Short-term debt instruments and liquid mutual funds are offering materially higher yields than near-zero current accounts, Shree Radha Financial Services says. Many MSMEs, family firms and seasonal traders in Surat, Ahmedabad, Bharuch and Vadodara keep surplus cash in current accounts while inflation erodes real value. Short-duration fixed deposits, overnight and liquid mutual funds, and a laddered programme of corporate accounts and segregated vehicles can preserve purchasing power and add tangible profit, industry advisers and regional analysts argue. The shift matters because disciplined redeployment converts excess balances from a cost into a recurring income line without sacrificing liquidity for seasonal cycles.

Holding surplus cash in current accounts that pay almost nothing lets inflation do the earning, not the business.

Short-term cash that earns instead of erodes

Shree Radha Financial Services notes that short-term debt instruments and liquid mutual funds yielding roughly 6-7% in 2026 offer a simple first step for firms that need daily or weekly liquidity. The arithmetic is straightforward: with consumer inflation running about 5-6% annually, a nominal 6-7% return preserves purchasing power and, in many cases, delivers a modest positive real return. That matters for Gujarat operators whose cash cycles are concentrated and seasonal, because the losses from sitting idle are cumulative.

Desi Ustad sets out practical choices for different time horizons. For traders who must redeploy cash within 60-90 days, short-duration fixed deposits and overnight or liquid mutual funds meet the cash management requirement while improving yields well above current-account rates. Desi Ustad illustrates the point with a Hyderabad pharmaceutical distributor that, by splitting Rs 80 lakh of quarterly surplus between a 90-day fixed deposit at 7.25% and overnight liquid funds, earned about Rs 5.5 lakh in a quarter. For more mature enterprises holding Rs 3-5 crore in average surplus cash, a disciplined programme yielding 6-8% annually can add Rs 18-40 lakh to profitability, Desi Ustad estimates, while helping preserve purchasing power versus inflation.

Practical implementation is as important as the math. Advisers repeatedly emphasise matching the instrument tenor to business cash needs to avoid forced liquidation during peak seasons. They also recommend a formal surplus classification and governance approval process so that working capital buffers aren't accidentally redeployed. For legal and succession reasons, Shree Radha Financial Services urges businesses to maintain separate personal or family folios where owners need assets held outside the operating entity.

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Building a ladder: from liquid funds to PMS

Beyond overnight and short-term corporate deposits, Gujarat-focused advisers point to a laddered approach that moves firms away from concentrated exposure to land, gold and the owner’s operating business.

Shree Radha Financial Services lists doable options such as liquid funds for same-day redemption, corporate mutual fund accounts for partnership firms that want to avoid deed changes, and segregated investment vehicles including small investment funds and portfolio management services for larger pools of capital.

Minimum thresholds matter. The Indian retail-advisory market typically has regulatory product segments that start at around Rs 10 lakh. Discretionary portfolio management services commonly begin at higher sums such as Rs 50 lakh, which makes them relevant to medium and larger family businesses that want professional management and bespoke mandates. For firms that prefer low credit risk, short-term corporate bonds and bank fixed deposits remain available, while higher-return options such as small investment funds and discretionary PMS require larger minimums and professional oversight.

Regional industrial context strengthens the case for partial redeployment outside the operating business. A Velox Consultants outlook on Central Gujarat highlights a corridor spanning Vadodara, Ankleshwar, Bharuch, Anand, Halol and Savli, which now offers diversified manufacturing exposure across chemicals, pharmaceuticals, engineering goods, food processing and energy-related industries. LinkedIn analysis by Sahil Shaikh and the Gujarat government investment portal both point to the state’s investor-friendly infrastructure, single-window clearance systems and a large network of industrial estates. Those features increase the practical options for family firms that want to split excess capital between internal reinvestment and third-party financial assets.

Governance and execution are the final guardrails. Firms should set clear thresholds that define surplus cash above working capital, require formal board or partner approval for redeployment strategies, and document tenor limits and expected returns.

Corporate mutual fund accounts can be convenient for partnership firms that don't want to alter deed structures. Segregated vehicles and PMS are appropriate where minimums and governance frameworks exist, and they bring professional asset-allocation and risk management into the company’s balance sheet conversation.

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A practical first step is to pilot governance-backed redeployment in the state’s industrial clusters. Firms can test segregated vehicles, liquid funds and short-duration instruments in regions such as Dholera Ahmedabad, Vadodara-Ankleshwar and Bharuch-Dahej while formalising surplus thresholds and board approvals.

This article was created with AI assistance.