You are on page 1of 54

Verily my Lord understand best the mysteries

of
all that He planneth to do. For verily He is full
of knowledge and wisdom.

DEDICATION

This piece of work is humbly dedicated with all love


and devotion to the greatest of all Almighty. As it
would

not

have

been

possible

to

complete

successfully my project without hid love and grace he


has bestowed upon me. I thank him foe al that he has
given me during this golden period of learning and
learning it realistically.
And thou (standest) on an exalted standard of
character.

II

ACKNOWLEDGEMENT

It is my pleasant duty to gratefully acknowledge my


deep debt of gratitude and to offer my sincerest thanks to
kind, and supportive Mr. Prakash Nayak (Vice presidentCorporate banking) Mr. Jayraj Bhatt (Sr.Manager- Corporate
banking) whose positive attitude and faith in my abilities
spurred me a lot to perform well.
I am also very thankful to MS. Bhavana Shah without
whom my project work would not have been possible. She
has always been a great source of help at every stage of the
project through discussion and criticism would also like to
thank whole staff of Kotak Mahindra Bank who have been
directly or indirectly being instrumental in the development
of this project.
Lastly, but not least, I owe our special regards to our
parents, sisters and brothers, who always supported us and
prayed for my betterment and success.

III

EXECUTIVE SUMMARY
Finance as are source stands next in importance to the awesome
power of human potential and financial intermediaries are the pillars
that support the activity of finance.

The Kotak Mahindra Group was born in 1985 as Kotak Capital


Management Finance Limited. This company was promoted by Uday
Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish
Mahindra and Anand Mahindra took a stake in 1986, and that's when
the company changed its name to Kotak Mahindra Finance Limited.
Since then it's been a steady and confident journey to growth and
success.
Entering of mahindras in to finance sector was not an eventual event it
was an well thought and very much awaited movement which has led
to an foundation of full service banking and one of giants in to an
automobile sector to venture in to banking sector.
The report focuses on components of trade finance offered by division
of corporatebanking.Following are the range of products and services
offered by corporate banking department.They offer corporate anf
intituitions a complete banking client centric solutionsand

IV

services.These include working capital,trade services,transaction


banking,moneymarket and foreing exchange sevices and cash
management.All of there services are client focused and tailored
according to clients needs and delivered after factoring in industry
imperatives and individual contexts.

Specifically my project objective requirqd me to undertake an study


and find out the prospective market for corporate banking product like
L/C(LETTER OF CREDIT) CBD (CLEAN BILL DISCOUNTING). Our study
concentrated on two major sector in the industries which are heavily
dependent on efficient functiong of supply chain in to there
organization.We segregated our study in to two sectors Pharma sector
and oil sector.The focus was on finding out the current status of there
financing of the transportation and logistics expenses and
simultaneously prospecting about there wllingness nad awareness
about different kind of na financinf instruments available and provided
by our bank.Collection of an data mainly concentrated on collecting
information regarding there current financials,there critical raw
materials requirement nad an list of vendors to there company.After
collecting al this materials from the companies next step was to
analyse and segregate the vendor of this company who may fit in to
the criteria for providing services .The method used for contacting and
having healthy discussion with them was questionnaire and some
amount of oral communication.after getting an informationliated an
interpretation and analysis was done in order to drive out na business
from this information.
V

Companies selected for collection of data were:


INTAS PHARMACIEUTICALS LIMITED
CADILA PHARMACIUETICALS LIMITED
TROEKA PHARMACIUETICALS LIMITED
PLOX PHARMACIEUTICALS LIMITED
ISHITA DRUGS PRIVATE LIMITED & IPCL

INTRODUCTION TO BANKING IN INDIA


Banking in India has its origin as early as the vedic period. It
is believed that the transistion from money lending to
banking must have occurred even before Manu, the great
Hindu Jurist, who has devoted a section of his work to
deposits and advances and laid down rules relating to rates
of interest. During the Mogul period, the indegenous bankers
played a very important role in lending money and financing
foreign trade and commerce. During the days of the East
India Company, it was the turn of the agency houses to carry
on the banking business. The General Bank of India was the
first Joint Stock Bank to be established in the year 1786. The
others which followed were the Bank of Hindustan and the
Bengal Bank. The Bank of Hindustan is reported to have
continued till 1906 while the other two failed in the
meantime. In the first half of the 19th century the East India
Company established three banks; the Bank of Bengal in
1809, the Bank of Bombay in 1840 and the Bank of Madras

VI

in 1843. These three banks also known as Presidency Banks,


were independent units and functioned well. These three
banks were amalgamated in 1920 and a new bank, the
Imperial Bank of India was established on 27th January 1921.
With the passing of the State Bank of India Act in 1955 the
undertaking of the Imperial Bank of India was taken over by
the newly constituted State Bank of India. The Reserve Bank
which is the Central Bank was created in 1935 by passing
Reserve Bank of India Act 1934. In the wake of the Swadeshi
Movement, a number of banks with Indian management
were established in the country namely, Punjab National
Bank Ltd, Bank of India Ltd, Canara Bank Ltd, Indian Bank
Ltd, the Bank of Baroda Ltd, the Central Bank of India Ltd. On
July 19, 1969, 14 major banks of the country were
nationalised and in 15th April 1980 six more commercial
private sector banks were also taken over by the
government. Today the commercial banking system in India
may be distinguished into :

Public Sector Banks

VII

State Bank of India and its associate banks called the State
Bank group
20 nationalised banks
Regional Rural Banks mainly sponsored by Public Sector
Banks

Private Sector Banks


Old generation private banks
New generation private banks
Foreign banks in India
Scheduled Co-operative Banks
Non-scheduled Banks

CO-OPERATIVE SECTOR
The co-operative banking sector has
been developed in the country to the
suppliment the village money lender.
VIII

The co-operatiev banking sector in India is divided into 4


components

State Co-operative Banks


Central Co-operative Banks
Primary Agriculture Credit Societies
Land Development Banks
Urban Co-operative Banks
Primary Agricultural Development Banks
Primary Land Development Banks
State Land Development Banks

DEVELOPMENT BANKS

Industrial Finance Corporation of India (IFCI)


Industrial Development Bank of India (IDBI)

IX

Industrial Credit and Investment Corporation of India


(ICICI)
Industrial Investment Bank of India (IIBI)
Small Industries Development Bank of India (SIDBI)
SCICI Ltd.
National Bank for Agriculture and Rural Development
(NABARD)
Export Import Bank of India
National Housing Bank

LET US LOOK AT THE BASIC REASONS AS TO


WHY AN BUSINESS WORLD WOULD LIKE TO
INVEST IN INDIA:

There are several good reasons for investing in India.


One of the largest economies in the world.

Strategic location - access to the vast domestic and South


Asian market.

A large and rapidly growing consumer market up to 300 million


people, constitute the market for branded consumer goods estimated to be growing at 8% per annum. Demand for several
consumer products is growing at over 12% per annum.
X

Foreign investment is welcome, approval is required but is


automatic in sixty categories of Industries.

Skilled man-power and professional managers are available at


competitive cost.

One of the largest manufacturing sectors in the world, spanning


almost all areas of manufacturing activities.

One of the largest pools of scientists, engineers, technicians


and managers in the world.

Rich base of mineral and agricultural resources.

Long history of market economy infrastructure

Sophisticated financial sector.

Vibrant capital market with over 9,000 listed companies and


market capitalisation of US$ 154 billion (March,1996)

Well developed R&D infrastructure and technical and marketing


services.

Policy environment that provides freedom of entry, investment,


location, choice of technology, production, import and export.

Well balanced package of fiscal incentives.

A sophisticated legal and accounting system.

English is widely spoken and understood.

Rupee is convertible on Current Account at market determined


rate.

Free and full repatriation of capital, technical fee, royalty and


dividends.

Foreign brand names are freely used. No income tax on profits


derived from export of goods.
XI

Complete exemption from Customs Duty on industrial inputs


and Corporate Tax Holiday for five years for 100 per cent Export
Oriented units and units in Export Processing Zones.

Corporate Tax applicable to the foreign companies of a country


with which agreement for avoidance of Double Taxation exists,
can be one which is lower between the rates prevailing in any
one of the two countries and the treaty rate.

A long history of stable parliamentary democracy

INTRODUCTION TO KOTAK MAHINDRA GROUP


KOTAK MAHINDRA GROUPKotak Mahindra is one of India's
leading financial institutions, offering complete financial
solutions that encompass every sphere of life. From
commercial banking, to stock broking, to mutual funds, to
life insurance, to investment banking, the group caters to
the financial needs of individuals and corporates.The group
has a net worth of over Rs.1,550 crore and employs over
3,000 employees in its various businesses. With a presence
in 59 cities in India and offices in New York, London, Dubai
and Mauritius, it services a customer base of over
5,00,000.Kotak Mahindra has international partnerships with

XII

Goldman Sachs (one of the world's largest investment banks


and brokerage firms), Ford Credit (one of the world's largest
dedicated automobile financiers) and Old Mutual (a large
insurance, banking and asset management conglomerate).
THE

JOURNEY SO FAR ... KEY GROUP COMPANIES AND


THEIR BUSINESSES Kotak Mahindra BankThe Kotak Mahindra
Groups flagship company, Kotak Mahindra Finance Ltd which
was established in 1985, was converted into a bank Kotak
Mahindra Bank Ltd in March 2003 becoming the first Indian
company to convert into a Bank. Its banking operations
offers a central platform for customer relationships across
the groups various businesses. The bank has a presence in
XIII

the Commerial Vehicles, Retail Finance, Corporate Banking


and Treasury and has recently entered the Housing Finance
segment. Kotak Mahindra Capital CompanyKotak Mahindra
Capital Company Limited (KMCC), India's premier Investment
Bank and a Primary Dealer (PD) approved by the RBI, is a
strategic joint venture between Kotak Mahindra Bank Limited
and the Goldman Sachs Group, LLP. KMCC's core business
areas include Equity Issuances, Mergers & Acquisitions,
Structured Finance and Advisory Services, Fixed Income
Securities and Principal Business. Kotak SecuritiesKotak
Securities Ltd., a strategic joint venture between Kotak
Mahindra Bank Limited and the Goldman Sachs Group, LLP.,
is one of India's largest brokerage and securities distribution
house in India. Over the years Kotak Securities has been one
of the leading investment broking houses catering to the
needs of both institutional and retails investor categories
with presence all over the country through franchisees and
co-ordinators. Kotak Street - the retail arm of Kotak
Securities Ltd., offers online (through www.kotakstreet.com)
and offline services well-researched expertise and financial
products to the retail investors.Kotak Mahindra PrimusKotak
Mahindra Primus Limited (KMP) is a joint venture between
Kotak Mahindra Bank Ltd and Ford Credit International Inc.,
(USA) formed to finance all non-Ford passenger vehicles.
KMP is one of the countrys leading players in car finance
and is focused to financing and supporting automotive and
XIV

automotive related manufacturers, dealers and retail


customers.Kotak Mahindra Asset Management
CompanyKotak Mahindra Asset Management Company
(KMAMC), a subsidiary of Kotak Mahindra Bank, is the asset
manager for Kotak Mahindra Mutual Fund (KMMF). KMMF
manages funds in excess of Rs 4000 crores and offers
schemes catering to investors with varying risk- return
profiles. It was the first fund house in the country to launch a
dedicated gilt scheme investing only in government
securities.Kotak Mahindra Old Mutual Life Insurance
LimitedKotak Mahindra Old Mutual Life Insurance Limited, is
a joint venture between Kotak Mahindra Bank Ltd. and Old
Mutual plc. Kotak Life Insurance helps customers to take
important financial decisions at every stage in life by offering
them a wide range of innovative life insurance products, to
make them financially independent.

XV

INTRODUCTION TO KOTAK MAHINDRA BANK


LTD.

Kotak Mahindra is one of India's leading financial institutions,


offering complete financial solutions that encompass every
sphere of life. From commercial banking, to stock broking, to
mutual funds, to life insurance, to investment banking, the
group caters to the financial needs of individuals and
corporates.
3,000 employees in its various businesses. With a presence
in 60

XVI

cities in India and offices in New York, London, Dubai and


Mauritius, it services a customer base of over 5,00,000.
Kotak Mahindra has international partnerships with Goldman
Sachs (one of the world's largest investment banks and
brokerage firms),
cities in India and offices in New York, London, Dubai and
Mauritius, it services a customer base of over 5,00,000.

Ford Credit (one of the world's largest dedicated automobile


financiers) and Old Mutual (a large insurance, banking and
asset management conglomerate). Apart from this kotak
has also ventured a long way in to different retail banking
and securities services.

XVII

ORGANISATION CHART

XVIII

No.
1

Name of the Company


Kotak Mahindra Capital Company Limited

Directors
Uday Kotak (C)
Ajay Sondhi (VC & MD)
Shanti Ekambaram
N.J. Jhaveri
Dipak Gupta
Richard Gnodde

XIX

Tim Leissner
Noel Sephton (Alt. to Richard
Gnodde)
2

Kotak Securities Limited

Uday Kotak (C)


C. Jayaram
Narayan S.A. (MD)
Ajay Sondhi
Falguni Nayar (ED)
Sanjiv Bhatia
Jenny Finney
Noel Sephton (Alt. to Jenny
Finney )

Kotak Mahindra Primus Limited

Uday Kotak (C)


Dipak Gupta
Gaurang Shah
C. Jayaram
Narpal Ahluwalia
Pankaj Desai
Michael Kozel
Gregory Cohen

Kotak Mahindra Old Mutual Life Insurance


Limited

Uday Kotak (C)


Shivaji Dam (MD)
Dipak Gupta
Hasan Askari
James Harry Sutcliffe
Vineet Nayyar
Pallavi Shroff
S.S. Thakur
M.G. Diwan

Kotak Mahindra Asset Management Co.


Limited

Uday Kotak (C)


R.C. Khanna
Sukant Kelkar
C. Jayaram
Narayan S.A.

XX

Bipin R. Shah
6

Kotak Mahindra Trustee Company Limited

Amit Desai (C)


Chandrashekhar Sathe
Girish Sharedalal
Tushar Mavani
Anirudha Barwe

Kotak Mahindra Private-Equity Trustee Ltd. Shailesh Haribhakti (C)


M.R. Punja
Chandrashekhar Sathe

Kotak Forex Brokerage Limited

Uday Kotak
Dipak Gupta
Chandrashekhar Sathe

Kotak Mahindra Investments Limited

Dipak Gupta
Jaimin Bhatt
Shanti Ekambaram
K V S Manian
R. Sundarraman

10

Kotak Mahindra (International) Ltd.

Kishore Sunil Banymandhub


Ashraf Ramtoola
Ravi Lochan Pola
Paul Parambi
Shyam Kumar

11

Kotak Mahindra (UK) Limited

Paul Parambi
Shyam Kumar
Viswanathan Varadarajan

12

Kotak Mahindra Inc.

Paul Parambi
Ravi Lochan Pola
Viswanathan Varadarajan
Shyam Kumar

13

Global Investment Opportunities Fund Ltd. Uday Kumar Gujadhar


Yuvraj Kumar Juwaheer
Paul Parambi
Shyam Kumar
Ravi Lochan Pola

XXI

14

Kotak Mahindra Securities Ltd.

Chandrashekhar Sathe
Shanti Ekambaram
Jaimin Bhatt

HISTORY OF INDIAN TRADE FINANCE

Historically, the Indian government has pursued a


cautious policy with regard to financing budgets,

XXII

allowing only small amounts of deficit spending. Budget


deficits increased in the late 1980s, and the necessity
of financing these deficits from foreign borrowing
contributed to the 1990 balance of payments crisis. The
central government budget deficit reached 8.4 percent
of GDP in FY 1990, up from 2.6 percent in FY 1970, 5.9
percent in FY 1980, and 7.8 percent in FY 1989. The
deficit was cut to 5.9 percent in FY 1991 and 5.2
percent in FY 1992, but widened to 7.4 percent in FY
1993. It was expected to recede to 6.2 percent in FY
1995.
The central government's budget deficits during the
1980s increased the total public debt rapidly until in FY
1991 it stood at Rs3.9 trillion. The bulk of this debt was
owed to citizens and domestic institutions and firms,
particularly the central bank. Readers of Indian
monetary statistics should be alert to the use of the
terms lakh (see Glossary) and crore (see Glossary),
which are used to express higher numbers.
India Monetary Process
The basic elements of the financial system were
established during British rule (1757-1947). The
national currency, the rupee, had long been used
domestically before independence and even circulated
XXIII

abroad, for example, in the Persian Gulf region. Foreign


banks, mainly British and including some from such
other parts of the empire as Hong Kong, provided
banking and other services. The Reserve Bank of India
was formed in 1935 as a private bank, but it also
carried out some central bank functions. This colonial
banking system, however, was geared to foreign trade
and short-term loans. Banking was concentrated in the
major port cities.

The Reserve Bank was nationalized on January 1, 1949,


and given broader powers. It was the bank of issue for
all rupee notes higher than the one-rupee
denomination; the agent of the Ministry of Finance in
controlling foreign exchange; and the banker to the
central and state governments, commercial banks,
state cooperative banks, and other financial
institutions. The Reserve Bank formulated and
administered monetary policy to promote stable prices
and higher production. It was given increasing
responsibilities for the development of banking and
credit and to coordinate banking and credit with the
five-year plans. The Reserve Bank had a number of
tools with which to affect commercial bank credit.

XXIV

After independence the government sought to adapt


the banking system to promote development and
formed a number of specialized institutions to provide
credit to industry, agriculture, and small businesses.
Banking penetrated rural areas, and agricultural and
industrial credit cooperatives were promoted. Deposit
insurance and a system of postal savings banks and
offices fostered use by small savers. Subsidized credit
was provided to particular groups or activities
considered in need and which deserved such help. A
credit guarantee corporation covered loans by
commercial banks to small traders, transport operators,
self-employed persons, and other borrowers not
otherwise effectively covered by major institutions. The
system effectively reached all kinds of savers and
provided credit to many different customers.
The government nationalized fourteen major private
commercial banks in 1969 and six more in 1980.
Nationalization forced commercial banks increasingly to
meet the credit requirements of the weaker sections of
the nation and to eliminate monopolization by vested
interests of large industry, trade, and agriculture.
The banking system in India expanded rapidly after
nationalization. The number of bank branches, for
XXV

instance, increased from about 7,000 in 1969 to more


than 60,000 in 1994, two-thirds of which were in rural
areas. The deposit base rose from Rs50 billion in 1969
to around Rs3.5 trillion in 1994. Nevertheless, currency
accounted for well over 50 percent of all the money
supply circulating among the public. In 1992 the
nationalized banks held 93 percent of all deposits.
In FY 1990, twenty-three foreign banks operated in
India. The most important were ANZ Grindlays Bank,
Citibank, the Hongkong and Shanghai Banking
Corporation, and Standard Chartered Bank.
Public-sector banks in India are required to reserve their
lending based on 40 percent of their deposits for
priority sectors, especially agriculture, at favorable
rates. In addition, 35 percent of their deposits have to
be held in liquid form to satisfy statutory liquidity
requirements, and 15 percent are needed to meet the
cash reserve requirements of the Reserve Bank. Both
these percentages represent an easing of earlier
requirements, but only a small proportion of publicsector banks' resources can be deployed freely. In late
1994, the rate of interest on bank loans was
deregulated, but deposit rates were still subject to
ceilings.
XXVI

More than 50 percent of bank lending is to the


government sector. With the onset of economic reform,
India's banks were experiencing major financial losses
as the result of low productivity, bad loans, and poor
capitalization. Seeking to stabilize the banking industry,
the Reserve Bank of India developed new reporting
formats and has initiated takeovers and mergers of
smaller banks that were operating with financial losses.
India has a rapidly expanding stock market that in 1993
listed around 5,000 companies in fourteen stock
exchanges, although only the stocks of about 400 of
these companies were actively traded. Financial
institutions and government bodies controlled an
estimated 45 percent of all listed capital. In April 1992,
the Bombay stock market, the nation's largest with a
market capital of US$65.1 billion, collapsed, in part
because of revelations about financial malpractice
amounting to US$2 billion. Afterward, the Securities and
Exchange Board of India, the government's capital
market regulator, implemented reforms designed to
strengthen investor confidence in the stock market. In
the mid-1990s, foreign institutional investors took
greater interest than ever before in the Indian stock

XXVII

markets, investing around US$2 billion in FY 1993


alone.
Despite increases in energy costs and other pressures
from the world economy, for most of the period since
independence India has not experienced severe
inflation. The underlying average rate of inflation,
however, has tended to rise. Consumer prices rose at
an annual average of 2.1 percent in the 1950s, 6.3
percent in the 1960s, 7.8 percent in the 1970s, and 8.5
percent in the 1980s.
Three factors lay behind India's relative price stability.
First, the government has intervened, either directly or
indirectly, to keep stable the price of certain staples,
including wheat, rice, cloth, and sugar. Second,
monetary regulation has restricted growth in the money
supply.
Third, the overall influence of the labor unions on wages
has been small because of the weakness of the unions
in India's labor surplus economy.

XXVIII

AREA OF ACTIVITY UNDERTAKEN UNDER THE


PURVIEW OF PROJECT STUDY:
WHAT IS TRADE FINANCE?
Trade is your business. Making it happen faster is job. Kotak
Mahindra Bank offers an entire gamut of trade finance
services to cover your trade finance needs. This includes
both Export & Import finance, Inland Bill Discounting and Bill
Collection Remittances, Bank Guarantee. We have a
dedicated trade finance team that has a rich experience in

XXIX

understanding customer needs to structure various Trade


Finance products.

SERVICES PROVIDED UNDER TRADE FINANCE

Domestic : Bills Discounting


Bnaks experienced and dedicated trade finance team is
focused on structuring bill discounting products to meet
customer needs be it short term or medium term finance.
In fact, banks services go beyond plain bill discounting to
encompass a complete range of supply chain management
solutions.They aim at increasing the efficiency of the entire
cycle, ensuring that transactions are executed speedily and
effectively. They will soon offer integrated supply chain
services on an electronic platform.

Domestic : Invoice Discounting


Invoice discounting entails "discounting" an accepted
invoice / bill for the sale of goods to provide working capital.
They offer to the clients the dual advantage of simple
XXX

documentation and absence of collateral requirements.


Finance is extended either by crediting the current account
of the supplier or by issuing a pay order .

Domestic : Purchase Order Financing


Purchase order financing is an innovative program where
they offer flexible finance to supply chain partners of
corporates. This involves "discounting" a contract/ purchase
order to help finance the manufacturing cycle for goods
ordered by the corporate. This service is particularly useful
for vendors with seasonal increases in working capital
requirements
Highlights:
Service extended to key vendors identified by the
corporate
Pre-shipment loan against Purchase Order from
corporate
Corporate pays the bank directly for all supplies by the
vendor
Maximum tenure is currently 45 days.

XXXI

International : Exports
PRESHIPMENT CREDIT:
They offer pre-shipment credit to exporters by way of
packing credit, enabling them to finance operations like
purchase/import of raw materials or processing and packing
of export goods. Exporters can avail of this pre-shipment
credit either in rupees or foreign currency

Post-Shipment Credit
They offer post-shipment credit to exporters, helping them
finance export sales receivable for the time lag between
shipment of goods and date of realization of export
proceeds. Exporters can avail of the following services:
Negotiation/ payment/ acceptance of export documents
under letter of credit
Purchase/ discount of export documents under confirmed
orders/export contracts etc.
Advances against export bills sent on collection basis
Advances against exports on consignment basis
Advances against undrawn balance on exports
Advances against approved deemed exports

XXXII

Exporters can avail of this post-shipment credit either in


rupees or foreign currency.

Bills and Collections


They have a strong, experienced trade finance team
that focuses on client trade-related requirements,
whether domestic or international. This team advises
and guides clients on documentation and transactions
ensuring:
Quick turnaround times through smooth document
processing
Faster payments through constant follow-ups with
correspondent banks for timely recovery of funds
Cost effectiveness
Better reach
Excellent trade support
Arrangement of credit reports of overseas parties
Specialised advice on international trade related issues
as well as technical issues such as ECM requirements,
RBI reporting, new circulars and international
developments

XXXIII

They have developed a global network of correspondent


banks that enables them to handle large volume collection
portfolios. Theyoffer world-class facilities for handling
collections related to international trade.
They also handle documents where proceeds have been
received by the exporter on an advance payment basis and
the actual shipment takes place later. In such cases, the
documents need to be accompanied with an Foreign Inward
Remittance Certificate (FIRC) as proof of receipt of the
advance payment.

Inward Remittances
They facilitate Foreign Inward Remittance (foreign
exchange received by a person in India through banking
channels) and offer convenient modes of operations for
quick and easy disbursement.

XXXIV

The facility is extended through arrangements with reputed,


correspondent banks located in most countries around the
world.

International : Imports : Letter of Credit


They offer to there customers import financing services
through Letters of Credit (L/C) which are well accepted
globally and supported by a strong trade finance setup.
They have correspondent banking arrangements with a large
number of banks worldwide for this service.There trade team
is equipped to structure solutions for a variety of purchase
requirements, ranging from simple L/Cs to revolving L/Cs, bid
bonds, Standby L/Cs and other performance guarantees

Bills and Collections


They have a strong, experienced trade finance team that
focuses on client trade-related requirements, whether
domestic or international. This team advises and guides
clients on documentation and transactions ensuring:

XXXV

Quick turnaround times through smooth document


processing
Faster payments through constant follow-ups with
correspondent banks for timely recovery of funds
Cost effectiveness
Better reach
Excellent trade support
Arrangement of credit reports of overseas parties
Specialised advice on international trade related issues
as well as technical issues such as ECM requirements,
RBI reporting, new circulars and international
developments

They have developed a global network of correspondent


banks that enables them to handle large volume collection
portfolios. We offer world-class facilities for handling
collections related to international trade.

Outward Remittances
There services in this area include:
Payment of direct Import Bills: Processing and
remittances for Import Bills directly received by
importers in India.
XXXVI

Advance payment towards imports: Processing and


remittances towards advance payment for imports.
Other outward remittances like dividend payouts, ECB
payments, royalty, shipping, etc.

Treasury Products

They have a state-of-the-art dealing room situated at


Nariman Point, Mumbai. The dealing room handles inter-bank

XXXVII

transactions

and

corporate

foreign

exchange

flows

generated by the various branches.

Products
Spot foreign exchange transactions (for value up to two
business days)
Forward

foreign

exchange

transactions

(for

value

greater than two business days)


Inward/outward remittances
Derivatives such as Options,Currency Swaps, etc.

Services
Active dealings in the inter-bank market for major
currencies, spot and forwards
Quick and competitive dealing in prices in major
currencies
customised solutions for specific client exposures
Trading recommendations based on technical analysis
Regular fundamental analysis
Established correspondent banking relationships

XXXVIII

Treasury Products : Money Market


There Money Market and Fixed Income Desk is an active
player in the Rupee markets and caters to the treasury
requirements of clients across the Inter-Bank, Co-operative
bank, Corporate, Pension Fund and Trust sectors.
With an active sales force in Mumbai, Delhi, Kolkata,
Chennai, Bangalore and Ahmedabad They are equipped to
meet client requirements across the country. Here they also
offer the entire spectrum of services involved in the
origination and placement of corporate debt.

Our Money Market Desk offers:


Fixed Income Solutions
Short Term Needs: Purchase/ Sale of Treasury Bills,
Commercial Paper, Certificate of Deposits
Long Term Needs: Purchase/ Sale of Government and
Corporate Debt
Distribution Needs: Placement of Debt Issues
Depository Needs: Constituent SGL Facility
Retail Needs: Purchase/Sale of instruments in smaller
lots is also offered.

XXXIX

Derivative Solutions
Hedging Needs: Market Maker in the Rupee interest
Rate swap market in tenors upto 5 years

Research : Overview

We know how important it is for our corporate clients to


keep their finger on the pulse of fluid market dynamics and
stay on top of economic and market trends.

Our Fixed Income Research is focused on in-depth analysis of


key issues influencing the Indian debt, money and foreign
exchange markets. Our unique approach to the analysis of
economic and financial news is documented in a full range of
research products. These provide insights on asset
XL

allocation, identify significant market trends and publish


global forecasts on economic activity, policies, interest-rates
and the Indian rupee. All our research is geared towards
highlighting opportunities for our customers.
Our Research products include:
The Daily Forex Monitor (DFM) that tracks the Indian and
International foreign exchange markets and opines on
currency strategies on a daily basis.
The Weekly Money Market Update that details the
developments in money markets and provides a short-term
interest-rate view along with indicative pricing for Triple A
credits.
The monthly FINSEC that details the significant macroeconomic indicators, developments in fixed income markets
and the conduct of Government / Central bank monetary
policy. It also documents our views on market trends for the
coming month and assesses the investment outlook.
The FINSEC Focus that attempts to identify and analyse
significant lead indicators of real economic activity to aid
forecasts. The 'Back to School' section covers the theoretical
understanding of various economic concepts.

XLI

PROCEDURE THAT WAS UNDERTAKEN TO


FULFILL THE PROJECT OBJECTIVE
The project that was given to me required me to contact the
procurement department of each and every company that
was mentioned under the scope of my project. Basically my

XLII

project would require me to collect all of the primary


information about the institution which could be availed of
either by observation or but mutual talks which ever way it
could be convienient.after having the primary information
about an organization Includes proceed further in the
direction of my getting the primary information about kind of
raw material that could be used with in the organization.
Though relating all the information and getting all the
information required was a tough task but that was been
made possible by support of bank staff and my project guide.
I was given sufficient time to make an amount of interactive
level that would aloe me to get an critical information that
was required for accomplishment of the project. Actually my
project required an list of vendors of all of the companies
under my portfolio which could allow bank to garner the
trade financing relationship with them by having there
suppliers business being financed by us.

COLLECTION OF DATA:
By and large in to the primary round of collecting a data
front companied regarding there list of vendors the method
used was verbal communication and contacts.
After which using an instrument called questionnaire did
contacting and collecting information from the vendors. The

XLIII

basic need for having a method of collection was lack of time


with vendors to have a long verbal communication and also
some of the critical information that was to be collected hard
for that matter.

CONTENTS OF QUESTIONNAIRE:
Being a research document it was taken care to be tested
first and then applied as an instrument to have a final
decision being made based on that. At very inception stage
my project guide took an special effort to have an pilot study
of an instrument done so that it would perfectly suffice the
purpose for which it was been administered.

ANALYSIS OF DATA COLLECTED:

Already most of the vendors were having there trade


being financed from other banks

XLIV

The only differentiating factor for the banks were


there services
Our bank could very well succeed in the market for
creditability and rapport with the market that
mahindras are carrying
Kotak mahindra bank evokes an absolutely positive
kind of an response which shows presence of one
year old bank in to the market
In the field of corporate finance your contacts are
your business
Relationship maintenance and making truly customer
a king are very well fitted jargons over here
Trade finance requires lot of awareness from your side
also.
We need to be updated with each and every
development.
Most of the vendors were ready to change there
current trade financing bank if better terms were
made available
Another important differentiating factor was hassle
free financing that would require minimum
documentation and information.
We need to be highly careful of our premium clients
who give us an wholesome business.

XLV

Great amount of research work goes in to for having


an current developments notified to the clients.

XLVI

FIANCIAL OVERVIEW

XLVII

XLVIII

XLIX

LI

LII

LIII

LIV