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  • Correspondent Banking

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    Komal Khero
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    A correspondent bank provides services like funds transfers and international trade financing on behalf of other banks in locations where they do not have a direct presence. They charge fees for these services. For example, a Pakistani bank without a Japanese branch may use a Japanese correspondent bank to handle transactions in Japan. This allows banks to serve customers abroad without establishing new branches directly. Correspondent banks offer services like general banking, credit, investment management, international trade support, and management consulting. They can be appointed through agency agreements or SWIFT to facilitate timely payments across borders, though money laundering and communication issues may arise.

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    A correspondent bank provides services like funds transfers and international trade financing on behalf of other banks in locations where they do not have a direct presence. They charge fees for these services. For example, a Pakistani bank without a Japanese branch may use a Japanese correspondent bank to handle transactions in Japan. This allows banks to serve customers abroad without establishing new branches directly. Correspondent banks offer services like general banking, credit, investment management, international trade support, and management consulting. They can be appointed through agency agreements or SWIFT to facilitate timely payments across borders, though money laundering and communication issues may arise.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    132 views7 pages

    Correspondent Banking

    Uploaded by

    Komal Khero
    A correspondent bank provides services like funds transfers and international trade financing on behalf of other banks in locations where they do not have a direct presence. They charge fees for these services. For example, a Pakistani bank without a Japanese branch may use a Japanese correspondent bank to handle transactions in Japan. This allows banks to serve customers abroad without establishing new branches directly. Correspondent banks offer services like general banking, credit, investment management, international trade support, and management consulting. They can be appointed through agency agreements or SWIFT to facilitate timely payments across borders, though money laundering and communication issues may arise.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Correspondent banking network

    CORRESPONDENT BANKING NETWORK


    A correspondent bank is a financial institution that acts as an agent for another bank, providing services and products in an area the other bank does not operate in. Numerous international financial institutions have a correspondent banking branch to provide services to smaller banks with less reach. The correspondent banks make a charge for these services.

    CORRESPONDENT BANKING NETWORK


    For example, If an Pakistani bank does not have a branch in Japan; it may find it difficult to carryout Japan-related import/export transactions for its customers. In such a case, the Pakistani bank may choose a bank in Japan as its correspondent bank to put through all its Japan-related financial transactions. This arrangement avoids the need of opening a branch in another country. Hence, it is cost effective also.

    Examples of Interbank Services:


    General Banking: Operational services as demand account, fund transfer, currency transfer, cheque clearing and collection. Credit services: Provision of loans for other financial intuitions. Portfolio & Investment Management: Sale and trade of securities, investment advices and safekeeping.

    Examples of Interbank Services:


    Management Assistance: Management consulting, automatic data processing, business development.
    International Trade Finance Services including LC opening, counseling etc. Special Services: Brochures and pamphlets on global and economic outlooks, statistical information, Underwritings.

    CORRESPONDENT BANKING- strategies

    Appointment of an Agent institution in foreign country

    Agency Arrangement
    SWIFT-Society for Worldwide International Financial Telecommunication

    Advantage: Timely payment

    Disadvantage: Money laundering, miscommunication, currency worth declines, narrow scope.

    CORRESPONDENT BANKING- strategies


    Establish and Maintain Relationship from the Base Location Opening of Representative Office in the defined Geographic Area

    Setting up of branches or subsidiaries overseas


    Most expensive

    Expansionary Objectives

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