster electronic reconciliation
Allows for detection of book keeping errors
Reduces the number of cheques issued
Earns interest income or reduces interest expense.

For Banks

Banks have shifted their sales mix toward products that generate non-interest income by selling ‘non-bank’ fee-based financial services, and by charging explicit fees for services.
According to a study titled ‘Fee-Based Financial Services Markets: New Opportunities and Threats in the Internet Age’ by Killen Associates again, the market for retail and commercial fee-based financial services will exceed that for interest-based services globally.
Banks have aimed for such services to be their primary profit source for certain reasons. This revenue is more stable over time, assures a steady income and more importantly, leads to a strong relationship with the corporate client.