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The globalization has intensified the activities in the international bank market to a very large extent.
The competition has increased manifold and each bank is in search of mean to differentiate itself from the others. Similarly domestic banks in developing countries are striving to sustain in the market.
Banks in the international arena are playing an important role in bringing various sectors together. They are bridging the gap between the lenders and borrowers in a more effective manner and are participating in enhancing the worlds output.
Banks also need certain regulations to guide them. Greater domestic and foreign competition can lift the efficiency of local banks and other financial institutions. This is a development to manage, but not to impede.
Supervisory oversight also needs to continuously evolve to keep pace with market changes. Basel II is an important step in this direction. Finally, accounting standards need, as far as possible, to become more harmonized internationally.
INTRODUCTION
The emphasis is on the theory and practice of international banking, because of its critical importance in the modern banking framework. International banking is not a new phenomenon; international bank activity can be traced back to as early as the 13th century. In this topic we understand the difference between Indian banking and international. International banking helps us to know how important international banking for the progress of India and also for the counter. It is one of the most important factors responsible for economic growth of the nation. Banks in many nations have internationalized their operation since 1970. The quantum of operation has increased in such a manner that the concept evolved into a subject in itself. The term multinational banking signifies the presence of banking facilities in more than one country. Aiber has defined International banking as a subset of commercial banking transactions and activity having a cross border or cross currency element. Domestic operation such as the currency of denomination of the transaction, the residence of the bank customer and location of the banking office the range of transactions comprised by International banking can be easily distinguished. A deposit or a loan transacted in local currency between a bank in its home country and a resident of that same country is termed as pure domestic banking.
BRIEF HISTORY
The origin of international banking dates back to the second century BC when Babylonian temples safeguarded the idle funds and extended loans to merchants to finance the movements of goods. The loans extended by the Florentine banking houses were the first instance of international lending by the prerunners of the modern banks to the forerunners of the modern governments. During the nineteenth century many innovations were witnessed in the international lending, leading to trade financing and investment banking. Trade financing started as short term lending. Of the two investments banking accounted further great bulk of the international lending and financial companies acted as agents or underwriters for the placement of funds and thus originated the concept of Capital Markets. By 1920, American banking institutions dominated international lending, and the European nations were the major borrowers. There was perfect international banking system existing till the time of First World War. The Bretton system had installed a secured financial framework and revolutionized the economic life by creating a global shopping center. International banking speeded up after the first oil crisis in 1973. Progress in the telecommunications sector across the world supplemented the growth of international banking.
through financial markets for financing the development projects in member countries. Effectively it was the commercial banks which mobilized savings and channelized them to these institutions for development use. With the introduction of the flexible exchange rate system, exchange rates were determined by market demand- supply forces. Since all transactions went through the banking system involved with International Banking were ideally placed to establish the demand supply equilibrium. The role of establishing exchange rate was therefore transferred from central banks to commercial banks.
RECENT TRENDS
In the past two decades, people around the world have come across complex developments in the financial sector which have evolved gradually. The increasing domination of securities of markets by financial institutions managed by professional bankers has led to the institutionalization of markets. Globalization has affected the financial markets in the world almost entirely.
Foremost among the global trends in the worlds financial industry are consolidation and convergence. These two encompass financially driven mergers within domestic market.
TABLE 1
CAUSES OF GLOBALISATION CONSEQUENCES GLOBALISATION DEREGULATION ABROAD INCREASED INVESTMENT GREATER INSTITUTIONALIZATION ABROAD SUCCESS OF EURO-MARKETS INTEGRATION OF MARKETS WIDER RANGE OF CROSS BORDER OF
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12. Visakhapatnam 13. Jubilee Hills Chennai 15. Mount Road 16. Tuticorin 17. Tirupur 18. Pondicherry Main 19. International Banking Branch, Kolkata 20. Park Street, Kolkata 21. Johar Bazar, Jaipur
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14. International Banking Branch- Chennai Chennai Chennai Chennai Chennai Kolkata Kolkata Jaipur
22. M. I. Road, Jaipur 23. M. G. Road, Ernakulam 24. Trivandrum 25. Quilon 26. Cochin Main 27. Parliament Street, New Delhi 28. Nehru Place, New Delhi 29. Defence Colony, New Delhi 30. Sector 17B, Chandigarh 31. Bhiwani 32. Civil Lines, Ludhiana 33. Jalandhar City 34. Phagwara 35. Shimla Main 36. Barotiwala 37. Silpukhuri, Guwahati 38. Goalpara 39. Shillong 40. Karimganj 41. Giridih 42. Ashok Market, Bhubaneswar 43. Nehru Park, Jodhpur 44. Bhadohi 45. Mirzapur 46. Chandpur 47. Moradabad Main 48. Arera Colony, Bhopal
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Jaipur Trivandrum Trivandrum Trivandrum Trivandrum New Delhi New Delhi New Delhi Chandigarh Chandigarh Chandigarh Jalandhar Jalandhar Shimla Shimla Guwahati Guwahati Guwahati Guwahati Ranchi Bhubaneswar Jodhpur Varanasi Varanasi Varanasi Bareilly Bhopal
49. New Palasiya, Indore 50. Cooch Behar 51. Ashram Road, Ahmedabad
This international network is further augmented by correspondent arrangements with leading Banks at all important world centres in various countries. Thus UCO has a true global presence and can offer a variety of international banking products, services and financial solutions to all crosssections of clients, tailor-made to their banking requirements through one of the best international banking relationship networks both in terms of strength and spread.
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NRI Banking (Please visit NRI Corner) Foreign Currency Loans Finance/Services to Exporters Finance/Services to Importers Remittances Forex & Treasury Services Resident Foreign Currency (Domestic) Deposits Correspondent Banking Services All General Banking Services (Please visit Domestic Banking Sections)
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Repatriability
Tax Exemption
The Deposit is exempted from Indian Wealth tax. Interest is exempted from Indian Income tax.
Choice of Currency
Place your deposit in any of the six international currencies USD, GBP, Euro, JPY, AUD & CAD. For deposit at any of our authorized branches in India, please remit money to our Treasury Branch Mumbai accounts with full details.
Customers can remit in any convertible currency. UCO Bank shall convert it in any of the above six currencies of your choice. During the customers visit to India the customer may also tender foreign currency notes/travelers cheques to UCO banks branches.
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There is no upper ceiling; customer can put any amount in these deposits. The minimum amount for each currency is: USD 2,000 or its equivalent in any of the hard currencies.
Pease check the list of UCO Banks branches spread across India accepting FCNR Deposits.
From a minimum period of 12 months to a maximum period of 60 months, customer has the choice of keeping the deposit with the bank. Bank also allows the customer the flexibility of closing the customers Fixed Deposit account before the due date but the interest rate payable will be subject to a penalty of 1%. Customers deposit should have run for a minimum period of one year to be eligible for interest.
Automatic Renewal
Customers deposits are automatically renewed on maturity for the same tenure in case no other instructions are received before due date.
Joint account
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Customer can open a joint account with the bank with other Non-Resident Indian(s).
Nomination
Banks offer Rupee as well as Foreign Currency Loans in the currency of Deposit against security of your FCNR Deposits in UCO banks authorized branches in India. The overseas branches also offer foreign currency loans against these deposits, subject to rules, if any, applicable in that country.
Retain their savings in foreign currency in a RFC account Get the proceeds of FCNR (B)/NRE Deposits credited to Repatriability
with UCO
this account
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Permitted for bonafide purposes for self & dependents including exchange required for travel, other personal purposes and investments.
On becoming an NRI again, customers can transfer these funds into an FCNR (B) or NRE account. Choice of Currency
Place the deposit in any of the six international currencies USD, GBP, Euro, JPY, CAD and AUD.
Customers can remit in any convertible currency. Bank shall convert it in any of the above six currencies of your choice.
4) NON RESIDENT ORDINARY (NRO) DEPOSITS: NRO account may be opened in the following manner: Where an Indian citizen having a resident account leaves India and becomes non-resident, his resident account should be designated as NRO account. Where non-resident Indian receives income in India, he can open a NRO a/c with such funds. NRO a/c may also be opened by foreign exchange remitted through normal banking channels. All types of a/c like SB, CD and all term deposits as applicable to domestic deposits can be opened Interest rates are as per domestic deposits. Interest is taxable. Rupee Deposits - HIGHLIGHTS
Type of Accounts
You can open Savings Bank, Current, Recurring and Fixed Deposit accounts with us.
Authorized Branches
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For our Indian branches accepting Indian Rupee NRE Deposits, please get in touch with NRI Relationship Centre at our Head Office or the respective Regional Offices of your choice.
Interest Rate
For NRE accounts you can remit in any convertible currency. We shall convert it in Indian Rupees.
NRE Accounts Same as in case of FCNR (B). NRO Accounts Joint accounts with residents permitted, Nomination facility available.
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REMITTANCE TO INDIA Remit through us EITHER to your own account with us or any other bank OR to your near and dear ones. We offer an efficient, easy and convenient channel to transfer money back home in any corner in India. Through our Overseas Branches Just walk in to any of our branches in Singapore and Hong Kong or call them for assistance. Through our Accounts with Correspondents
The most convenient way of remitting the money from any part of the world is a direct credit into UCOBANK Treasury Branch Mumbai Account with correspondents.
We have correspondent arrangements worldwide. The details of our Treasury Branch Mumbai accountsin six major currencies are placed on the web for your convenience. Just send full remittance instructions to your bank for a direct credit into our Treasury Branch Mumbai Account with correspondents. Through Drafts/Cheques Send your Bank Drafts or Cheques to any of our branches in India with full particulars of remittance/beneficiary.
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If you are remitting from Singapore or Hong Kong, avail the facility of remittance provided by our overseas branches. 1. LOANS TO NRIs Against Deposits Bank gives loans against NR deposits to NRI deposit account holder and third parties in Indian Rupees. Bank gives loans against FCNR (B) deposits to NRI deposit account holder in foreign currency in India. This facility is available at our overseas branches, subject to local directives, if any in that country. NRI Home Loans Bank has attractive schemes to accommodate the housing needs of NRIs. 1. Loans for Residential Property NRIs can avail of loans for i. ii. iii. Construction of a new residential house
Purchase of a residential flat or residential house Extension of a residential flat or residential house
2.
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NRIs can avail of loans for purchase of a residential plot of land for residential use. 3. Loans against existing residential property
NRIs can avail of loans by mortgaging an existing residential property for any of the following purposes. The loan shall be utilised for meeting the borrower's personal requirements or for his own business purposes. Education Business Medical treatment Prohibition: The proceeds of rupee loan should not be utilised for any of the following activities: i. ii. The business of chit fund, or
business, iii.
Trading
Transferable
Development
(TDRs), iv.
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2. FOREIGN CURRENCY LOANS a) In India (FCNR 'B' Loans): The foreign currency denominated loans in India are granted out of the pool of foreign currency funds of the Bank in FCNR Deposit etc. accounts as permitted by Reserve Bank of India. These loans are commonly known as FCNR Loans.UCO has a broad base of NRI customers/depositors. Therefore, with the resource base of FCNR deposits etc. UCO is in a position to offer the Foreign Currency Loans in India to our customers as an alternative to loans in Rupees. These loans are denominated in foreign currency such as US Dollars and are offered as short term loans. The interest is fixed with a reasonable spread over LIBOR UCO also allows loans in foreign currency to NRIs against their FCNR Deposits at the Indian Branches. The details are available in NRI banking section. b) From Outside India: With presence at two major financial centers of the world, UCO has foreign currency resources to arrange /grant Foreign Currency Loans to Indian as well as multinational corporates at the competitive rates.The foreign currencies denominated loans are granted by our overseas branches to Indian Corporates as per External Commercial Borrowing (ECB)Policy of Govt.ofIndia/RBI.
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3. FINANCE/SERVICES TO EXPORTERS UCOGOLD CARD FOR EXPORTERS UCO launches Gold card for creditworthy exporters - Simplified access to export credit on very good terms: Better terms of credit including rates of interest than those extended to other exporters by the Bank. Processing of applications for credit faster than for other exporters.Simpler norms, subject to specific requirements in each case, if any. 'In-principle' limits for a period of 3 years with a provision for automatic renewal, subject to fulfillment of the terms and conditions of sanction. Preference for grant of packing credit in foreign currency (PCFC), subject to availability of foreign currency funds. Lower charges schedule and fee-structure than those provided to other exporters. Relaxations in the norms in respect of security and collaterals, wherever feasible. Other facility/benefit to the exporters, subject to the fulfillment of extant rules and regulations applicable to export finance.
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to
the
case
of
Rupee
facility.
In the PCFC drawls permitted in a foreign currency other than the currency of export, exporter bears the risk in currency fluctuations. The foreign currency drawls are restricted to major currencies at present. In case, the export order is in a non-designated currency, PCFC is given in US$. For orders in Euro, Pound Sterling and JPY, PCFC can be availed in the respective currencies or US$ at the choice of exporter. Multi-currency drawls against the same order, are not permitted at present due to operational inconvenience. Repayment: PCFC is to be repaid with the proceeds of the export bill submitted after shipment. In case of cancellation of export order, the PCFC can be closed by selling equivalent amount of foreign exchange at TT selling rate prevalent on the date of liquidation. The PCFC in foreign currency are granted at our various branches through our Integrated Treasury Branch in Mumbai. c) Negotiation of Bills under L/C: UCO's International Banking Branches and Authorized Forex Branches are active in negotiation/discounting of sight /usance international export bills under L/Cs opened by foreign banks as well as branches of Indian banks abroad. UCO offers the most competitive rates. These transactions are undertaken by our branches within the
d) Export Bill Rediscounting: UCO provides financing of export by way of discounting of export bills, as post shipment finance to the exporters at competitive international rate of interest. This facility is available in four currencies i.e. US$, Pound Sterling, Euro be purchased/ discounted. Exporters can avail this facility from UCO to cover the bills drawn under L/C as well as other export bills. e) Bank Guarantees: UCO, on behalf of exporter constituents, issues guarantees in favor of beneficiaries abroad. The guarantees may be Performance and Financial. For Indian exporters, guarantees are issued in compliance to RBI guidelines. and JPY. The export bills (both Sight and Usance) drawn in compliance of FEMA can
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4. FINANCE/SERVICES TO IMPORTERS a) Collection of Import Bills: UCO has correspondent relationship with reputed International Banks throughout the world and can thus provide valuable services to importers who may be importing from any part of the Globe. The import bills are collected by our International Banking Branches and Authorised Forex Branches at very competitive rates. The import bills drawn on customers of other branches are also collected through these branches. b) Letter of Credit: On account of UCO's presence in international market for decades, UCO has established itself as a well known international bank. L/Cs of UCO are well accepted in the International market. For any special requirement UCO can get the L/C confirmed by the top international banks. Thus UCO's L/C facility for the purchase of goods/services etc. fulfills the requirements of all importers to arrange a reliable supply. UCO offers this facility to importers in India within the ambit of FEMA and Exim policy of Govt. of India. UCO uses state of the art SWIFT network to transmit L/Cs and with a worldwide network of correspondents and our overseas branches facilitates prompt & efficient services to the importers. L/C facility is granted to the importers on satisfying credit exposure norms of the Bank.
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c) Financing of import: Usance L/C facility UCO's Usance L/C facility provides the importer an opportunity to avail credit from their supplier/supplier's bank. Deferred Payment Guarantee/Standby LC UCO's Deferred Payment Guarantee/Standby LC facility also provides the importer an opportunity to avail credit from their supplier/supplier's bank. Foreign Currency Loans Short term External Commercial Borrowings or Trade Credits for less than three years as permitted by RBI for imports into India is allowed by our overseas branches to Indian importers at very competitive rates. These are generally backed by L/Cs opened by importer's bank. Indian importers can also avail this facility from our overseas branches as roll-over credit on their bank agreeing to extend the L/C in favor of our overseas branches. d) Bank Guarantees: UCO, on behalf of importer constituents or other customers, issues guarantees in favor of beneficiaries abroad. The guarantees may be both Performance and Financial.
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5. REMITTANCES UCO, through its worldwide network of correspondents, Indian branches and overseas branches, offers prompt inward and outward foreign remittance facilities at very competitive rates. The use of SWIFT network adds to reliability and efficient handling. The remittances are handled by our International Banking Branches and Authorized Forex Branches. The outward remittances of customers of other branches are also remitted through these branches. Through our wellspread network of branches in India, inward remittances reach every nook & corner in India. UCO has tie-up arrangements with Western Union Money Transfer.
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6. FOREX & TREASURY SERVICES UCO operates in the Forex Market in India as well as abroad. In India the inter-bank forex operations is centralized at our Integrated Treasury Branch in Mumbai, country's undisputed financial hub. UCO's International Banking Branches and Authorized Forex Branches undertake customer transactions. The forex requirements of customers of other branches are also routed through these branches. Overseas branches undertake the forex treasury operations in Singapore and Hong Kong centre. All the forex treasuries are equipped with state of art technology and professionally skilled staff to handle forex treasury operations efficiently.
UCO deals in all the important international currencies. Our Forex Treasuries generally undertake the following treasury related activities:Forex Inter Bank Placements/Borrowings Sale & Purchase of currency on behalf of customers Forward Cover Bookings Cross Currency Swaps Interest Rate Swaps (IRS) Forward Rate Arrangements (FRAs) Forex Money Market Operations
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hedging products to hedge the market risks i.e. interest rate risk and foreign exchange risk in Bank's balance sheet. 7. RESIDENT FOREIGN CURRENCY (DOMESTIC) A/Cs UCO also offers Resident individuals in India, the facility to open noninterest bearing current account in foreign currency at the selected Indian branches as permitted by RBI. A joint account with a resident eligible to open RFC (D) account is permissible. Nomination facility is also permitted. Thus UCO will provide an option to resident individuals to retain their receipts from abroad in foreign currency as permitted by RBI. 8. CORRESPONDENT BANKING SERVICES The extensive network of branches in India and presence in two important international centres enables UCO to offer correspondent banking services to the banks. The International Banking Branches and Authorized Forex Branches in India as well as our overseas branches are capable of providing the services that an international correspondent Bank can offer. UCO can provide the following main services:i) Collection of bills both Documentary and Clean. ii) Advising/confirming of L/Cs opened by banks iii) Discounting of Bills drawn under L/Cs
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iv) Maintenance of foreign currency accounts in S$ and HK$ v) Maintenance of Rupee accounts in India vi) Making foreign currency payments/remittance on behalf of customers of banks. UCO's excellent service with competitive charges provides a good Correspondent Banking solution. UCO's overseas branches are active in discounting of usance international trade bills. With foreign currency resources of overseas branches, UCO offers the most competitive rates for discounting of these bills. The bills under the L/Cs of the most of the Indian Banks as well as International Banks are also discounted at competitive rates. These transactions are undertaken by them within the Bank/Country Exposure ceilings prescribed by UCO.
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EXTERNAL COMMERCIAL BORROWING (ECB) The foreign currency loans to the Indian corporate are granted by UCO's overseas branches. The borrowings raised by the Indian corporate from specified banking sources outside India are termed "External Commercial Borrowings" (ECBs). These ECBs can be raised within the Policy guidelines of Govt. of India/Reserve Bank of India, as applicable from time to time. ECB includes the following:i) Commercial Loans ii) Syndicated Loans iii) Floating/Fixed rate notes and bonds iii) Lines of Credit from foreign banks and financial institutions iv) Import loans, loans from the export credit agencies of other countries. UCO is very active in granting and arranging various forms of ECB facilities for the Indian Corporate. UCO can offer following services to the Indian corporates in respect of cross border financing:i) Arranging/granting External Commercial Borrowings by way of Foreign Currency Loans, FRNs, and Bonds for the Indian corporates. ii) Arranging/underwriting International Syndicated Loans for the Indian corporates. iii) Participating in the International Loan Syndications.
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iv) Granting loans backed by Export Credit Agencies. v) Providing import finance for Indian Corporates. vi) Issue of Guarantees such as Bids, Bonds, Performance, Advance Payment etc. for the overseas projects bagged by the Indian Corporates.
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TELE- BANKING
The Bank has planned to provide tele-banking facility to its valued clients in some select branches to start with, which will be gradually extended to more number of branches. Besides facilitating balance enquiry, customers will be able to requisition Statement of Account by fax as well as place requests for issuance of cheque books. Enquiries on latest Interest Rates on deposits as also last five transactions in the account can also be made. Instructions to stop payment too can be given by the customer through this facility of tele-banking.
II.
INTERNATIONAL
BANKING
SERVICES
OF
A. TRADE FINANCE Trade finance includes gamut of services which include credit for both pre shipment and post shipment activities. These primarily include: Export Avenue
Rupee
Export
Credit
(Pre-Shipment
and
Post-
Shipment)
PRE-SHIPMENT EXPORT CREDIT:Pre- Shipment credit (Packing Credit) is extended to the exporters for financing purchase, processing, manufacturing or packing of goods prior to shipment. This would mean any loan or advance can be extended by SBI on the basis of: a) Letter of Credit opened in the favor of the customer or in favor of some other person, by an overseas buyer b) A confirmed and irrevocable order for the export of goods from India c) Any other evidence of an order or export from India having been placed on the exporter or some other person, unless lodgment of export order or Letter of Credit with the bank has been waived.
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Packing Credit is granted for a period depending upon the circumstances of the individual case, such as the time required for procuring, manufacturing or processing (where necessary) and shipping the relative goods. Packing credit is released in one lump sum or in stages, as per the requirement for executing the orders/LC. The pre-shipment / packing credit granted has to be liquidated out of the proceeds of the bill dawn for the exported commodities, once the bill is purchased/discounted etc., thereby converting pre-shipment credit into post-shipment credit.
POST-SHIPMENT EXPORT CREDIT:SBI extend Post-shipment Credit that is any loan / advance granted or any other credit provided by SBI for purposes such as export of goods from India. It runs from the date of extending credit, after shipment of goods to the date of realization of export proceeds and includes any loan / advance granted on the security of any duty drawback allowed by the Govt. from time to time. Post-shipment credit has to be liquidated by the proceeds of export bills received from abroad in respect of goods exported. The exporter has the following options at post-shipment stage: i. To get export bills purchased /discounted / negotiated; ii. To get advances against bills for collection;
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iii. To receive advances against duty drawback receivable from Govt. The exporter has the option to avail of pre-shipment and post-shipment credit either in rupee or in foreign currency. However, if the pre-shipment credit has been availed in foreign currency, the post-shipment credit has necessarily to be under EBR Scheme since foreign currency pre-shipment credit has to be liquidated in foreign currency.
Pre Shipment Credit in Foreign Currency (PCFC) SBIs Pre-shipment Credit in Foreign Currency (PCFC) facilitates funds in foreign currency. SBIs PCFC gives the choice of four different currencies in which to operate the scheme - the US Dollar, Pound Sterling, Euro and the Japanese Yen. SBI has 64 branches across the country handling the PCFC facility for the customers exclusive convenience. The Banks Foreign Department, based at Calcutta, is the nodal centre for raising and deploying offshore and onshore funds for lending under PCFC.
ii) Disbursement of EBR and simultaneous repayment of PCFC and iii) Repayment of EBR. When the exporter has sufficient drawing power available within his overall limit to accommodate the proposed PCFC advance, PCFC is made available to him either in foreign currency for payment of his import bills or in Indian rupees for purchase of domestic raw material by converting the foreign currency of PCFC at T.T. Buying rate. PCFC is operated like cash credit account with balances in foreign currency. The liability of the exporter to the Bank on account of PCFC is in foreign currency. The rupee equivalent will be shown in the account only at notional rates which really doesn't concern the exporter. Interest on PCFC will be arrived in foreign currency and the rupee equivalent thereof will be recovered at quarterly intervals from the exporter's CC or Current account.
LETTER OF CREDIT
SBI offers Letters of Credit to facilitate purchase of goods in international trading operations. The bank's vast network of branches and correspondent banks enables ones enterprise to sustain a seamless flow of business on a wide platform. Further, the bank's informed trade finance crew can provide
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with sophisticated credit and trade information, and market knowledge, helping to extract more value from business. Since the Bank establishing the Letter of Credit undertakes the responsibility of honoring the drafts drawn there under, the ability of the importer to meet its obligation, the integrity of the exporter, the nature of goods, besides observance of Exchange Control regulations etc. are considered.
Supplier's credit
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Suppliers' Credit essentially represents credit sales affected by the supplier on the basis of accepted bills or promissory notes with or without a collateral security. Any credit facility arranged with recourse to the supplier for financing upto 180 days import into India which is not backed up in the form of any letter/document/guarantee/agreement, etc. issued by the LC opening banks or in any other manner except normal routine commercial transactions like an LC, can be treated as a suppliers' credit. The underlying commercial contract between the exporter and the Indian importer should provide for drawing of usance drafts with an upper cap of 180 days on the usance period. When documents under such usance LCs are discounted by our foreign offices and other banks, it is not based on any mandate/letter of comfort/guarantee given by the LC opening bank in India either on their own behalf or at the instance of the importer, i.e.. the buyer of goods. Indian importers are free to enjoy a credit period of 180 days on their imports from the date of shipment provided interest for the period does not exceed the prime rate for the currency in which the goods are invoiced. Prior approval of RBI/GOI was required for exceeding this time limit, till September 2002. With a view to simplifying the procedure for imports into India, RBI, in September 2002, decided that the Authorized dealers may approve proposals received in form ECB for short term credit for financing, by way of Suppliers' Credit, of import of goods into India, provided.
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The credit is being extended for a period of less than 3 years. The amount of credit does not exceed USD 20 million (approx. Rs. 94 crores now) per import transaction. The 'all-in-cost' per annum, payable for the credit does not exceed LIBOR + 50 basis points for credit up to one year and LIBOR + 125 basis points for credit for periods beyond one year but less than three years.
B. CORRESPONDENT BANKING The Correspondent Banking Division develops and maintains relationship with Banks and Financial Institutions across the Globe. This network Correspondent Banks forms the foundation for all international operations of SBI. SBI has correspondent banking relations with around 522 leading banks worldwide. The Rupee Vostro accounts of International Banks and Institutions are maintained and serviced at SBIs International Services branch (ISBM) at Mumbai and at Overseas Branches at Kolkata (Calcutta), Chennai, Cochin, Bangalore and New Delhi. ACU accounts are also serviced at the overseas branches. C. MERCHANT BANKING SBIs Merchant Banking Group is strongly positioned to offer perfect financial solutions to the respective business. It provides the resources, convenience and services to meet the needs of the customer by arranging Foreign Currency credits through:
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Products and services include:1) Arranging External Commercial Borrowings (ECB) 2) Arranging and participating in international loan syndication 3) Loans backed by Export Credit Agencies 4) Foreign currency loans under the FCNR (B) scheme 5) Import Finance for Indian corporate D. PROJECT EXPORT FINANCE State Bank of India is an active participant in the area of finance of Project export activities. These activities will mainly involve financing the fund based and non fund based requirements of the project exporters. Project export contracts are generally of high value and exporters undertaking them are required to offer competitive terms to be able to secure orders from foreign buyers in the face of stiff international competition. SBIs vast network of branches spread all over the country which are authorized to handle trade related transactions, substantial presence overseas with branches/offices in all major commercial centers of the world
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covering all time zones and strong network of correspondent relationship with top ranking banks in several countries adds to the competitive strengths to facilitate and meet various requirements of project exporters.
Fund based facilities include:i) Pre-shipment credit both in Indian rupees and in foreign currency to extend financial assistance for procuring/ manufacturing/ processing/ packing/ shipping goods meant for export.
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ii) Rupee/ Foreign currency supplier's credit: - When a project export is on deferred credit terms, we meet the financial requirement of our exporter in Indian rupees or foreign currency. iv) Buyers credit: Bank also participates in grant of credit to foreign buyers under the Buyers Credit Scheme of Exim Bank.
International Credit/Debit cards and Internet Banking facilities shall be extended to the SBI Exporters Gold Card holders on priority basis.
Venkatachari Jagannathan
MERCHANT RATES AND FEES WITH REGARDS TO INTERNATIONAL BANKING:A Merchant Account has a variety of fees, some periodic, others charged on a per-item or percentage basis. Some fees are set by the merchant account provider, but the majority of the per-item and percentage fees are passed through the merchant account provider to the credit card issuing bank according to a schedule of rates called interchange fees, which are set by Visa and MasterCard. Interchange fees vary depending on card type and the circumstances of the transaction. For example, if a transaction is made by swiping a card through a credit card terminal it will be in a different category than if it were keyed in manually.
DISCOUNT RATES
The discount rate comprises a number of dues, fees, assessments, network charges and mark-ups merchants are required to pay for accepting credit and debit cards, the largest of which by far is the Interchange fee. Each bank or ISO/MLS has real costs in addition to the wholesale interchange fees, and creates profit by adding a mark-up to all the fees mentioned above. There are a number of price models banks and
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ISOs/MLSs use to bill merchants for the services rendered. Here are the more popular price models:
3-TIER PRICING
The 3-Tier Pricing is the most popular pricing method and the simplest system for most merchants, although the new 6-Tier Pricing is gaining in popularity. In 3-Tier Pricing, the merchant account provider groups the transactions into 3 groups (tiers) and assigns a rate to each tier based on a criterion established for each tier.
QUALIFIED RATES
A qualified rate is the percentage rate a merchant will be charged whenever they accept a regular consumer credit card and process it in a manner defined as "standard" by their merchant account provider using an approved credit card processing solution. This is usually the lowest rate a merchant will incur when accepting a credit card. The qualified rate is also the rate commonly quoted to a merchant when they inquire about pricing. The qualified rate is created based on the way a merchant will be accepting a majority of their credit cards. For example, for an internet merchant, the internet interchange categories will be defined as Qualified, while for a physical retailer only transactions swiped through or read by their terminal in an ordinary manner will be defined as Qualified.
card that does not qualify for the lowest rate (the qualified rate). This may happen for several reasons such as:
A consumer credit card is keyed into a credit card terminal instead of being swiped A special kind of credit card is used like a rewards card or business card
A mid-qualified rate is higher than a qualified rate. Some of the transactions that are usually grouped into the Mid-Qualified Tier can cost the provider more in interchange costs, so the merchant account providers do make a markup on these rates. The use of "rewards cards" can be as high as 40% of transactions. So it is important that the financial impact of this fee be understood.
A consumer credit card is keyed into a credit card terminal instead of being swiped and address verification is not performed A special kind of credit card is used like a business card and all required fields are not entered A merchant does not settle their daily batch within the allotted time frame, usually past 48 hours from time of authorization.
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A non-qualified rate can be significantly higher than a qualified rate and can cost the provider much more in interchange costs, so the merchant account providers do make a markup on these rates.
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CONCLUSION Banks have influenced economies and politics for centuries. Historically, the primary purpose of a bank was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers. Banking services have expanded to include services directed at individuals, and risk in these much smaller transactions is pooled. International banking has become an important aspect of world economy. It deals with various aspects of financial services. Banks offer many different channels to access their banking and other services. Though international banking concept is quite old, it has acquired certain new characteristics and dimensions. Now international banking has become a very important for international trading and financial transaction. Its importance is increasing through the globalization of world economy and we will see its benefits in the near future very soon.
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Bibliography
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INDEX
Sr.No. Topic Page No.
1 2 11 27 34 39
International Banking with case study of UCO bank Types of Facilities For Export Forex Services For Corporates
TELE- BANKING
International Banking with a case study of State Bank Of India Pre-Shipment Export Credit Post-Shipment Export Credit 42 40
Import Avenue Merchant Rates And Fees International Banking- A Survey Conclusion Bibliography
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44 51 54 55 56
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PROJECT REPORT
on
INTERNATIONAL BANKING
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