Professional Documents
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INTERNATIONAL BANKING
SUBMITTED BY
T.Y.B.(com)
(SEMISTER Vth)
SUBMITTED TO
UNIVERSITY OF MUMBAI
PROJECT GUIDE
SONAL SAWAKAR
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SUMAN EDUCATION SOCIETY
L.N COLLEGE OF COMMERCE
INTERNATIONAL BANKING
PROJECT REPORT
SUBMITTED BY
(SEMISTER Vth)
SUBMITTED TO
UNIVERSITY OF MUMBAI
ACADAMIC YEAR
(2017-2018)
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SUMAN EDUCATION SOCIETY
L.N COLLEGE OF COMMERCE
CERTIFICATE
Principal
Internal External
Examiner College Seal Examiner
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DECLARATION
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
…………………….…………
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ACKNOWEDGEMENT
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
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EXECUTIVE SUMMARY
(A) OBJECTIVE:
(B) SUB-OBJECTIVE:
(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
in Developing Countries
3 International Bank Accounts 21
9 Conclusion 65
10 Bibliography 66
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1. International Banking
Introduction
mergers with other foreign banks. All the basic tools and concepts of
particular:
Control and communication systems are normally more complex for foreign
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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.
various services.
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Reasons for Engaging in International Banking
curve effect
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History of International Bank
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
its banks could be free from scrutiny and hence the heavy-handed
banking with practical regulations. Soon the rest of the world was “in
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In the years since they have come into greater use and thus more
obtained assets and funds, or the choice locales for their money-
known that these prejudices could not be further from the truth. They
know that these banks can safeguard their funds from the perils of
safeguard their assets and funds from the perils of undue regulation
and taxation.
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Modes of International Banking
There are a lot of available methods for entry into international banking
Correspondent Banks
not warranted due to the low volume of transactions concluded for the
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
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the domestic bank a presence in overseas markets, which permits international
transactions to be concluded.
Representative Offices
the home office, solicit loans for the home office, and develop
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residents of the U.S. if they are not engaged in international activities,
accept deposits for U.S citizens or residents and can only maintain
Limited Branches
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market is through a so-called limited federal branch. Basically, this is
condition that the foreign bank enter into an agreement with the
may be established outside the foreign bank’s home state, they are
Subsidiary Banks
the term “bank” and subsidiary” has the same meaning as those
bank. State banks are governed by the laws of the state in which they
the Currency under the National Bank Act. In United States for
Directors.
Bank Acquisitions
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Firms willing to gained access to international banking operations
Holding Company Act, the Federal Reserve Board must approve the
Bank Mergers
several reasons for a foreign bank merging with a domestic bank. For
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2. Role of International Commercial Banks in
Developing Countries
followings.
Financing Industry
scale industries. Thus, they not only provide finance for industry but
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
exchange. Moreover, they finance both exports and imports of developing countries
Financing Agriculture
In fact, the central bank depends upon the commercial banks for the
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
intervention.
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
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3. International Bank Account
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
start your offshore bank. Your bank offshore account is set up and is
spend and wire money in and out of the account through your online
system.
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
clients, or rather, low client activity, your single deposit account can
very well be the primary transaction hub. However once you start
that are used to perform larger transaction volume. In the most cases
when you start an offshore bank, your transaction frequency will not
banking software. Each client will have secure access to their account
and just like all other types of financial recording, computer systems
the actual banking takes place. Client accounts are merely a long list
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
Common items that may be necessary when setting up international bank accounts:
references
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
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
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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
Once your international bank account has been established, you will
enable you to conduct all your banking affairs from the comfort
of your home.
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International Bank Accounts and Security
Banking privacy and security is a major concern. It is a priority that
the privacy and financial safety laws are a longstanding and stable. It
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Here are some jurisdictions that are private banking financial centers:
Antigua
Bahamas
Barbados
Dominica
Gibraltar
Hong Kong
Isle of Man
Labuan, Malaysia
Liechtenstein
Montserrat
Nauru
Nevis
Singapore
Switzerland
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4. International Banking Institutions
investment.
Switzerland
Luxembourg
Lichtenstein
Isle of Man
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Banking within European Union Jurisdictions
While the scrutiny may be lower and the confidentiality and privacy
their privacy if they are subject to it--The EU Tax Directive may limit
Directive.
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The International jurisdictions that are not subject to EU laws or
the same benefits that the EU versions do, but not bound to the EU
investor or depositor looking for a specific benefit for his funds that
$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-
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,
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
domestic bank account. The client receives a bank account debit card
or credit card and online access, wire transfer access and can perform
bank account for as little as a $2500 initial deposit, and in other cases,
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privacy laws. Private accounts typically require a higher initial
accessible via phone, fax and email and attentive to your needs, yet
very discreet.
including the US, tax worldwide income. The interest rates are usually
higher and the fees are competitive. Many fortune 500 companies,
Protecting and growing the finances of our clients are our biggest
concerns.
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5. International banking regulations and privacy
for outside litigation to be brought against you and your bank account.
consideration to outline what the banking goals are and then choose
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jurisdictions does a poor job of managing and regulating their banking
activity.
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6. STATE BANK OF INDIA
Profile
Spreading its arms around the world, the SBI’s International Banking
through its four wings - the Domestic division, the Foreign Offices
division.
finance and project export finance. The Foreign Offices wing offers
currency operations.
like correspondent banking, global link services and country and bank
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
and corporate are able to avail single-window Euro services from SBI
Frankfurt.
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
SBI understands and values your Pre shipment and post shipment
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commitments…… our trade finance cell offers both Pre shipment
SBI offers Pre-shipment Credit (Packing Credit) to the exporters, for financing
This would mean any loan or advance extended to you by SBI on the
basis of:
overseas buyer;
India;
export order or Letter of Credit with the bank has been waived.
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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
shipment credit.
from India.
exported.
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shipment credit either in rupee or in foreign currency. However, if the pre-shipment
shipment credit has necessarily to be under EBR Scheme since foreign currency pre-
you need, when you are looking for funds in foreign currency. Avail it
requirements at international interest rates. Just not this, you can also
operate the scheme - the US Dollar, Pound Sterling, Euro and the
Japanese Yen. SBI has 64 branches across the country handling the
under PCFC.
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EXPORT BILL REDISCOUNTING
Introduction
Avail SBI's export bill rediscounting (EBR) for post shipment finance at
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
closed when the overseas buyer pays the bill and the export proceeds
are realized. Take your pick from any of the four designated
IMPORT AVENUE
Letter of Credit
Leverage SBI's reputation and goodwill in the global market! Avail of SBI's Letters
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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
platform.
Further, the bank's informed trade finance crew can provide you with
the importer to meet its obligation, the integrity of the exporter, the
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
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Importers get credit for a maximum period of 180 days, enabling them
domestic rates.
These facilities are useful for import by sellers in the domestic market as well as
export-related import.
Suppliers Credit
recourse to the supplier for financing up to 180 days import into India
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
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
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With a view to simplifying the procedure for imports into India, RBI,
proposals received in form ECB for short term credit for financing, by
The amount of credit does not exceed USD 20 million (approx. Rs. 94 crores now)
The 'all-in-cost' per annum, payable for the credit does not exceed 6 months LIBOR
CORRESPONDENT BANKING
Banks and Financial Institutions across the Globe. This network Correspondent
SBI has correspondent banking relations with around 522 leading banks
correspondent banking.
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
including all matters pertaining to the exchange of test keys and swift
management.
All trade and retail transactions are handled by the vast net work of SBI's branches.
The Rupee Vostro accounts of International Banks and Institutions are maintained
correspondent relationships.
their products for various applications of the SBI and its clients.
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• Setting up Standard Settlement Instructions.
• Use correct BIC Number of the branch for which the message is
been provided.
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the Agency Arrangements. Messages for paying funds into our
MERCHANT BANKING
• Commercial loans
• Syndicated loans
• FCNR loans
• Financing of Imports.
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We are internationally the most Preferred Bank by Export Credit Agencies for
SBI being an Indian entity has no India exposure ceiling. Our Primary focus is On
Insightful credit Information and helps you Maximize the Value from the
transaction.
financing the fund based and non fund based requirements of the
project exporters.
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• Exports of services are the contracts for export of consultancy, technical and
other services.
competition.
Our vast network of branches spread all over the country which are
REGULATORY FRAMEWORK
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issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management
Reserve Bank of India has laid down the authority structure for
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.
under:
Assessment norms have been simplified and for units with export
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exceeding 25 days in case of new sanctions and 15 days in case of renewals.
renewal of limits after the three year tenure as also simplified method for
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
holders. The present rate for Packing Credit up to 180 days and Post-
benchmark Prime Lending Rate. Also, SBI Gold Card holders will be
TREASURY
Profile
India's largest bank is also home to the country's biggest and most
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dealing rooms in India and abroad, backed by the assured expertise of informed
SBI's relationships with over 700 correspondent banks are also leveraged
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
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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.
own discretion.
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
Trading
The bank’s trading operations are unmatched in size and value in the
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
with over 700 correspondent banks and institutions across the globe enhance the
Banking Group (IBG) and functions under the Chief General Manager
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management of treasury functions at SBI’s foreign offices including asset liability
foreign currency interest rate swaps, cross currency swaps and forward
up by TMG.
Security.
The PMS forms part of the Treasury Dept. of State Bank of India, and is based at
Mumbai.
funds and custody of the securities related thereto. In the increasingly complex
today, even the most sophisticated investors are finding it difficult to address day to
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• investment returns
INTERNATIONAL BANKING
India has opened the first International Banking Unit (OBU) in India at the
SEEPZ Special Economic Zone, New Bank Building, Andheri (East) Mumbai
The OBU will be deemed as an overseas branch of the Bank and undertake the
following activities:
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Management Act, 1999.
in India
banks in India where both legs of the transactions are denominated in foreign
currencies.
clients
expenses
7. Buy Rupees from an Authorized Dealer in India to fund the Special Rupee
Account.
Following the USA PATRIOT Act and the final rules issued by the U.S.
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For this purpose and as permitted by the final rules, State bank of
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
and can provide higher interest rates than the legal rate in the home
rates on deposits.
world.
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
or lower rate loans based on risk and investment opportunities not available
elsewhere.
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8. Disadvantages of International Banking
banking crisis which swept the world in 2008 the only savers who
& Friedlander. Those who had deposited with the same banks
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of what the compensation limit of that country has stated thus
and tax havens, along with clearing houses, have been accused of
phone or by mail.
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
truth.
known as tax havens, exist mostly for the purpose of providing asset
banking and financial centers can present real world solutions to many
of the issues facing people looking for asset protection from pending
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divorce, poor market conditions, or extraneous litigation that is so often a marked
really saying much. In reality, those jurisdictions that the average lay
States is chief among them, with an estimate half of all of the money
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
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-
These types of facts, of course, are very rarely ever reported by news and print
astonishing figures.
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Conclusion
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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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