Liquidity And Profitability Management in Commercial Banks

Abstract

Banks play a key role in financial system of a country. Banking refers to a financial activity to manage and safeguard the hard-earned money of customers. Banking refers to the system of financial institutions, such as banks and credit unions, that provide various financial services to individuals, businesses, and governments. Banking services mainly include accepting deposits, lending money, facilitating transactions, and offering various financial products like savings accounts, loans, and credit cards. Banking plays a crucial role in the economy by facilitating the flow of money and enabling economic activities. Finance is the primary key which controls all production and operational activities in any business, it plays major role in management of funds for smooth flow of business. Appropriate allocation of funds can happen with proper maintenance of liquidity. Liquidity is the term used to measure the ability of a firm in maintenance of cash. Liquidity is required to meet the   prompt demands of customer and shows effect on profitability of the business.  Profit is the main reason for the continued existence of every commercial organization and profitability depicts the relationship of the absolute amount of profit with various other factors. In this present study liquidity and Profitability of Union Bank of India and HDFC is measured. The impact of liquidity on profitability is analysed.