1 What Does Offshore Banking Unit - OBU Mean? A shell branch located in an international financial center.

Offshore banking units (OBUs) make loans in the Eurocurrency market when they accept deposits from foreign banks and other OBUs. OBUs' activities are not restricted by local monetary authorities or governments, but they are prohibited from accepting domestic deposits. Investopedia explains Offshore Banking Unit - OBU OBUs have proliferated across the globe since the 1970s. They are found throughout Europe, as well as in the Middle East, Asia and the Caribbean. U.S. OBUs are concentrated in the Bahamas, the Cayman Islands, Hong Kong, Panama and Singapore.

Correspondent Bank
A bank that has limited access to certain financial markets and therefore must use the services of another bank to conduct certain transactions. Correspondent banks are usually small. Agreements with other banks allow it to provide necessary services for account holders without incurring the expense of setting up a branch in another city or country.

The correspondent banks are selected with great care to ensure that our customers get the best and most reliable service in the foreign lands at most competitive rates. Outward Remittances towards imports payment and for other purposes will be affected with ease as per FEMA regulations. Quick collection of Export Bills and clear instruments through the wide network of correspondents. adequate drawing arrangements with a number of our correspondents. Remittances by way of DD / TT / Swift can be effected through any of our correspondents worldwide. The main services provided are: 1. 2. 3. 4. Collection of bills both Documentary and Clean. Advising / confirming of L/Cs opened by Indian Banks. Discounting of Bills drawn under L/Cs as well as outside L/Cs. Maintenance of foreign currency accounts (Nostro in US$, Euro, GBP at New York, Brussels and London respectively) for settlement of transactions (Link). Making foreign currency payments/ remittance on behalf of customers of Indian Banks.

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Risk Management

FX specialists develop hedging strategies in consultation with individual customers. We offer several different types of FX contracts to fit our customers' diverse needs. See below for an overview of our risk management product offerings. Our FX specialists work with commercial customers to design customized hedging strategies to minimize risk in foreign markets. We have a diverse set of product offerings to fit our customers' different needs:

Spot Contract Exchange of one currency for another for delivery two business days from the transaction date, with the exception of the Canadian dollar which is delivered one business day from the trade date.

Ideal for companies who occasionally make or receive payments in foreign currencies, or who need to arrange a foreign exchange transaction right away. Forward Contract Exchange today of one currency for another for delivery beyond two business days from the transaction date. Forward rates are based on the spot rate adjusted by the interest rate differential between the two countries.

Ideal for companies with predictable cash flows in foreign currencies in order to protect against possible adverse movements of exchange rates. Flexible Forward Similar to a regular forward, a flexible forward is a contract which will settle during a future period. Companies can strip down pieces of the principal within the predetermined "window."

Ideal for companies with regular but unpredictable cash flows in foreign currencies. This type of contract allows for flexibility with the timing of the conversion while maintaining a set conversion rate throughout the window. Non-Deliverable Forward A synthetic contract used to hedge foreign currency risk where no traditional forward market exists (such as India, China, and Brazil). No delivery of foreign currency occurs under this contract; the contract is net settled in U.S. dollars to offset the change in market pricing of the hedged foreign currency.

Ideal for companies who have foreign exchange exposure in countries where a freely traded forward market does not exist. This type of hedge is used to protect the margins on a U.S. dollar-based cash flow. Foreign Currency Swap

A contract which simultaneously combines the purchase and sale of one currency against another with two different value dates. A swap consists of a spot transaction and a forward transaction, executed simultaneously for the same quantity.

Ideal for companies already holding forward contracts that need to be adjusted due to timing issues or exposure changes. Also used to hedge inter-company loans in foreign currencies with predictable payback schedules. Foreign Currency Option The right, not the obligation, to buy or sell a currency using a call/put option against another at a specified rate (known as the strike price) at a specified date in the future.