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CLASS TYBBI SUBJECT INTERNATIONAL BANKING AND FINANCE TOPIC FUNCTIONAL OVERVIEW OF INTERNATIONAL BANKING
Market generally indicates a geographical location preferred for trading which facilitates trade by providing means of settlement and resolution of disputes. It may be defined as meetings or systematic communication by telephone , telex or other electronic means between foreign exchange dealers , brokers and banks for the purpose of transacting foreign exchanges.i.e foreign currencies.
As majority of the deals in wholesale market is between the banks, it is called as Interbank market.
Retail Market: Retail market is the market in which the travelers and tourists exchange one currency for another in the form of currency notes or travelers cheques. Total turnover and transactions size is very small.
First
Second
Third
Layer
In retail market in addition to ADs there are moneychanges who are allowed to deal in foreign currencies. Full-fledged money changers are allowed to buy and sell foreign currency and restricted moneychangers are allowed only to buy. Indian markets also has accredited brokers who match buyers and sellers. FEDAI ie. Foreign exchange Dealers Associaton Of India has made it mandatory to route deals between two ADs through brokers.
Accordingly international Banking has functions sub-grouped Customer related functions Compliance related (regulatory) functions Inter-bank functions Internal Function
(C) Finance of Project export Non Fund Based Facilities Fund Based
(D) Derivative offering (E) Remittances
Inter-bank functions
Internal Functions
2)
3) 4) 5) 6)
Pre Shipment Export Credit Post Shipment Credit Export Bill Rediscounting (EBR) Gold Card Scheme Approved by RBI Foreign Currency Import Credit Suppliers Credit
7) Bank Guarantees for Imports 8) LC for Project Exports 9) Guarantees for Project Exports Bid Bond Guarantee Advance Payment Guarantee Performance Guarantee Retention Guarantee Overseas Borrowing Guarantee Maintenance Guarantee 10) Fund Based Facilities for Project Exports 11) Remittances 12) Derivatives Offering
TREASURY FUNCTIONS
Monitoring of forex operation Structuring, marketing, facilitating execution of foreign currency derivatives Maintenance of reciprocal lines, Nostro, Vostro, and Mirror accounts
Profile of a dealer
Responsibilities of a dealer Interbank and merchant transaction Working hours of interbank market