IDBI Bank was incorporated at Gwalior under the Companies Act on September 15, 1994. Soon after, the bank initiated discussions on launching cash management services (CMS) in India. The basic reason for entering the CMS arena was the float income earned out of the business.

Apart from this, the bank has invested in a large branch network. They could leverage this network for CMS. Clearing cycles for upcountry (outstation) instruments in India are traditionally in the range of 10 to 21 days. The CMS team is dedicated to reduce this, thus providing the corporate with early access to funds.

IDBI Bank launched a comprehensive range of cash management, catering to both the collections and payables management business. The bank implemented CashTech Solutions’ suite of cash management products to help them in this endeavor.

Another part of IDBI Bank’s strategic initiative was to launch special CMS products – besides the normal range—to cater to specific segments. Two of these products are:

n Utility collections: The utility industry includes providers of services such as water, electricity and telephone. A large, widespread consumer network characterizes the industry, where collections of bills prove to be a daunting task for the utility service providers. IDBI Bank caters to this market segment with specific products.

n Services to other banks: Besides providing CMS to corporates, IDBI Bank also provides correspondent banking facilities to its various partner banks. The network offered is across 65 locations within the country and services include pick up of instruments on behalf of their partner banks and clearing the same in the designated clearing location.

Cash management is imperative for all banks in India. Today, the value proposition that the banks are offering to their corporate customers is essentially "beat the clearing cycle".

However, this value proposition will not sustain itself in the future. As Reserve Bank of India implements RTGS and image-based clearing; the clearing cycles will come down drastically. Kumar Subramanian, head, corporate and retail operations, IDBI Bank, says: "With the advent of automated clearing houses, the value proposition of cash management will change from early credits to information reporting and service."

IDBI Bank is geared up for the change. Its commitment to technological advancement and service orientation will be the differentiating factor that will provide it an edge over its competitors.

Source: CashTech Solutions