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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: 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.
- 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.
Types of Cash Management Services
Products offered by banks:
- Cash Collection Service
- Direct Credit by Funds Transfer
- Cheque/DD Drawing Arrangement
- NEFT Payment Electronic Channel
- Receivables Management/ Cheque Collections
- NACH payment facility
- Auto-Sweeping Facility
Challenges And Issues
Certain challenges bankers need to address in cash management services are:
- Need to comprehend the client’s line of activity
- Provision of other advisory services to clients
- Decisions regarding sourcing of software
- Special consideration to small and medium companies
- Co-ordinating activity
- Security and risk management
- Operational Reliability
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