Bank Financing and Cash Management: A Corporate Perspective

KOLKATA, 5 November, 2008: Banks in India are not leveraging their full potential,according to the survey report, Bank Financing and Cash Management: A Corporate Perspective, released by PricewaterhouseCoopers. This survey is the first of its kind, designed to provide insights that should enable banks to improve their services. It represents the views of senior finance executives from 33 companies across 5 metropolitan areas and 6 broad industry sectors. The report also synopsizes the issues faced by senior finance executives with respect to their bank financing and cash management needs.

Sivarama Krishnan, executive director, PricewaterhouseCoopers and Survey Project Director, released the results of the survey at the Banking 2008 convention organised by Confederation of Indian Industry (CII) at the Oberoi Grand in Kolkata. PricewaterhouseCoopers (PwC) was the knowledge partner for the convention. The event was attended by luminaries representing all areas of finance in government, banks and corporate.

The objectives of the survey were two fold; to assist banks in assessing their current status and possible opportunities for the future, by bringing out industry perspectives on the services offered; and to help corporate benchmark themselves with peers and suggest possible improvement areas.

As per the report, India Inc. is optimistic about the future and feels that the current financial crisis is temporary in nature. As and when the corporate recover from the slump, they will have an even greater need for bank financing and optimal cash management services. This would consequently require the services of banks to improve and increase in scale and scope.

Thirty per cent of the time of senior finance executives is consumed by transactional activities, rather than strategic ones, was another insight. This is at least partially explained by the evidence in the report which states that the various cash management services currently offered by the banks are not optimally utilised, nor are the finance functionalities exhaustively automated in-house.

The uncertainties of the present macro-economic situation were confirmed by the number of votes received for mitigating exchange rate and interest rate risk. However, the report indicates that there is a huge knowledge gap that needs to be bridged, in terms of various services on offer by banks, that could help in mitigating risk (a case in point being unpopularity of derivative instruments) or those that could help industry focus on their core business. According to the report, some of the blame could be attributed to the less empathetic service offered by banks and less empowered work force.

The report details, among other things, the positives and improvement areas for both the private and nationalised banks from a view point of their corporate customers. It suggests that the way forward for banks is to align their people, process and technology to meet the needs of the industry. However, at the same time, industry also needs to make its own assets better equipped for effective and optimal utilisation of the service offered by banks and thus manage change and crises effectively.

ENDS

Notes to Editor:

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