Bank Reserve Management
Reserves of the bank can be of two types: primary reserve and secondary reserve. The primary reserve usually ensures liquidity only apart from complying with legal requirements and does not contribute to profit earning. Secondary reserve contributes to a small part of profit earnings besides fulfilling the day-to-day liquidity requirement. What is Bank Reserve Management?…
Primary Reserve of Bank
Reserves intended to meet working capital needs, legal requirements and a caution against unanticipated withdrawals or loan demand.
Secondary Reserve of Bank
A working reserve is mandatory but insufficient for maintaining normal banking operations. In a simple sense, the bank keeps the assets or securities in the near-cash form to maintain liquidity. They are not included in the statutory or primary reserves and are called secondary reserves. All bank regulatory committees suggest keeping an adequate secondary reserve…
Bank Cash management: How Banks Manage Day-To-Day Cash
The bank is a business entity engaged in a business activity mainly covering cash transactions. But the cash or money with which a bank conducts its business to a great proportion belongs to the depositors. Generally, bank owners’ contribution does not exceed 4;6% of the total capital. Besides bearing interests, banks have to incur costs…
