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PROJECT REPORT ON

INTERNATIONAL BANKING

SUBMITTED BY

T.Y.B.(com)

BANKING AND INSURANCE

(SEMISTER Vth)

SUBMITTED TO

UNIVERSITY OF MUMBAI

PROJECT GUIDE

SONAL SAWAKAR

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SUMAN EDUCATION SOCIETY
L.N COLLEGE OF COMMERCE

Rajendra Nagar, Borivali (E), Mumbai


– 400066

INTERNATIONAL BANKING
PROJECT REPORT

SUBMITTED BY

T.Y.B.Com. BANKING AND INSURANCE

(SEMISTER Vth)

SUBMITTED TO

UNIVERSITY OF MUMBAI

ACADAMIC YEAR

(2017-2018)

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SUMAN EDUCATION SOCIETY
L.N COLLEGE OF COMMERCE

Rajendra Nagar, Borivali (E),


Mumbai – 400066

CERTIFICATE

This is to certify that APARNA PRAMOD PRADHAN of B.Com. (Banking


& Insurance) has successfully Completed a project on

INTERNATIONAL BANKING for the Semester – V.

Under the guidance of Prof. SONAL SAWAKAR During the


academic year 2017-2018.

Principal

Co-ordinator (Sharda Shriyan) Project Guide

Internal External
Examiner College Seal Examiner

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DECLARATION

I Ms. APPARNA PARMOD PRADHAN from L.N. COLLEGE OF


COMMERCE Student of T.Y. BANKING AND INSURACE [Semester 5TH]
hereby submit my project on ‘INTERNATIONAL BANKING’ with reference
to ‘BANKING SECTOR.’

I also declare that the project that has been the partial fulfillment of the
requirement of the degree of “T.Y.B.Com (Banking and Insurance)” of the
Mumbai University has been the result of my own efforts.

Sign of student

…………………….…………

APPARNA PRAMOD PRADHAN

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ACKNOWEDGEMENT

I gratefully acknowledge and express deep appreciation to many people


who have made this project possible and visible. Mere thanks to our guide Prof.
SONAL SAWAKAR seems pretty small compared to the months of
tremendous support and indulgence he gave. His review, comments, corrections
and suggestions have enormously enriched my project.

Without cheerful support and motivation of our Professional Course

Co–ordinator Prof. SONAL SAWAKAR this project would not have seen the
light of the day. I am also grateful to our Principal Ms. SHARDA SHRIYAN

I also would like to thank Ms. SONAL SAWAKAR for helping me


with the expertise in the Banking Sector, without the help of this two this project
would not be possible.

It gives me immense pleasure to present this project in the course of


Banking and Insurance, and I also would like to share the credit with our
librarian Ms. ALKA WADHWANA for her valuable tips in this project and
understanding the concept of Leasing.

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EXECUTIVE SUMMARY

(A) OBJECTIVE:

This study on International Banking is important not only to


an organization, shareholders, and banking sector but also to
an Indian economy as a whole. Due to globalization and
liberalization our economy is opening its door for reforms.

(B) SUB-OBJECTIVE:

While in foreign developing countries, international banks


besides performing the usual commercial banking
functions play an effective role in their economic
development.

(C) METHODOLOGY:

BOOKS
http://www.offshoreinfo.com
International Banking and
Finance
http://www.statebankofindia.com/
http://www.offshorecompany.com
http://www.offshorebank.net/

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TABLE OF CONTENT

Sr. Page
Topics
No. No.
1 International Banking 8

2 Role of International Commercial Banks 18

in Developing Countries
3 International Bank Accounts 21

4 International Banking Institutions 28

5 International banking regulations and privacy 33

6 State Bank of India 35

7 Advantages of International Banking 59

8 Disadvantages of International Banking 61

9 Conclusion 65

10 Bibliography 66

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1. International Banking
Introduction

International Banking is a process that involves banks dealing with

money and credit between different countries across the political

boundaries. It is also known as Foreign/International Banking. In

another words, International Banking involves banking activities that

cross national frontiers. It concerns the international movement of

money and offering of financial services through off shore branching,

correspondents banking, representative offices, branches and

agencies, limited branches, subsidiary banking, acquisitions and

mergers with other foreign banks. All the basic tools and concepts of

domestic bank management are relevant to international banking.

However, special problems or constraints arise in international

banking not normally experience when operating at home. In

particular:

Business activities have to be transacted in foreign languages and under foreign

laws and regulations.

Information on foreign countries needed by a particular bank wishing to

operate internally may be difficult to obtain.

Control and communication systems are normally more complex for foreign

than for domestic operations.

Risk level may be higher in foreign markets.

Foreign currency transaction is necessary.

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International bank managers require a broader range of management

skills than managers who are concerned only with domestic problems.

It is more difficult to observe and monitor trends and activities in foreign countries.

Larger amounts of important work might have to be left to intermediaries,

consultants and advisers.

International banking deals with all banking transactions-private and

governmental- of two or more countries. Private Banks undertake

such transactions for profit; governments may be for provision of

various services.

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Reasons for Engaging in International Banking

Banks undertake international operations in order to expand their revenue/profit

base, acquire resources from foreign countries, or diversify their activities.

Specific reasons expanding operations abroad include the saturation of domestic

market; discovery of lucrative opportunities in other countries; desire to expand

volume of operations in order to obtain economy of scale. Further motives for

operating internationally are as follows:

• Commercial risk can be spread across several countries

• Facilitation of international businesses and trade

• Involvement in international banking can facilitate experience

curve effect

• Economies of scope might become available

• Reduce cost of service delivery

• Recognition and reputation

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History of International Bank

It is an unfortunate fact that Europeans have always been

subjected to relatively heavy tax burdens. This was as true on the

British Isles as it was on the continent. Faced with the prospect of

watching their hard earned assets and wealth diminish with every out-

reach of the tax collector’s hand, they were ripe for a solution. And a

solution came--the small, island nation state known as the Channel

Islands convinced these frustrated depositors that deposits placed in

its banks could be free from scrutiny and hence the heavy-handed

taxation burden. The Euros were convinced--and soon this service

thrived, with other small jurisdictions becoming savvy to this foreign

capital-attracting status and they began to revamp their banking

institutions, adopting sound, pragmatic banking rules and regulations

that eased the potential concerns of investors and depositors. The

International bank was off to a running start!

And soon the term “International banking” became synonymous with

any smaller, haven jurisdiction that offered safe, secure, confidential

banking with practical regulations. Soon the rest of the world was “in

the know”, and began to look at these havens as viable solutions to

their needs. Americans, Africans, Asians, etc., found these

international bank accounts quite useful for a myriad of reasons.

Unlike their banks at home, these international banks were not

regularly subjected to political turmoil or economic strife, and were

most welcome for their stability and asset protection benefits.

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In the years since they have come into greater use and thus more

visible, international banking accounts have been unfairly portrayed

by the media and by the larger jurisdictions as the stomping grounds

of the criminal underground--a veritable haven for their illicitly-

obtained assets and funds, or the choice locales for their money-

laundering schemes. Money-wise investors and depositors have long

known that these prejudices could not be further from the truth. They

know that international banks can be remarkably effective havens for

assets and funds in need of safe, secure, confidential keeping. They

know that these banks can safeguard their funds from the perils of

civil, economic, or political strife in their home countries. Today,

international banks continue to keep their end of the bargain and

continue to provide a safe, confidential haven for those seeking to

safeguard their assets and funds from the perils of undue regulation

and taxation.

Many a discriminating depositor has benefited from the safe,

confidential, and low taxation environment that an International

banking account has to offer. While it is important to assess your

goals and discuss these with a competent, experienced agent before

leaping into un-chartered waters, there are many unquestionable

benefits provided by establishing an international bank account. Their

reputation among depositors and investors for providing a viable

banking location featuring protection from liability and confidentiality

is growing, and international banks will continue with this hard-

earned reputation for asset protection, tax reduction, depending on

your jurisdiction, and superb confidentiality of deposits.

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Modes of International Banking

There are a lot of available methods for entry into international banking

Operations. This include; Correspondent Banks, Representative Offices,

Branches and Agencies, Limited Branches, Subsidiary Banks, Bank Acquisitions

and Bank Mergers.

Correspondent Banks

In order to adequately provide needed international banking services,

commercial banks establish a network of foreign correspondent banks

to supplement their own facilities worldwide. Frequently, the expense

of establishing a related banking entity, such as overseas branch, is

not warranted due to the low volume of transactions concluded for the

banks’ international clients. Therefore, to provide services while

keeping costs minimal, account relationships are developed with

foreign banks to facilitate international payment mechanisms between

the institutions. Deposit accounts are opened at the correspondent

banks, which enable them to make direct payments overseas by means

of debiting and crediting the respective accounts with settlement to be

made at a later date. Such accounts are termed due to (or nostro)

accounts and due from (or vostro) accounts on the bank’s books. In

addition to payment accounts, correspondent bank relationship

facilitates transactions such as letters of credit, documentary

collection, foreign exchange services, and loan services for a bank’s

international clients. Thus, the correspondent bank relationship gives

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the domestic bank a presence in overseas markets, which permits international

transactions to be concluded.

Representative Offices

A representative’s office is both the most commonly used and the

most limited in function of all foreign banking operating

internationally. The international representative office functions

mainly as liaison between correspondent banks and the parent bank.

Representative offices are usually prohibited from engaging in general

banking activities, although they may receive checks for forwarding to

the home office, solicit loans for the home office, and develop

customer relations. However, they may not receive deposits or make

loans. Generally, representative offices serve as the preliminary step

to other forms of banking activity since they are a relatively

inexpensive means of establishing a presence in a new location.

Branches and Agencies

Depending upon the extent of services that the institution wishes to

offer, either a branch or an agency may be established. The basic

definition of “branch” and “agency” may be found in the U.S.

International Banking Act of 1978. A branch is any office of a foreign

bank at which deposits are received. On the other hand, an agency is


any office at which deposits may not be accepted from citizens or

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residents of the U.S. if they are not engaged in international activities,

but at which credit balance may be maintained. Thus, the principal

difference between branches and agencies is that agencies cannot

accept deposits for U.S citizens or residents and can only maintain

credit balances related to their international activities. In addition,

agencies cannot engage in either fiduciary or investment advisory

activities with the exception of acting as custodians for individual

customers. Agencies do engage in a variety of activities to finance

international trade, such as the handling of letters of credit. Both

agencies and branches are principally active in international market.

As extensions of the foreign parent bank, branches are generally

subject to more stringent state regulation than agencies due to the

more extensive nature of their operations. The powers of a federal

branch are similar in scope of those of a national bank; these branches

possess full deposit-taking, loan, and commercial banking powers in

addition to other trust powers. They are also subject to duties,

restrictions, and limitations similar to those of a national bank

organized in the same area.

Limited Branches

In pursuant to the International Banking Activities, an additional

means by which a foreign bank may participate in foreign banking

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market is through a so-called limited federal branch. Basically, this is

an office chartered by the Comptroller of the Currency subject to the

condition that the foreign bank enter into an agreement with the

country’s apex bank or regulatory authorities restricting the branch’s

deposit-taking activities to those permitted by law. Since this office

may be established outside the foreign bank’s home state, they are

restricted to deposit taking activities of an international nature.

Subsidiary Banks

Foreign banks gain control of subsidiary banks by establishing new

institutions or by acquiring existing domestic banking institutions and

these subsidiaries generally may engage in a full line of banking

activities. With respect to the designation of a foreign bank subsidiary,

the term “bank” and subsidiary” has the same meaning as those

provides by section 2 of the Bank Holding Company Act (BHCA). A

subsidiary bank of a foreign bank may be either a national or a state

bank. State banks are governed by the laws of the state in which they

are located, while national banks are chartered by the Comptroller of

the Currency under the National Bank Act. In United States for

example, although foreign ownership is not restricted, non-U.S.

citizens may not form a majority of a national bank’s Board of

Directors.

Bank Acquisitions

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Firms willing to gained access to international banking operations

may also adopt the acquisition approach by acquiring indigenous or

domestic banks. However, the acquisition process is guided by

stringent conditions. For instance, Under the United States Bank

Holding Company Act, the Federal Reserve Board must approve the

acquisition of direct or indirect control of a U.S. bank by a domestic

or foreign bank holding company. Various factors are considered in

the approval or denial of a BHC application. These include analysis of

the competitive effect of the acquisition, the acquirer’s financial and

managerial resources, and future prospects of the bank being acquired,

community needs, and the applicant’s organizational structure.

Bank Mergers

Bank mergers is another option that is opened to those who whishes to

provide international banking services in foreign countries. There are

several reasons for a foreign bank merging with a domestic bank. For

example, this provides an expedient and economical means of

expanding into new markets; it becomes easier to establish an identity

on a state-wide basis; and the bank is able to continue smooth

operations with experienced management and personnel.

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2. Role of International Commercial Banks in
Developing Countries

While in foreign developing countries, international banks besides

performing the usual commercial banking functions play an effective

role in their economic development. These roles include the

followings.

Mobilization of Savings for Capital Formation

International commercial banks help in overcoming savings through a


network of branch banking. People in developing countries have low
incomes but the banks induce them to save by introducing varieties of
deposit scheme to suit the needs of individual depositors. They also
mobilize idle savings of the few rich. By mobilizing savings, the
banks channel them into productive investments. Thus, they help in
capital formation of a developing country.

Financing Industry

The international commercial banks finance the industrial sector.

They provide short time, medium-term and long-term loans to

industries. Besides, they underwrite the shares and debentures of large

scale industries. Thus, they not only provide finance for industry but

also help in developing the capital market, which is underdeveloped in

such countries.

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Financing Trade

The international commercial banks help in financing both internal and external

trades. The banks provide loans to retailers and wholesalers to stock which

they deal. They also help in the movement goods from one place to another by

providing all types of facilities such as discounting and accepting bills of

exchange. Moreover, they finance both exports and imports of developing countries

by providing exchange facilities to importers and exporters.

Financing Agriculture

The international commercial banks help the large agricultural sector

in developing countries in a number of ways. They provide loans to

traders in agricultural commodities. They provide finance directly to

agriculturists for the marketing of the modernization and

mechanization of their farms, for providing irrigation facilities and for

developing lands. Help in Monetary Policy: The international

commercial banks help in economic development of a country by

faithfully following the monetary policy of the country’s central bank.

In fact, the central bank depends upon the commercial banks for the

success of its monetary management in keeping with requirement of a

developing economy.

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Features of international banking
* International banks provide access to politically and economically stable

jurisdictions. This may be an advantage for that resident in areas where there is a

risk of political turmoil who fear their assets may be frozen, seized or disappear.

* Some international banks may operate with a lower cost base and

can provide higher interest rates than the legal rate in the home

country due to lower overheads and a lack of government

intervention.

* Interest is generally paid by international banks without tax


deducted. This is an advantage to individuals who do not pay tax on

worldwide income, or who do not pay tax until the tax return is

agreed, or who feel that they can illegally evade tax by hiding the

interest income.

* Some international banks offer banking services that may not be available from

domestic banks such as anonymous bank accounts, higher or lower rate loans

based on risk and investment opportunities not available elsewhere.

* International banking is often linked to other structures, such as

international companies, trusts or foundations, which may have specific tax

advantages for some individuals.

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3. International Bank Account

An Offshore Bank Account


As with any "bank", onshore or offshore, there is one primary deposit

account that is managed by software. It's been hundreds of years since

your local bank had a space reserved on the shelf for 'your money'.

Even the largest U.S. national bank has a primary deposit account and

everything is computerized. The same goes for your offshore bank,

you have your financial institution and a deposit account that is

computer managed. We assist you with acquiring and configuration of

your online banking and account management software when you

start your offshore bank. Your bank offshore account is set up and is

the transaction center of your finance company. Depositors, deposit,

spend and wire money in and out of the account through your online

system.

How Offshore Bank Accounts Work


When you start an offshore bank, your account will work the same way all bank

accounts do. Below is a diagram showing how your offshore bank account works.

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Receiving / Sending Money with Your Offshore Bank
Your primary deposit account with be with a much larger offshore

bank in a jurisdiction that you choose. Just as your local bank, having

a single account with a larger bank, here we are replicating banking

infrastructure on a smaller scale for your offshore bank. With few

clients, or rather, low client activity, your single deposit account can

very well be the primary transaction hub. However once you start

increasing the number of depositors and the amount of

inbound/outbound banking activity, it might be necessary to start

performing bulk transactions to/from your offshore bank. This is done

through a holding company that has several offshore bank accounts

that are used to perform larger transaction volume. In the most cases

when you start an offshore bank, your transaction frequency will not

require the use of holding companies to manage bulk transfers.

Offshore Bank Accounting


Your offshore bank will be fully managed by the industry leading

banking software. Each client will have secure access to their account

and just like all other types of financial recording, computer systems

will automatically account for everything. Initial deposits will be

recorded by client identification and each transaction will be

identified by secure ID and related to the client account. This is how

the actual banking takes place. Client accounts are merely a long list

of transactions that control the access to funds in the master bank

deposit account, in this case, the offshore bank account for your

finance company.

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International Bank Account Setup
Most international banks will require an eligible introducer. This is someone who

already has a relationship with the bank. InternationalCompany.com is

an eligible introducer for many financial institutions throughout the world.

Common items that may be necessary when setting up international bank accounts:

Application forms with original signatures

Valid passport copy or driver's license Banking

references

Corporate legal documents

International banks have different requirements. Once the international

bank account has been processed, the confirmation is sent typically via email.

At that time the bank will wait for a wire transfer of initial deposit in order to

activate your new account. Some expenses include opening fee, additional banking

cards (if applicable), courier and other expenses. Again, these will vary between

the international banking account providers.

Once the bank account is active, you typically receive online access to create your

user account and password. You may also receive items such as an easy-to-use digital

signature device, test key table and other enabling tools to access your account

balance and perform transactions quickly, easily, privately and securely.

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InternationalCompany.com has helped thousands of customers worldwide set

up international bank accounts and establishes private financial accounts and asset

protection plans. A trusted provider that has relationships with the right

international jurisdictions should conduct these services with you.

International banking service

Once your international bank account has been established, you will

enjoy the luxury of numerous international banking services


including:
International platinum debit credit cards, allowing you access to
your money from over 20,000 ATM machines located across
the world. Credit cards can be issued under your international
IBC name, affording you complete privacy when accessing
your funds.

Internet access to your account, ability to verify account

balances, transfer funds and make stock purchases. This will

enable you to conduct all your banking affairs from the comfort

of your home.

International trading / brokerage accounts for online trading of

stocks and bonds in global International markets.


Corporate checks can be issued in the name of your IBC name
with your IBC name printed on each check operating the same
as domestic onshore checking account.

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International Bank Accounts and Security
Banking privacy and security is a major concern. It is a priority that

you and your money are safe. InternationalCompany.com regularly

recommends banking institutions that participate in a central banking

system. The system is highly regulated and implements stringent

accounting practices, which provides a stronger infrastructure and

independent oversight for local international banks. Many institutions

provide secure and private international banking accounts to

American and foreign corporations and local government officials.

The institutions provide employment and support the local economy.

Because of the economy's dependence on the financial services sector,

the privacy and financial safety laws are a longstanding and stable. It

is critical that all prospective clients make the right choice of

jurisdiction. We perform extensive research on many of the top

international bank account providers and are glad to provide helpful

information to help you make the proper choice.

International banks in some countries participate in mandated

financial protection insurance systems. Security and privacy is taken

very seriously. International banking security and privacy is

statutorily enforced, meaning, it's the law, limiting any information

whatsoever to be shared with a third party, including foreign

governments. Naturally, laws permit international bank account

providers to share information in cases of severe criminal acts or

terrorism. Banking privacy is not taken lightly. In Switzerland, for

example, any employee violating a customer's privacy is punished

severely by law including stiff fines and jail time.

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Here are some jurisdictions that are private banking financial centers:

Antigua

Bahamas

Barbados

Channel Islands (Jersey and Guernsey)

Dominica

Gibraltar

Hong Kong

Isle of Man

Labuan, Malaysia

Liechtenstein

Montserrat

Nauru

Nevis

Singapore

Switzerland

Turks and Caicos Islands

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4. International Banking Institutions

Recommended International Banking Jurisdictions


International Banking Jurisdictions Listed in order: here is a list of the

international banking jurisdictions are the most advantageous for

providing financial safety, privacy, convenience and return on

investment.

For initial deposits of over $200,000:

Switzerland

Luxembourg

Lichtenstein

Isle of Man

InternationalCompany.com specializes in bank accounts in Switzerland;

please visit our entire section on Swiss Banking.

For deposits under $200,000, here are the recommended


jurisdictions:

Caribbean (many countries, call for details) Latvia

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Banking within European Union Jurisdictions
While the scrutiny may be lower and the confidentiality and privacy

higher in the lower tax haven jurisdictions, potential account holders

should note that an agreement between European Union members

(and those falling under its purview or jurisdiction) known as the

European Union Savings Tax Directive 2005 may adversely affect

their privacy if they are subject to it--The EU Tax Directive may limit

the confidentiality and privacy of certain accounts held in

international banks if these banks happen to be situated in a

jurisdiction subject to it.

As of this writing, the member countries of the European Union are as

follows: Austria, Belgium, Cyprus, Czech Republic, Denmark,

Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,

Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal,

Slovakia, Slovenia, Spain, Sweden, and the United Kingdom

Any jurisdictions that is a commonwealth, governed by, or a

consigner of these nations and their laws is subject to the EU Tax

Directive. Others may also willingly comply, such as Switzerland and

the United States.

Stated simply, the EU Savings Tax Directive 2005 is an agreement

between the EU Member States that allows for the exchange of

financial or transactional information. This agreement is known as the

“automatic exchange of information option” and is the hallmark of the

Directive.

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The International jurisdictions that are not subject to EU laws or

directives do not participate in this agreement and thusly afford

depositors of those jurisdictions an increased level of confidentiality.

Other International Bank Account Jurisdictions


There are many other international jurisdictions that provide many of

the same benefits that the EU versions do, but not bound to the EU

Directive. This can be an extremely important consideration for an

investor or depositor looking for a specific benefit for his funds that

just cannot be met by a jurisdiction subject to EU Directive reporting.

Though this is an important consideration, it should not automatically

be assumed that it is always most advantageous to bank in a non-EU

Directive adhering jurisdiction. If a potential depositor meets the

initial deposit amount requirements, has his banking goals in

alignment with his bank and its jurisdiction, then an established

international locations such as Switzerland can be better suited to his

needs. However, there are very competent jurisdictions not subject to

the EU Tax Directive with initial deposit requirements vastly lower

than those of the “established” jurisdictions. For example, some

jurisdictions like Panama and Belize can require as little as $500 or

$1000 US to start.

Geography
Before the internet explosion of the mid-90, account holders and
potential depositors in international banks would literally have to walk
into a bank (or send an authorized representative to do so) in order to
establish an account, transact funds, or formalize agreements. The old

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“lock box and key” method reigned supreme. However, since the mid-

90’s, there has been a veritable explosion in services heretofore

unimaginable in many service industries worldwide, and this of course

includes international banking. Gone are the days of having to

actually walk into the bank--now, most of the services are a keystroke

away, with world wide web access to accounts and funds. With credit

card like debit cards and the advent of electronic funds transfers,

virtual signatures, and the virtually limitless access to the internet,

international banking has been revolutionized into a simpler solution

for many individuals and corporations. No matter if your bank is in

the Grand Canyon state or Grand Cayman, most of the features

offered by banks are just a mouse click away. Assuming that all of the

precautions are met and adhered to, the confidentiality of any deposit

or investment is as secure as it’s ever been.

Additional Banking Information


International banking accounts operate in the same manner as any

domestic bank account. The client receives a bank account debit card

or credit card and online access, wire transfer access and can perform

the typical bank account transactions, plus more. International banks

offer many of the same conveniences and customer service. When

selecting your institution it is important that you choose the provider

that is right for your scenario.

Many international banking institutions will allow you to set up a

bank account for as little as a $2500 initial deposit, and in other cases,

much less. All of the recommended international bank account


providers are highly regulated and adhere to strict international

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privacy laws. Private accounts typically require a higher initial

deposit. However those are negotiable depending on the overall

account goals and projections. Any provider of international banking

accounts that is recommended by InternationalCompany.com is

accessible via phone, fax and email and attentive to your needs, yet

very discreet.

Your international bank account balance will earn interest, usually

free of local taxation in the bank's jurisdiction. Many countries,

including the US, tax worldwide income. The interest rates are usually

higher and the fees are competitive. Many fortune 500 companies,

including oil companies take advantage of international banking.

Some of the more popular tax haven jurisdictions have hundreds of

first-rate banks from which to choose. Financial institutions in private

jurisdictions do not report customer account information to any

foreign governments, or theirs, so it is up to the account holder to do

so. InternationalCompany.com establishes thousands of business

structures, bank accounts, privacy and protection plans worldwide.

Protecting and growing the finances of our clients are our biggest

concerns.

International Banking institutions offer a wide variety of benefits, when it comes

to privacy Switzerland is hard to beat.

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5. International banking regulations and privacy

Our international bank accounts are situated in countries with strict

confidentiality enforced by law. No information can be given to

outside parties, including foreign governments and tax authorities,

regarding your banking activities. There are no taxes rendered on

accounts. Tax avoidance not considered a crime in these countries.

There are no statures in relation to taxation, making it is impossible

for outside litigation to be brought against you and your bank account.

Banks will not even acknowledge the presence of your account.

The international banking sector is regulated far more strictly than

banks at home. Each international bank must hold greater reserves

than their domestic counterparts. All banking deposits are fully

insured. As an extra safety measure all international institutions are

rigorously audited by central banks of each jurisdiction, safeguarding

all banking deposits and the international banking system at large

Where Should an International Bank Account be Established?


It is important that the proper jurisdiction be selected when deciding

which jurisdiction to use as an international banking jurisdiction. The

majority of the international jurisdictions have prudent, sound

regulations in place geared towards safeguarding the deposits and

maintaining their confidentiality. However, some weigh their benefits

in taxation, while others in confidentiality, and so forth. Though they

all offer a comparatively confidential and secure environment, it bears

consideration to outline what the banking goals are and then choose

the jurisdiction accordingly. A small minority of the international

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jurisdictions does a poor job of managing and regulating their banking

institutions, but the informed investor or advisor will deem these as

unsuitable for themselves or their clients. Further, these poorly

organized and run jurisdictions are often manipulated by illicit

depositors and hence prove easy targets of the FATF (Financial

Action Task Force) looking for money laundering or other criminal

activity.

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6. STATE BANK OF INDIA
Profile

Spreading its arms around the world, the SBI’s International Banking

Group delivers the full range of cross-border finance solutions

through its four wings - the Domestic division, the Foreign Offices

division, the Foreign Department and the International Services

division.

The Domestic wing provides services like merchant banking, shipping

finance and project export finance. The Foreign Offices wing offers

the entire range of international trade and industrial finance products,

while the Kolkata-based Foreign Department undertakes treasury and

currency operations.

The International Services division renders specialized services

like correspondent banking, global link services and country and bank

risk exposure monitoring. Being India’s largest and most trusted

commercial bank, the SBI offers you a network of relationships

unmatched in strength and span by any other Indian financial entity.

The bank has a network of 131 offices/branches


in 32countries spanning all time zones. The SBI’s international

presence is supplemented by a group of Overseas and NRI branches

in India and correspondent links with over 522 leading banks of the

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world. SBI’s international joint ventures and subsidiaries enhance its global stature.

The bank has carved a niche for itself in Euro land with branches

strategically located in Paris, Frankfurt and Antwerp. Indian banks

and corporate are able to avail single-window Euro services from SBI

Frankfurt.

These strengths are reinforced by a dedicated and highly skilled team of

professionals deployed by the bank in each specific segment.

TRADE FINANCE

Introduction

SBI Understand there is much stake involved in Export Import business Global

economic, political situations, anything and every thing that affects you and

your business. SBI offers the trusted financial solution to all your complex

Trade finance related fund needs (both in Indian rupee and foreign currencies).

The gamut of our services include credit for both pre shipment and post shipment

activities.

EXPORT AVENUE

RUPEE EXPORT CREDIT (PRE-SHIPMENT AND POST-


SHIPMENT)

SBI understands and values your Pre shipment and post shipment

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commitments…… our trade finance cell offers both Pre shipment

and Post shipment credit in rupee denominated terms to exporters

having firm export orders or confirmed letters of credit.

Avail Rupee export credit at most competitive rates at 449 branches.

Pre-Shipment Export Credit

SBI offers Pre-shipment Credit (Packing Credit) to the exporters, for financing

purchase, processing, manufacturing or packing of goods prior to shipment.

This would mean any loan or advance extended to you by SBI on the

basis of:

a) Letter of Credit opened in your favor 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 lodgement of

export order or Letter of Credit with the bank has been waived.

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.

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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.

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;

iii. To receive advances against duty drawback receivable from Govt.

The exporter has the option to avail of pre-shipment and post-

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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. The details of pre-

shipment and post-shipment credit in foreign currency are mentioned below.

PRE-SHIPMENT CREDIT IN FOREIGN CURRENCY (PCFC)

SBI‘s Pre-shipment Credit in Foreign Currency (PCFC) is just what

you need, when you are looking for funds in foreign currency. Avail it

to meet your manufacturing, processing and packing fund

requirements at international interest rates. Just not this, you can also

cover the cost of both domestic as well as imported inputs of SBI’s

PCFC gives you 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 your exclusive convenience.

Our Foreign Department, based at Kolkata, is the nodal centre for

raising and deploying international and onshore funds for lending

under PCFC.

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EXPORT BILL REDISCOUNTING

Introduction

Avail SBI's export bill rediscounting (EBR) for post shipment finance at

international rates of interest. PCFC will be liquidated with the discounting of

bills under EBR scheme.

The foreign currency of the bill will be applied to PCFC in foreign

currency and if there is any surplus of the bill after adjusting to PCFC,

the surplus portion will be converted into Indian rupees and credited

to the exporter's CC or Current account.


The EBR advance which is a foreign currency loan will be eventually

closed when the overseas buyer pays the bill and the export proceeds

are realized. Take your pick from any of the four designated

currencies: US Dollar, Pound Sterling, Euro and the Japanese Yen.

Contact any of our 64 forex-intensive branches handling EBR.

IMPORT AVENUE

Letter of Credit

Leverage SBI's reputation and goodwill in the global market! Avail of SBI's Letters

of Credit for your purchases in international and domestic trading operations.

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SBI offers Letters of Credit to facilitate purchase of goods in international

trading operations. Backed by SBI's strong reputation, you will be able to build

better trust in trade and forge business relationships faster.

The bank's vast network of branches and correspondent banks enables

your enterprise to sustain a seamless flow of business on a wide

platform.

Further, the bank's informed trade finance crew can provide you with

sophisticated credit and trade information, and market knowledge,

helping you 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.

Foreign Currency import credit

This is ideal for both Indian importers and their foreign suppliers. SBI offers credit

to foreign suppliers of Indian importers by purchasing the import bill for its full

value through one of the bank's overseas offices. The tenor of this form of

supplier's credit does not exceed 180 days. The supplier gets 100 per cent of the

invoice value immediately, making his deal practically a cash sale.

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Importers get credit for a maximum period of 180 days, enabling them

to manage their liquidity better. Further, their interest payables could

be lower since international interest rates are currently lower than

domestic rates.

These facilities are useful for import by sellers in the domestic market as well as

export-related import.

Suppliers Credit

Suppliers' Credit essentially represents credit sales effected 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 up to 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.

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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.

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 6 months LIBOR

+ 200 basis points.

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 bank has deployed a dedicated Correspondent Relations section to

attend exclusively to create, nurture, cultivate and continue relationship in

correspondent banking.

The Correspondent Relations section helps SBI’s correspondents market and

distributes their products for various applications of the bank and its Customers.

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Meanwhile, the bank’s Foreign Department, based in Kolkata

(Calcutta), handles all operational aspects of correspondent banking,

including all matters pertaining to the exchange of test keys and swift

authenticator keys (SAK), appointment of correspondents,

maintenance and reconciliation of Nostro accounts, and treasury

management.

All trade and retail transactions are handled by the vast net work of SBI's branches.

However, only designated branches handle International Banking activities.


Designated branches enjoy delegated authority to receive/pay through the NOSTRO

accounts maintained by the Foreign Department.

The Rupee Vostro accounts of International Banks and Institutions are maintained

and serviced at SBI’s 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.

Products and Services

• Creating, nurturing, cultivating and maintaining SBI’s network of over 522

correspondent relationships.

• Providing support to the correspondents in marketing and distribution of

their products for various applications of the SBI and its clients.

Complaint Resolution of correspondents.


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• Setting up Standard Settlement Instructions.

SWIFT Channel of SBI (In India)


• Swift Linked Offices

( 146 In Number at Various Locations )

• SWIFT Authenticator Keys are centralized at SOC (Prior

Clearance of FD is required for exchange of SAKs).

• Although FD is SWIFT Linked, messages regarding fund

transfers, Letters of Credit, Guarantees, etc., should not be sent

to them. These should be sent to the branches concerned giving

Branch Code No., Name of the Branch, Name of Beneficiary

and Account No.

• Use correct BIC Number of the branch for which the message is

meant (list appended).

• Draw Payment Orders only in currencies mentioned in the schedule

of Agency Arrangements (as agreed upon between SBI and correspondents).

• Payment Instructions containing all relevant details

should be sent to the branch concerned for execution of the

payment order with specific details as to where cover funds have

been provided.

• Cover funds for remittances should be provided to the

respective Nostro account with full details viz., branch name,


code number, name of the beneficiary etc., in accordance with

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the Agency Arrangements. Messages for paying funds into our

Nostro Account without any authenticated payment instruction

directly to the drawee branch result in delay, inconvenience to

beneficiary and embarrassment to remitter. Branches may be

advised to get full details from remitter before sending

remittances (please refer to Standard Settlement Instructions).

• Payments relating to our Associates/ Subsidiaries may

not be sent to our branches as they maintain their own nostro

accounts and have their own arrangements for such payments

MERCHANT BANKING

SBI’s Merchant Banking Group is strongly positioned to offer perfect financial

solutions to your business. We specialize in the arrangement of various forms of

Foreign Currency Credits for Corporate.

We provide the resources, convenience and services to meet your needs by

arranging Foreign Currency credits through:

• Commercial loans

• Syndicated loans

• Lines of Credit from Foreign Banks and Financial Institutions

• FCNR loans

• Loans from Export Credit Agencies

• Financing of Imports.

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We are internationally the most Preferred Bank by Export Credit Agencies for

Guarantees in case of the Indian Clients or Projects.

SBI being an Indian entity has no India exposure ceiling. Our Primary focus is On

Indian Clients. SBI’s seasoned Team of professionals provides you with

Insightful credit Information and helps you Maximize the Value from the

transaction.

SBI’s PRODUCTS AND SERVICES

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

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.

• Export of engineering goods on deferred payment terms

• Execution of turnkey projects abroad

• Execution of overseas civil construction contracts abroad

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• Exports of services are the contracts for export of consultancy, technical and

other services.

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.

Our 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 covering all time zones and our strong network of

correspondent relationship with top ranking banks in several countries

adds to our competitive strengths to facilitate and meet various

requirements of project exporters. More over we also enjoy the

comprehensive credentials in International banking community.

REGULATORY FRAMEWORK

Exchange Control Regulations:

The exchange control regulations relating to Project and Service

Exports revised from time to time are contained in the Memorandum

of Instructions on Project and Service Exports (PEM) issued by

Reserve Bank of India. The directions contained in the PEM are

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issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management

Act, 1999 (42 of 1999)

Authority structure for clearance of Project Export proposals:

Reserve Bank of India has laid down the authority structure for

clearance of project export proposals based on the value of contract:

• Contract value up to USD 100 mio- Authorized Dealer

• Contract value above USD 100 mio - Working Group

Thus proposals with contract value up to USD 100 mio can be cleared at State Bank

of India and proposals with contract value above USD 100 mio, the reference to

Working Group is done by SBI as the Sponsoring Bank on behalf of our customer.

EXPORTER GOLD CARD

State Bank of India has launched "SBI EXPORTERS GOLD CARD

SCHEME" to meet the working capital needs of exporters with good


track record and credit worthiness, subject to their fulfilling the

specified eligibility norms. The salient features of the scheme are as

under:

Assessment norms have been simplified and for units with export

turnover up to Rs. 100 crore simplified assessment in terms of Nayak

Committee norms will be made within specified time norm not

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exceeding 25 days in case of new sanctions and 15 days in case of renewals.

Further relaxations, subject to certain conditions, in the form of automatic

renewal of limits after the three year tenure as also simplified method for

effecting annual step-up in limits is being examined by the Bank.

sStandby limit of 20% will be sanctioned to all the SBI Exporters Gold Card

holders over and above the sanctioned limit to meet credit demands arising out of

receipt of sudden orders.

Limits sanctioned will be valid for a period of three years.

Interest will be charged at concessional rate from the Gold Card

holders. The present rate for Packing Credit up to 180 days and Post-

shipment credit up to 365 days would be 3.75% below the Bank's

benchmark Prime Lending Rate. Also, SBI Gold Card holders will be

given preference for grant of packing credit in foreign currency.

International Credit/Debit cards and Internet Banking facilities shall

be extended to the SBI Exporters Gold Card holders on priority basis.

TREASURY

Profile

India's largest bank is also home to the country's biggest and most

powerful Treasury, contributing to a major chunk of the total turnover

in the money and forex markets. Through a network of state-of-the-art

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dealing rooms in India and abroad, backed by the assured expertise of informed

professionals, the SBI extends round-the-clock support to clients in managing their

forex and interest rate exposures.

SBI's relationships with over 700 correspondent banks are also leveraged

in extracting maximum value from treasury operations. SBI's treasury operations

are channeled through the Rupee Treasury, the Forex Treasury and the Treasury

Management Group.

The Rupee Treasury deals in the domestic money and debt markets while the Forex

Treasury deals mainly in the local foreign exchange market. The TMG monitors

the investment, risk and asset-liability management aspects of the Bank's overseas

offices.

Rupee Treasury

The Rupee Treasury carries out the bank’s rupee-based treasury functions in

the domestic market. Broadly, these include asset liability management, investments

and trading. The Rupee Treasury also manages the bank’s position regarding

statutory requirements like the cash reserve ratio (CRR) and the statutory liquidity

ratio (SLR), as per the norms of the Reserve Bank of India.

Products and Services

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• Asset Liability Management (ALM): The ALM function
comprises management of liquidity, maturity profiles of
assets and liabilities and interest rate risks.

• Investments: SBI offers financial support through a wide

spectrum of investment products that can substitute the

traditional credit avenues of a corporate like commercial

papers, preference shares, non-convertible debentures,

securitized paper, fixed and floating rate products. SBI

invests in primary and secondary market equity as per its

own discretion.

These products allow you to leverage the flexibility of financial

markets, enable efficient interest risk management and optimize the

cost of funds. They can also be customized in terms of tenors and

liquidity options.

SBI invests in these instruments issued by your company, thus providing you

a dynamic substitute for traditional credit options. The Rupee Treasury handles the

bank’s domestic investments.

Trading

The bank’s trading operations are unmatched in size and value in the

domestic market and cover government securities, corporate bonds,

call money and other instruments. SBI is the biggest lender in call.

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Forex Treasury (FX)

The SBI is the country’s biggest and most important Forex Treasury, both in the

Interbank and Corporate Foreign Exchange markets, and deals with all the major

corporate and institutions in all the financial centers in India and abroad.

The bank’s team of seasoned, skilled and professional dealers can tailor

customized solutions that meet your specific requirements and extract maximum

value out of each market situation.

The bank’s dealing rooms provide 24-hour trading facilities and

employs state-of-the-art technology and information systems. SBI’s relationships

with over 700 correspondent banks and institutions across the globe enhance the

strength of the Forex treasury.

The FX Treasury can also structure and facilitate execution of derivatives

including long term rupee-foreign currency swaps, rupee-

foreign currency interest rate swaps and cross currency swaps.

Overseas Treasury Operation

The Treasury Management Group (TMG) is a part of the International

Banking Group (IBG) and functions under the Chief General Manager

(Foreign Offices). As the name implies the department monitors the

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management of treasury functions at SBI’s foreign offices including asset liability

management, investments and forex operations.

Products and Services

• Asset Liability Management (ALM): The ALM function

comprises management of liquidity, maturity profiles of assets and

liabilities and interest rate risks at the foreign offices.

• Investments: Monitoring of investment operations of the

foreign offices of the bank is one of the principal activities of

TMG. The main objectives of investment operations at our

foreign offices, apart from compliance with the regulatory

requirements of the host country, are (a) safety of the funds

invested, (b) optimisation of profits from investment

operations and (c) maintenance of liquidity. Investment

operations are conducted in accordance with the investment

policy for foreign offices formulated by TMG.

• The activites include appraisal of the performance of the

foreign offices broad parameters such as income earned from

investment operations, composition and size of the portfolio,

performance vis-à-vis the budgeted targets and the market

value of the portfolio.

• Forex monitoring: Monitoring of forex operations of our

foreign offices is done with the objective of optimising of returns

while managing the attendant risks.

• Forex and Interest rate (Foreign Currency) derivatives:

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facilitating execution of foreign currency derivatives
including currency options, long term rupee - foreign currency swaps,

foreign currency interest rate swaps, cross currency swaps and forward

rate agreements. Commodity hedging is one of the recent activities taken

up by TMG.

• Reciprocal Lines: The department is also responsible for

maintenance of reciprocal lines with international banks.

Portfolio Management & Custodial Services

The Portfolio Management Services Section (PMS) of State bank of

India has been set up to handle investment and regulatory related

concerns of Institutional investors functioning in the area of Social

Security.

The PMS forms part of the Treasury Dept. of State Bank of India, and is based at

Mumbai.

PMS was set up exclusively for management of investments of Social Security

funds and custody of the securities related thereto. In the increasingly complex

regulatory and investment environment of

today, even the most sophisticated investors are finding it difficult to address day to

day investment concerns, such as

• adherence to stated investment objectives

• security selection quality considerations

• conformity to policy constraints

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• investment returns

The team manning the PMS Section consists of highly experienced

officers of State Bank of India, who have the required depth of

knowledge to handle large investment portfolios and address the

concern of large investors. The capabilities of the team range from

Investment Management and Custody to Information Reporting.

INTERNATIONAL BANKING

SBI OPENS INDIA'S FIRST INTERNATIONAL BANKING UNIT State Bank of

India has opened the first International Banking Unit (OBU) in India at the

SEEPZ Special Economic Zone, New Bank Building, Andheri (East) Mumbai

400,096 on 17th July 2003 -

another landmark in the history of India's Financial Sector.

The OBU will be deemed as an overseas branch of the Bank and undertake the

following activities:

1. Raise funds in convertible foreign currency as deposits and borrowings

from Non Residents sources.

2. Transact in foreign exchange with residents in India who are


eligible to enter into or undertake such transactions in terms of various Rules and

Regulations as framed under Foreign Exchange

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Management Act, 1999.

3. Open foreign currency accounts abroad as well as with other OBUs

in India

4. Trade in foreign currencies in the overseas market and also with

banks in India where both legs of the transactions are denominated in foreign

currencies.

5. Provide customized loan and liability products for the benefit of

clients

6. Maintain Special Rupee account with an Authorized Dealer in India

out of the convertible foreign exchange resources for meeting local

expenses

7. Buy Rupees from an Authorized Dealer in India to fund the Special Rupee

Account.

USA PATRIOT ACT CERTIFICATION

Following the USA PATRIOT Act and the final rules issued by the U.S.

Department of Treasury, Banks ("Foreign banks") are required to issue Certification

to U.S. banks or broker-dealers in securities ("Covered Financial Institutions")

with which they maintain Correspondent accounts.

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For this purpose and as permitted by the final rules, State bank of

India has prepared a Certification for use by any financial institution

that needs a USA PATRIOT Act Certification from State Bank of

India or one of its branches. We kindly request you to use this

Certification instead of approaching directly State Bank of India's

branches.

This Certification only covers State Bank of India and its branches and does not

cover its subsidiaries and joint ventures. If the Certification is required from
our subsidiaries and joint ventures, please contact them directly.

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7. Advantages of International Banking

International banks can sometimes provide access to politically

and economically stable jurisdictions. This will be an advantage

for residents in areas where there is risk of political turmoil, who

fear their assets may be frozen, seized or disappear. However it is

often argued that developed countries with regulated banking

systems offer the same advantages in terms of stability.

Some international banks may operate with a lower cost base

and can provide higher interest rates than the legal rate in the home

country due to lower overheads and a lack of government

intervention. Advocates of international banking often characterize.

Government regulation as a form of tax on domestic banks, reducing interest

rates on deposits.

International finance is one of the few industries, along

with tourism, in which geographically remote island nations can

competitively engage. It can help developing countries source

investment and create growth in their economies, and can help

redistribute world finance from the developed to the developing

world.

Interest is generally paid by international banks without tax being

deducted. This is an advantage to individuals who do not pay tax on worldwide

income, or who do not pay tax until the tax return is agreed, or who feel that
they can illegally evade tax by hiding the interest income.

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Some international banks offer banking services that may not

be available from domestic banks such as anonymous bank accounts, higher

or lower rate loans based on risk and investment opportunities not available

elsewhere.

International banking is often linked to other structures, such

as international companies, trusts or foundations, which may have

specific tax advantages for some individuals.

Many advocates of international banking also assert that the

creation of tax and banking competition is an advantage of the

industry. Critics of the industry, however, claim this competition as

a disadvantage, arguing that it encourages a "race to the bottom" in

which governments in developed countries are pressured to deregulate their

own banking systems in an attempt to prevent the off shoring of capital.

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8. Disadvantages of International Banking

International bank accounts are less financially secure. In

banking crisis which swept the world in 2008 the only savers who

lost money were those who had deposited their funds in

international branches of Icelandic banks such as Kaupthing Singer

& Friedlander. Those who had deposited with the same banks

onshore received all of their money back. In 2009 However only

international centers such as the Isle of Man have refused to

compensate depositors 100% of their funds following Bank

collapses. Onshore depositors have been refunded in full regardless

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of what the compensation limit of that country has stated thus

banking international is historically riskier than banking onshore.

International banking has been associated in the past with

the underground economy and organized crime, through money

laundering. Following September 11, 2001, international banks

and tax havens, along with clearing houses, have been accused of

helping various organized crime gangs, terrorist groups, and other

state or non-state actors.

International jurisdictions are often remote, and therefore costly

to visit, so physical access and access to information can be

difficult. Yet in a world with global telecommunications this is

rarely a problem for customers. Accounts can be set up online, by

phone or by mail.

International private banking is usually more accessible to those

on higher incomes, because of the costs of establishing and

maintaining international accounts. However, simple savings

accounts can be opened by anyone and maintained with scale fees

equivalent to their onshore counterparts. The tax burden in

developed countries thus falls disproportionately on middle-

income groups. Historically, tax cuts have tended to result in a

higher proportion of the tax take being paid by high-income

groups, as previously sheltered income is brought back into the

mainstream economy.

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International bank accounts are sometimes touted as the solution to

every legal, financial and asset protection strategy but this is often much more

exaggerated than the reality.

International Banking Myths


International banking comes with a stigma, so many entrepreneurs and

business professionals cringe at the mere mention that their money

can be safely kept in an International bank account. Images of fast,

expensive boats, drug kingpins, and white suits come instantly to

mind. This perception, of course, has not been helped by the

proliferation of bad Hollywood movies, television shows, and

negative portrayal in the press--they could not be further from the

truth.

The fact is that international financial centers (OFC) or banks, also

known as tax havens, exist mostly for the purpose of providing asset

protection, asset growth, tax reduction, depending on your

jurisdiction, and excellent service for foreign individuals and

corporations, large and small, around the world. While not as

glamorous nor exotic as they are so often portrayed, international

banking and financial centers can present real world solutions to many

of the issues facing people looking for asset protection from pending

lawsuits, or as a way to mitigate the ramifications of a local unstable

government. To be sure, an international bank account can also

provide asset protection from the ordinary perils of things such as

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divorce, poor market conditions, or extraneous litigation that is so often a marked

consideration in the Western world.

International Bank Accounts, Money Laundering, and


Other Criminal Activity
It would be a misstatement to state that no illicit funds find their way

into International bank accounts--but as we will soon see, that isn’t

really saying much. In reality, those jurisdictions that the average lay

person would least suspect to be guilty of this or other illegal banking

activities have turned out to be the major money laundering and

criminal enterprise-funding centers in the world. And the United

States is chief among them, with an estimate half of all of the money

laundered in the world laundered within its 50 states. This half

translates to a conservatively-achieved estimate of $300 billion US.

Of course, the United States is not the only high-tax, or “large” jurisdiction

that is home to this activity, with other countries such as the UK and Germany

sharing in this dubious distinction.

So although the haven international banking jurisdictions are perceived to be

the ideal locale for the financing of the criminal underworld, the reality is that

the high-tax jurisdictions house the vast majority of these funds, with the low-

taxation havens representing a much smaller percentage overall.

These types of facts, of course, are very rarely ever reported by news and print

media, or by the jurisdictions that are frankly quite embarrassed by these

astonishing figures.

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Conclusion

As a student of BBI I had a great opportunity to do a project of


“International Banking” which was indeed a wonderful experience
and has enhanced my knowledge in banking sector.

This study on International Banking is important not only to an


organization, shareholders, and banking sector but also to an Indian
economy as a whole. Due to globalization and liberalization our

economy is opening its door for reforms. The onset of International


banking will undoubtedly accelerate the pace of structural change
within the Indian banking system. The financial institutions as a
segment will essentially convert into banks.

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Bibliography

• http://www.offshoreinfo.com/offshore_banks_details.htm

• http://www.offshorecompany.com

• http://www.confidentialbanking.com/

• http://www.statebankofindia.com/

• http://www.offshorebank.net/

• http://www.sterlingoffshore.com

• http://taxhavenco.com

• http://www.offshorecompany.com

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