The motto in many finance and controlling departments is “Cash is king!” Of course, this is no different in India either. Directly related to this are the questions: “Who do I actually want to trust with our hard-earned money?” Who is it really in good hands with?” It makes sense to think about the specific steps involved in advance. Because not all banks are the same! This is no less true in India than in other countries.
Banks in India
In general, one can say at this point that private banks in India are generally more advanced and modern than state-run institutions. The state banks often function and act like sluggish authorities and in India many of them are still on the market. Look at different banks, compare the houses based on the factors that are particularly important to you, and then make your selection. For example, the online banking offer could be of great importance. Of course, e-banking is in principle also available in India. With electronic access, you can conveniently and easily monitor and control the payment transactions of your Indian entity on a daily basis from your European headquarters and intervene immediately if necessary. We strongly advise you to make use of these options and choose your Indian bank accordingly.
Cash management and access to finance
In addition, you must also decide who in your Indian company is allowed to approve payments and in what amount as an authorized signatory. Of course, at least the “four eyes principle” is recommended here. For example, a CEO/General Manager and a CFO/Finance Manager who control each other according to the well-known principle of “checks and balances”. You should document their authority in writing in a “LoA”, i.e. “Level of Authority” documentation, and regularly check strict compliance with “internal audits” or “inventories”. You probably already do all of this in Europe and perhaps in America too, so please adopt these tried and tested structures and standards in India too. There is no reason not to do this.
The topic of cash management is particularly sensitive in India. This is often the cause of conflict due to different cultural understandings of the topic. Our tool box on the topic “Business Risk Assessment” helps you identify potential problem areas in your branches and take concrete measures.
Start with our India self-test and use this checklist to identify typical risks in your India business within a few minutes.
