1. 2. 3. 4.

Introduction Motives for holding cash Advantages of Cash Planning Profile of HNB (PLC), Batticalloa 1. Motive of holding cash by HNB. 2. Advantages of Cash Flow Planning 3. How does Cash Budget help in planning of the firms Cash Flow?. 5. Conclusion

 Cash is an important current asset for the operation of business. A good cash management can improve financial results. In order to evaluate the effective planning of cash flow in the organizations, we have selected HNB There is a need for the proper management of cash to ensure high levels of profitability.

02. Motive of holding cash.

 The transaction motive requires a firm to hold cash to conduct its business in the ordinary course and pay for operating activities like purchases, wages and salaries, other operating expenses, taxes, dividends, payments for utilities etc.

Precautionary Motive
The precautionary motive is the need to hold cash to meet uncertainties and emergencies.

Speculative Motive.
It refers to the desire of a firm to keep cash to take advantage of profitable opportunities, which are outside the normal course of business.

03. Advantages of Cash Planning.

A cash flow statement provides information that enables users to evaluate the changes in net assets of an enterprise. cash flow information is often used as an indicator of the amount, timing and certainty of future cash flows.

Hatton National Bank (PLC), Batticaloa.

4. Profile of HNB (PLC), Batticaloa .

Established in 1995 January 26.
At present, the manager is Mr. K. . Rejendra. About 28 employees are working in this branches. There are 3 ATM machines are available in this branches.

Percentage in Total Deposit

3%

7%
20% Reserve in Central Bank Liqudity 70% Loan Other

Motives of holding cash in HNB.

customers withdrawal purpose load their ATM machines To run their daily business Issuing loans to persons, Firms & other banks also.

Transaction Motive

Precautionary Motive

Done through the head office of HNB

Speculative Motive

Made provisions for unexpected expenses

 HNB prepares its Action Plan of Cash at the end of the year (annually ). Usually Head office of HNB will prepare the statement of cash planning annually and forward it to all branches. After receiving the statement, Batticaloa branch will prepare their individual cash flow planning for the next year. The person who is in the General Ledger (G.L) section will be responsible for preparing the cash budget, and action plan.

 Balancing the profit and maintain liquidity.

Helps to reporting purpose of the bank.

Profit Maximization through maintaining minimum level of cash in their ATM machine. Helps to achieve their target easily and quickly Eliminate unwanted cash encourage the cash receivables. spending and

Income & Expenditure Structure in HNB.

Accounts Types

Expenditure

Income

General Expenses

Staff Expenses

Other Expenses

Interest income

NPA Recovery

Commission

 Cash budget functioning as a guidance to allocate right amount of money at the right place. Preparing the cash budget it helps to the banks to control their cash flows Cash budget helps to control the cost where it is necessary. Reduce other expenses and spend that amount of money where ever necessary.

Conclusion
Cash is an important element in the Working capital management. organization must plan its cash inflows and out flows within a time period. Effective cash planning will help to earn profit and maintain liquidity in order to achieve its objective..