## Recent Developments in Cash Management

Technology has transformed cash management, making it faster, accurate, and efficient.

### Key Developments

Development	Key Features
Electronic Fund Transfer (EFT)	Instant inter-bank transfers; real-time forex updates; balance monitoring
Zero Balance Account (ZBA)	Account always kept at zero; cash transferred in/out daily for exact needs; surplus invested in marketable securities
Money Market Operations	Invest surplus in short-term instruments; terms range overnight to 1 year; returns vary with market demand-supply
Petty Cash Imprest System	Fixed weekly petty cash amount; controls small expenses with minimal monitoring
Electronic Cash Management System	Satellite-linked integrated system; reduces cheques; produces electronic reconciliation; reduces paperwork
Virtual Banking	Internet, mobile banking, ATMs, UPI; no physical branch visits needed

### Virtual Banking — RBI Systems

System	Full Form
RTGS	Real Time Gross Settlement
NEFT	National Electronic Funds Transfer
MICR	Magnetic Ink Character Recognition
ECS	Electronic Clearing Service
INFINET	Indian Financial Network
CFMS	Centralised Funds Management System
SFMS	Structured Financial Messaging System

Benefits of Virtual Banking:

1. Lower cost per transaction

2. 24×7 access

3. Cost efficiency due to reduced staff cost

4. Improved customer service

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### Management of Temporary Cash Surplus

Short-term surpluses are invested in:

Investment depends on risk appetite and return expectations.

### Marketable Securities — Key Criteria and Examples

Three Key Principles:

1. Safety — Very low risk

2. Maturity — Match cash need timing

3. Marketability — Easy to sell when needed

Examples of Marketable Securities:

⚠️ Common exam mistakes

Confusing Zero Balance Account (ZBA) with a regular current account — ZBA is deliberately maintained at zero with daily automated transfers
Forgetting the three criteria for marketable securities: Safety, Maturity match, and Marketability — all three must be satisfied
Not knowing the full list of RBI virtual banking systems — RTGS, NEFT, MICR, ECS, INFINET, CFMS, and SFMS are all examinable
Confusing EFT (general electronic fund transfer) with NEFT or RTGS (specific RBI settlement systems)

Reference:

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Recent Developments in Cash Management - Technology and Systems

⚠️ Common exam mistakes