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1
INTRODUCTION
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BRIEF HISTORY
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REASONS FOR THE GROWTH OF INTERNATIONAL
BANKING
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Though international banking concept is quite old, it has acquired certain
new characteristics and dimensions.
The maturities have risen considerably and now the average maturities
are about ten years. Banks have started diversifying their sources of
funds along with the assets.
Apart from the above, two novel kinds of overseas bank operations
characterized international bank expansion in the late 1960s and 1970s.
ii) The shell branch, which is not really a bank but a device to get
around the domestic government regulation, was created.
RECENT TRENDS
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In the past two decades, people around the world have come
across complex developments in the financial sector which
have evolved gradually.
TABLE 1
International banks are organized in various formal and informal ways from
simply holding account with each other to holding common ownership.
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i) CORRESPONDENT BANKING – This represents an informal
linkage between banks and its customers in different countries.
The linkage is setup when banks maintain correspondent accounts
with each other and facilitates international payments and
collections for customers.
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Equity portfolio management
Balanced portfolio
Private international banks also provide wide ranging personal services for
international clients on similar lines as those provided for domestic clients.
Banks in the international arena are playing a vital role in bringing various
sectors together.
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financial centres in Singapore and Hong Kong and representative office at
Kuala Lumpur, Malaysia.
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1 Bangalore City Bangalore
2 Mysore Bangalore
3 Treasury Branch, Mumbai Mumbai
4 D. N. Road, Mumbai Mumbai
5 Nariman Point, Mumbai Mumbai
6 Worli, Mumbai Mumbai
7 Church Gate, Mumbai Mumbai
8 Santa Cruz Mumbai
9 Pune Camp Mumbai
10 Guntur Hyderabad
11 Hyderabad Main Hyderabad
12. Visakhapatnam Hyderabad
13. Jubilee Hills Hyderabad
14. International Banking Branch- Chennai
Chennai
15. Mount Road Chennai
16. Tuticorin Chennai
17. Tirupur Chennai
18. Pondicherry Main Chennai
19. International Banking Branch, Kolkata
Kolkata
20. Park Street, Kolkata Kolkata
21. Johar Bazar, Jaipur Jaipur
22. M. I. Road, Jaipur Jaipur
23. M. G. Road, Ernakulam Trivandrum
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24. Trivandrum Trivandrum
25. Quilon Trivandrum
26. Cochin Main Trivandrum
27. Parliament Street, New Delhi New Delhi
28. Nehru Place, New Delhi New Delhi
29. Defence Colony, New Delhi New Delhi
30. Sector 17B, Chandigarh Chandigarh
31. Bhiwani Chandigarh
32. Civil Lines, Ludhiana Chandigarh
33. Jalandhar City Jalandhar
34. Phagwara Jalandhar
35. Shimla Main Shimla
36. Barotiwala Shimla
37. Silpukhuri, Guwahati Guwahati
38. Goalpara Guwahati
39. Shillong Guwahati
40. Karimganj Guwahati
41. Giridih Ranchi
42. Ashok Market, Bhubaneswar Bhubaneswar
43. Nehru Park, Jodhpur Jodhpur
44. Bhadohi Varanasi
45. Mirzapur Varanasi
46. Chandpur Varanasi
47. Moradabad Main Bareilly
48. Arera Colony, Bhopal Bhopal
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49. New Palasiya, Indore Indore
50. Cooch Behar Salt Lake
51. Ashram Road, Ahmedabad Ahmedabad
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1. PRODUCTS & SERVICES:
All the facilities are subject to the prevalent rules & guidelines of the
Bank and RBI. Brief details of services provided are as under:-
3. Finance/Services to Exporters
4. Finance/Services to Importers
5. Remittances
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6. Forex & Treasury Services
Repatriability
Tax Exemption
The Deposit is exempted from Indian Wealth tax. Interest is exempted from
Indian Income tax.
Choice of Currency
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Place your deposit in any of the six international currencies USD, GBP,
Euro, JPY, AUD & CAD.
For deposit at any of our authorized branches in India, please remit money
to our Treasury Branch Mumbai accounts with full details.
Customers can remit in any convertible currency. UCO Bank shall convert it
in any of the above six currencies of your choice.
During the customers visit to India the customer may also tender foreign
currency notes/travelers cheques to UCO banks branches.
There is no upper ceiling; customer can put any amount in these deposits.
The minimum amount for each currency is:
Pease check the list of UCO Banks branches spread across India
accepting FCNR Deposits.
Automatic Renewal
Joint account
Customer can open a joint account with the bank with other Non-Resident
Indian(s).
Nomination
Repatriability
Permitted for bonafide purposes for self & dependents including exchange
required for travel, other personal purposes and investments.
Choice of Currency
Place the deposit in any of the six international currencies USD, GBP, Euro,
JPY, CAD and AUD.
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3) NON RESIDENT EXTERNAL (NRE) DEPOSITS :
NRO a/c may also be opened by foreign exchange remitted through normal
banking channels.
All types of a/c like SB, CD and all term deposits as applicable to domestic
deposits can be opened Interest rates are as per domestic deposits.
Interest is taxable.
You can open Savings Bank, Current, Recurring and Fixed Deposit
accounts with us.
Authorized Branches
For our Indian branches accepting Indian Rupee NRE Deposits, please get
in touch with NRI Relationship Centre at our Head Office or the respective
Regional Offices of your choice.
Interest Rate
For NRE accounts you can remit in any convertible currency. We shall
convert it in Indian Rupees.
REMITTANCE TO INDIA
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Remit through us EITHER to your own account with us or any other bank
OR to your near and dear ones.
Just walk in to any of our branches in Singapore and Hong Kong or call
them for assistance.
Just send full remittance instructions to your bank for a direct credit into our
Treasury Branch Mumbai Account with correspondents.
Through Drafts/Cheques
Send your Bank Drafts or Cheques to any of our branches in India with full
particulars of remittance/beneficiary.
If you are remitting from Singapore or Hong Kong, avail the facility of
remittance provided by our overseas branches.
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1. LOANS TO NRIs
Against Deposits
Bank gives loans against NR deposits to NRI deposit account holder and
third parties in Indian Rupees.
Bank gives loans against FCNR (B) deposits to NRI deposit account holder
in foreign currency in India. This facility is available at our overseas
branches, subject to local directives, if any in that country.
NRIs can avail of loans for purchase of a residential plot of land for
residential use.
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3. Loans against existing residential property
Education
Business
Medical treatment
Prohibition:
The proceeds of rupee loan should not be utilised for any of the following
activities:
The foreign currency denominated loans in India are granted out of the pool
of foreign currency funds of the Bank in FCNR Deposit etc. accounts as
permitted by Reserve Bank of India. These loans are commonly known as
FCNR Loans.
UCO also allows loans in foreign currency to NRIs against their FCNR
Deposits at the Indian Branches. The details are available in NRI
banking section.
With presence at two major financial centers of the world, UCO has foreign
currency resources to arrange /grant Foreign Currency Loans to Indian as
well as multinational corporate’s at the competitive rates.
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(ECB) Policy of Govt. of India/RBI.
3. FINANCE/SERVICES TO EXPORTERS
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TYPES of FACILITIES FOR EXPORTS
UCO provides both pre and post shipment credit to the Indian exporters
through Rupee Denominated Loans as well as foreign currency loans in
India. Credit facilities are sanctioned to exporters who satisfy credit
exposure norms of UCO. Exporters having firm export orders or confirmed
L/C from a bank are eligible to avail the export credit facilities.
Rupee export credit is available for a maximum period of 180 days from the
date of first disbursement. In deserving cases extension may be permitted
within the guidelines of RBI. The corporate’s may also book forward
contracts with UCO in respect of future export credit drawls, if required, as
per the guidelines/directives provided by RBI.
UCO offers PCFC in the foreign currency to the exporters enabling them to
fund their procurement, manufacturing/processing and packing
requirements. These loans are available at very competitive international
interest rates covering the cost of both domestic as well as import content
of the exports.
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The corporate’s /exporters with a good track record can avail a running
account facility with UCO for PCFC. PCFC in foreign currency is available
for a maximum period of 180 days from the date of first disbursement
similar to the case of Rupee facility.
Features:
In the PCFC drawls permitted in a foreign currency other than the currency
of export, exporter bears the risk in currency fluctuations. The foreign
currency drawls are restricted to major currencies at present. In case, the
export order is in a non-designated currency, PCFC is given in US$. For
orders in Euro, Pound Sterling and JPY, PCFC can be availed in the
respective currencies or US$ at the choice of exporter.
Multi-currency drawls against the same order, are not permitted at present
due to operational inconvenience.
Repayment:
PCFC is to be repaid with the proceeds of the export bill submitted after
shipment. In case of cancellation of export order, the PCFC can be closed
by selling equivalent amount of foreign exchange at TT selling rate
prevalent on the date of liquidation.
The PCFC in foreign currency are granted at our various branches through
our Integrated Treasury Branch in Mumbai.
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UCO's International Banking Branches and Authorized Forex Branches are
active in negotiation/discounting of sight /usance international export bills
under L/Cs opened by foreign banks as well as branches of Indian banks
abroad. UCO offers the most competitive rates.
Exporters can avail this facility from UCO to cover the bills drawn under L/C
as well as other export bills.
e) Bank Guarantees:
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4. FINANCE/SERVICES TO IMPORTERS
b) Letter of Credit:
Thus UCO's L/C facility for the purchase of goods/services etc. fulfills the
requirements of all importers to arrange a reliable supply. UCO offers this
facility to importers in India within the ambit of FEMA and Exim policy of
Govt. of India. UCO uses state of the art SWIFT network to transmit L/Cs
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and with a worldwide network of correspondents and our overseas
branches facilitates prompt & efficient services to the importers.
c) Financing of import:
Short term External Commercial Borrowings or Trade Credits for less than
three years as permitted by RBI for imports into India is allowed by our
overseas branches to Indian importers at very competitive rates. These are
generally backed by L/Cs opened by importer's bank. Indian importers can
also avail this facility from our overseas branches as roll-over credit on their
bank agreeing to extend the L/C in favor of our overseas branches.
d) Bank Guarantees:
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UCO, on behalf of importer constituents or other customers, issues
guarantees in favor of beneficiaries abroad. The guarantees may be both
Performance and Financial.
5. REMITTANCES
UCO operates in the Forex Market in India as well as abroad. In India the
inter-bank forex operations is centralized at our Integrated Treasury Branch
in Mumbai, country's undisputed financial hub. UCO's International Banking
Branches and Authorized Forex Branches undertake customer
transactions. The forex requirements of customers of other branches are
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also routed through these branches. Overseas branches undertake the
forex treasury operations in Singapore and Hong Kong centre.
All the forex treasuries are equipped with state of art technology and
professionally skilled staff to handle forex treasury operations efficiently.
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FOREX SERVICES FOR CORPORATES
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structured products suitable for Corporate’s who have large receivables or
payment obligation in foreign currencies. Derivative Desk will deal in
hedging products to hedge the market risks i.e. interest rate risk and
foreign exchange risk in Bank's balance sheet.
UCO also offers Resident individuals in India, the facility to open non-
interest bearing current account in foreign currency at the selected Indian
branches as permitted by RBI. A joint account with a resident eligible to
open RFC (D) account is permissible. Nomination facility is also permitted.
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iii) Discounting of Bills drawn under L/Cs
The foreign currency loans to the Indian corporate are granted by UCO's
overseas branches. The borrowings raised by the Indian corporate from
specified banking sources outside India are termed "External Commercial
Borrowings" (ECBs). These ECBs can be raised within the Policy
guidelines of Govt. of India/Reserve Bank of India, as applicable from time
to time. ECB includes the following:-
i) Commercial Loans
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ii) Syndicated Loans
iv) Import loans, loans from the export credit agencies of other countries.
UCO is very active in granting and arranging various forms of ECB facilities
for the Indian Corporate. UCO can offer following services to the Indian
corporate’s in respect of cross border financing:-
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TELE- BANKING
The Bank has planned to provide tele-banking facility to its valued clients in
some select branches to start with, which will be gradually extended to
more number of branches. Besides facilitating balance enquiry, customers
will be able to requisition Statement of Account by fax as well as place
requests for issuance of cheque books. Enquiries on latest Interest Rates
on deposits as also last five transactions in the account can also be made.
Instructions to stop payment too can be given by the customer through this
facility of tele-banking.
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International Banking services of State Bank of India are delivered for the
benefit of its Indian customers, non-resident Indians, foreign entities and
banks through a network of 67 offices/branches in 29 countries, spread
over all time zones. The network is augmented by a cluster of Overseas
and NRI branches within India and correspondent links with over 522
banks, the world over. Bank's Joint Ventures and Subsidiaries abroad
further underline the Bank's international presence.
The Bank has carved a niche for itself in the Euro land with branches
located in Antwerp, Paris and Frankfurt. Indian banks and corporate’s are
able to avail single-window Euro services from the Bank's Frankfurt branch.
These services include:-
A. TRADE FINANCE
Export Avenue
Rupee Export Credit (Pre-Shipment and Post-
Shipment)
prior to shipment. This would mean any loan or advance can be extended
b) A confirmed and irrevocable order for the export of goods from India
c) Any other evidence of an order or export from India having been placed
on the exporter or some other person, unless lodgment of export order
or Letter of Credit with the bank has been waived.
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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.
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SBI‘s Pre-shipment Credit in Foreign Currency (PCFC) facilitates funds in
foreign currency. SBI’s PCFC gives the choice of four different currencies in
which to operate the scheme - the US Dollar, Pound Sterling, Euro and the
Japanese Yen.
SBI has 64 branches across the country handling the PCFC facility for the
customers’ exclusive convenience. The Bank’s Foreign Department, based
at Calcutta, is the nodal centre for raising and deploying offshore and
onshore funds for lending under PCFC.
PCFC & EBR schemes go hand in hand. The operation of these schemes
is in three stages, viz.
i) Disbursement of PCFC
When the exporter has sufficient drawing power available within his overall
limit to accommodate the proposed PCFC advance, PCFC is made
available to him either in foreign currency for payment of his import bills or
in Indian rupees for purchase of domestic raw material by converting the
foreign currency of PCFC at T.T. Buying rate.
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.
LETTER OF CREDIT
IMPORT AVENUE
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This facility 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.
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.
Supplier's credit
When documents under such usance LCs are discounted by our foreign
offices and other banks, it is not based on any mandate/letter of
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comfort/guarantee given by the LC opening bank in India either on their
own behalf or at the instance of the importer, i.e.. the buyer of goods.
Indian importers are free to enjoy a credit period of 180 days on their
imports from the date of shipment provided interest for the period does not
exceed the prime rate for the currency in which the goods are invoiced.
Prior approval of RBI/GOI was required for exceeding this time limit, till
September 2002.
With a view to simplifying the procedure for imports into India, RBI, in
September 2002, decided that the Authorized dealers may approve
proposals received in form ECB for short term credit for financing, by way
of Suppliers' Credit, of import of goods into India, provided.
The credit is being extended for a period of less than 3 years. The amount
of credit does not exceed USD 20 million (approx. Rs. 94 crores now) per
import transaction.
The 'all-in-cost' per annum, payable for the credit does not exceed LIBOR +
50 basis points for credit up to one year and LIBOR + 125 basis points for
credit for periods beyond one year but less than three years.
B. CORRESPONDENT BANKING
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network Correspondent Banks forms the foundation for all international
operations of SBI. SBI has correspondent banking relations with around
522 leading banks worldwide. The Rupee Vostro accounts of International
Banks and Institutions are maintained and serviced at 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.
C. MERCHANT BANKING
Commercial loans
Syndicated loans
FCNR loans
Financing of Imports.
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1) Arranging External Commercial Borrowings (ECB)
2) Arranging and participating in international loan syndication
SBI’s 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 strong network of correspondent relationship
with top ranking banks in several countries adds to the competitive
strengths to facilitate and meet various requirements of project exporters.
Maintenance Guarantee
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E. EXPORTER GOLD CARD
Assessment norms have been simplified and for units with export turnover
up to Rs. 100 crore. Standby 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.
State Bank of India has opened the first Offshore Banking Unit (OBU) in
India at the 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.
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G.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.
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.
file it to cabinet
attach label to it
bookmark it
send to friends
save note
add it to tracker
print it
currency converter
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MERCHANT RATES AND FEES WITH REGARDS TO
INTERNATIONAL BANKING:-
A Merchant Account has a variety of fees, some periodic, others charged
on a per-item or percentage basis. Some fees are set by the merchant
account provider, but the majority of the per-item and percentage fees are
passed through the merchant account provider to the credit card issuing
bank according to a schedule of rates called interchange fees, which are
set by Visa and MasterCard. Interchange fees vary depending on card type
and the circumstances of the transaction. For example, if a transaction is
made by swiping a card through a credit card terminal it will be in a different
category than if it were keyed in manually.
DISCOUNT RATES
3-TIER PRICING
The 3-Tier Pricing is the most popular pricing method and the simplest
system for most merchants, although the new 6-Tier Pricing is gaining in
popularity. In 3-Tier Pricing, the merchant account provider groups the
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transactions into 3 groups (tiers) and assigns a rate to each tier based on a
criterion established for each tier.
QUALIFIED RATES
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A mid-qualified rate is higher than a qualified rate. Some of the transactions
that are usually grouped into the Mid-Qualified Tier can cost the provider
more in interchange costs, so the merchant account providers do make a
markup on these rates.
A merchant does not settle their daily batch within the allotted time
frame, usually past 48 hours from time of authorization.
A non-qualified rate can be significantly higher than a qualified rate and can
cost the provider much more in interchange costs, so the merchant account
providers do make a markup on these rates.
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TWO DISTINCTS sets of issues are involved in the analysis of international
banking; one set, the industrial organization issues, centers on the patterns
of expansion of foreign branches and subsidiaries of banks headquartered
in the United States, Great Britain, Japan and few other industrial countries
and on the nature of the advantage that these branches and subsidiaries
have in relation to their host country competitors. The second set, the
international finance issues, involves the role of banks in cross-border and
cross-currency financial flows, both from their head offices and from their
foreign branches and subsidiaries.
CONCLUSION
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Banks have influenced economies and politics for centuries. Historically,
collected those funds back with interest when the goods were sold. For
centuries, the banking industry only dealt with businesses, not consumers.
Bibliography
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1. BOOKS-
a) International Banking Finance
- By ICFAI
b) Merchant Banking
- By K.C. Gupta
2. WEB SITES-
a) www.icfai.org
b) www.google.co.in
c) www.flipcart.com
d) www.wikipedia.com
INDEX
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Sr.No. Topic Page No.
Executive Summary 1
TELE- BANKING 39
Import Avenue 45
Conclusion 56
Bibliography 57
“INTERNATIONAL BANKING”
PRESENTED BY
KUSHAL .P. KAMATH
T.Y. B. COM
(BANKING & INSURANCE)
Semester V
PROJECT GUIDE
PROF. GOVIND SOWANI.
UNIVERSITY OF MUMBAI.
ACADEMIC YEAR
2008-2009
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JUHU ROAD, SANTACRUZ (WEST), MUMBAI 400 054
“INTERNATIONAL BANKING”
DECLARATION
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I, Kushal .P. Kamath, of L.S. Raheja College of Arts &
Signature of Student
CERTIFICATE
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I, Prof. Govind Sowani hereby certify that Kamath Kushal of
College Seal
ACKNOWLEDGEMENT
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The satisfaction and euphoria that accompanies the successful completion
of any task would be incomplete without mentioning the names of the
people who made it possible, whose constant guidance and
encouragement crown all the efforts with success.
I’m deeply indebted to all people who have guided, inspired and helped us
in the successful completion of this project. I owe a debt of gratitude to all
of them, who were so generous with their time and expertise.
I would like to thank Mr. Govind Sowani, my project guide, for his
continuous guidance and support.
Last but not the least, I thank everybody, who helped directly or indirectly
in completing the project that will go a long way in my career, the project is
really knowledgeable & memorable one.
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