Recent Developments in Cash Management and Marketable Securities

## Recent Developments in Cash Management

Technology has transformed cash management into a faster, more accurate, and efficient function.

### 1. Electronic Fund Transfer (EFT)

• Transfers money instantly between banks
• Enables real-time forex updates and balance monitoring
• Supports efficient banking operations

### 2. Zero Balance Account (ZBA)

• Account balance is always maintained at zero
• Cash is automatically transferred in or out daily to meet exact needs
• Surplus is automatically swept into marketable securities

### 3. Money Market Operations

• Firms invest surplus cash in short-term money market instruments
• Terms range from overnight to 1 year
• Returns vary with market demand and supply

### 4. Petty Cash Imprest System

• A fixed petty cash float maintained (typically weekly) for small expenses
• Minimal monitoring needed; helps control minor expenditures

### 5. Management of Temporary Cash Surplus

Short-term surpluses are invested in:

• Bank deposits
• Debt instruments (short-term or long-term)
• Shares of blue-chip companies

Investment choice depends on the firm's risk appetite and return expectations.

### 6. Electronic Cash Management System

• Fully integrated, satellite-linked system for managing all cash flows
• Features:
• Fast fund movement, tracking, and control
• Reduces paperwork and improves accuracy
• Supports electronic payments
• Faster electronic reconciliation
• Reduces number of cheques issued

### 7. Virtual Banking

Involves internet banking, mobile banking, ATMs, and UPI — no physical branch visits needed.

RBI-supported payment systems:

Benefits of Virtual Banking:

• Lower cost per transaction
• 24×7 access
• Reduced staff costs
• Improved customer service

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## Marketable Securities

Marketable securities are temporary investments of surplus cash providing safety, liquidity, and reasonable return.

### Three Key Principles

### Examples of Marketable Securities

• Treasury Bills (T-Bills)
• Bank Deposits
• Inter-corporate Deposits
• Commercial Paper
• UTI Units
• Money Market Mutual Funds (MMMFs)