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INTERNATIONAL BANKING
PROJECT GUIDE:
SUBMITTED TO:
UNIVERSITY OF MUMBAI
Rajasthani Sammelans Ghanshyamdas Saraf College of Arts & Commerce. Affiliated to University of Mumbai, Re-accredited by NAAC with A Grade. R.S Campus, S.V. Road, Malad (West), Mumbai-400064. A.Y.2013-2014
DECLARATION
I Mr.Jigar Nagu, a student of Ghanshyamdas Saraf College of Arts and Commerce, Malad (W) hereby state that I have completed project on INTERNATIONAL BANKING in the academic YEAR 2013-2014.This information submitted is true and original to best of my knowledge.
Date:
Rajasthani Sammelans Ghanshyamdas Saraf College of Arts & Commerce. Affiliated to University of Mumbai, Reaccredited by NAAC with A Grade. R.S Campus, S.V. Road, Malad (West), Mumbai-400064. A.Y.2013-2014
CERTIFICATE
I, Prajna Shetty hereby certify that Mr.Jigar Nagu, a student of Ghanshyamdas Saraf College has complete project on INTERNATIONAL BANKING in the Academic Year 2013-2014. Thus information submitted is true and original to the best of my knowledge.
College Seal:
ACKNOWLEDGEMENT
I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving me a chance to do this project. I express my sincere gratitude to the Principal Mrs. SujataKarmarkar, Guide Prof. Prajna Shetty , librarian and other teachers for their support and helping me for completing the project. My deep sense of gratitude to the staff and employees of their support and guidance. Thanks and appreciation to the helpful people for their support. I am also grateful to my friends for giving support in my project. Lastly I want to thank each and every person who helped me in completing the project especially my parents.
EXECUTIVE SUMMARY
The globalization has intensified the activities in the international bank market to a very large extent. The competition has increased manifold and each bank is in search of mean to differentiate itself from the others. Similarly domestic banks in developing countries are striving to sustain in the market. Banks in the international arena are playing an important role in bringing various sectors together. They are bridging the gap between the lenders and borrowers in a more effective manner and are participating in enhancing the worlds output. Banks also need certain regulations to guide them. Greater domestic and foreign competition can lift the efficiency of local banks and other financial institutions. This is a development to manage, but not to impede. Supervisory oversight also needs to continuously evolve to keep pace with market changes. Basel II is an important step in this direction. Finally, accounting standards need, as far as possible, to become more harmonized internationally.
INDEX
CHAPTER NO. TOPIC PAGE NO
Executive Summary Aims and Objectives 1 2 Introduction to International Banking Characteristics and Dimensions
1
3 4 5 6
Features of International Banking International banking services by UCO bank Loans to NRI Forex Services for Corporates
7 9 17 26
7 8
International banking services to SBI(Case Study) Merchant rates and fees with regards to international banking Conclusion Bibliography
30
41
44 45
The emphasis is on the theory and practice of international banking, because of its critical importance in the modern banking framework. as the 13th century. International banking is not a new phenomenon; international bank activity can be traced back to as early In this topic we understand the difference between Indian banking and international. International banking helps us to know how important international banking for the progress of India and also for the counter. It is one of the most important factors responsible for economic growth of the nation. Banks in many nations have internationalized their operation since 1970. The quantum of operation has increased in such a manner that the concept evolved into a subject in itself. The term multinational banking signifies the presence of First, a bank may be banking facilities in more than one country. According to Aliber (1984) there are at least three different definitions of an international bank. conduct business. Toronto by said to be international if it uses branches or subsidiaries in foreign countries to For example, the scale of US dollar denominated deposits in banks with Canadian subsidiaries would constitute American
international banking; the sale of the same deposits by Canadian banks would be classified as domestic banking. A second definition of international banking relates to the currency denomination of the loan or deposit, independent of the location of the bank. Any sterling transaction undertaken by a bank headquartered in the UK would be part of British domestic banking, irrespective of whether this transaction is carried out in a British branch or a subsidiary located outside the UK. But transactions in currencies other than sterling will be part of of the actual location of the British branch. international banking, independent
A third way of defining international banking is by the nationality of the customer and the bank. If the headquarters of the bank and customer have the same national identity, then any banking operation done for this customer is a domestic activity, independent of the location of the branch or the currency denomination of the transaction. For example, all Japanese banking carried out on behalf of Japanese corporate customers would be part of the domestic banking system in Japan, even if both the branch and the firm are subsidiaries located in Wales.
HISTORY
The origin of international banking dates back to the second century BC when Babylonian temples safeguarded the idle funds and extended loans to merchants to finance the movements of goods. The loans extended by the Florentine banking houses were the first instance of international lending by the prerunners of the modern banks to the forerunners of the modern governments.
During
the
nineteenth
century
many
innovations
were
witnessed
in
the
international lending, leading to trade financing and investment banking. Trade financing started as short term lending. Of the two investments banking accounted further great bulk of the international lending and financial companies acted as agents or underwriters for the placement of funds and thus originated the concept of Capital Markets.
By 1920, American banking institutions dominated international lending, and the European nations were the major borrowers. There was perfect international banking system existing till the time of First World War. The Bretton system had installed a secured financial framework and revolutionized the economic life by creating a global shopping center. International banking speeded up after the first oil crisis in 1973. Progress in the telecommunications sector across the world supplemented the growth of international banking.
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CHAPTER II
CHARACTERISTICS AND DIMENSIONS
Though international banking concept is quite old, it has acquired certain new characteristics and dimensions. The number of participants, which at the beginning of the period were mainly American banks, has widened to include German, UK, Japanese, and French and Italian banks. Nearly three quarters of the deficit of less developed countries are financed by commercial banks operating internationally. 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. i) A multinational consortium bank, was created by several established by parent banks, and ii) The shell branch, which is not really a bank but a device to get around the domestic government regulation, was created.
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RECENT TRENDS
In the past two decades, people around the world have come across complex developments in the financial sector which have evolved gradually.
The increasing domination of securities of markets by financial institutions managed by professional bankers has led to the institutionalization of markets. Globalization has affected the financial markets in the world almost entirely.
Foremost among the global trends in the worlds financial industry are consolidation and convergence. These two encompass financially driven mergers within domestic market.
TABLE 1
CAUSES OF GLOBALISATION CONSEQUENCES OF GLOBALISATION
DEREGULATION ABROAD INCREASED CROSS BORDER INVESTMENT GREATER INSTITUTIONALIZATION ABROAD SUCCESS OF EURO-MARKETS INTEGRATION OF MARKETS WIDER RANGE OF ALTERNATIVES FOR CLIENTS MARKET COMPLEXITIES NEED FOR LARGER FIRMS
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ii)
iii)
Private international banks also provide wide ranging personal services for international clients on similar lines as those provided for domestic clients.
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The globalization has intensified the activities in the international bank market to a very large extent. The competition has increased manifold and each bank is in search of means to differentiate it from the others. Similarly domestic banks in developing countries are striving to sustain in the market. Banks in the international arena are playing a vital role in bringing various sectors together. Banks also need certain regulations to guide them.
various products and services required by exporting and importing firms is becoming easier as international sales become more and more common. expansion of the internet and the advent of e-banking are also helping to increase the number of banks that companies can work with for their international banking requirements.
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This international network is further augmented by correspondent arrangements with leading Banks at all important world centres in various countries. Thus UCO has a true global presence and can offer a variety of international banking products, services and financial solutions to all cross-sections of clients, tailor-made to their banking requirements through one of the best international banking relationship networks both in terms of strength and spread.
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DEPOSIT SCHEMES FOR NRI's 1) Foreign Currency Non resident (FCNR-B) Deposits:
Customers overseas earnings remain fully repatriable in an FCNR (B) Deposit account with UCO bank.
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Repatriability
The principal amount and interest earned are fully repatriable.
Tax Exemption
The Deposit is exempted from Indian Wealth tax. Interest is exempted from Indian Income tax.
Choice of Currency
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.
Automatic Renewal
Customers deposits are automatically renewed on maturity for the same tenure in case no other instructions are received before due date.
Joint account
Customer can open a joint account with the bank with other Non-Resident Indian(s).
Nomination
Customer can register nomination for this Account. Nomination Form
India. The overseas branches also offer foreign currency loans against these deposits, subject to rules, if any, applicable in that country.
2)
DEPOSITS:
Returning Indians for permanent settlement, after staying abroad for not less than one year, can Retain their savings in foreign currency in a RFC account with UCO Get the proceeds of FCNR (B)/NRE Deposits credited to this account
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.
3)
NRE deposits can be placed with us in following a/cs Savings Bank A/c at present interest rate is 3.5%. Fixed Deposit A/c at following interest rates For creation of NRE deposits, remittances from abroad should be made to us in convertible rupees or in any hard currencies like USD, GBP, EUR and JPY etc. Above deposits are repatriable in any currency
4)
NRO account may be opened in the following manner:Where an Indian citizen having a resident account leaves India and becomes non-resident, his resident account should be designated as NRO account. Where non-resident Indian receives income in India, he can open a NRO a/c with such funds. 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.
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
We offer attractive rate of interest on your deposits.
Joint Accounts, Power of Attorney, Nomination NRE Accounts Same as in case of FCNR (B). NRO Accounts Joint accounts with residents permitted, Nomination facility
available.
REMITTANCE TO INDIA
Remit through us EITHER to your own account with us or any other bank OR to your near and dear ones. We offer an efficient, easy and convenient channel to transfer money back home in any corner in India.
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Through our Accounts with Correspondents The most convenient way of remitting the money from any part of the world is a direct credit into UCOBANK Treasury Branch Mumbai Account with correspondents.
We have correspondent arrangements worldwide. The details of our Treasury Branch Mumbai accountsin six major currencies are placed on the web for your convenience. 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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Loan for Plot of Land for residential use NRIs can avail of loans for purchase of a residential plot of land for residential use. 3. Loans against existing residential property
NRIs can avail of loans by mortgaging an existing residential property for any of the following purposes. The loan shall be utilised for meeting the borrower's personal requirements or for his own business purposes.
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Prohibition:
The proceeds of rupee loan should not be utilised for any of the following activities: i. ii. The business of chit fund, or Agricultural or plantation activities or in real estate business, or construction of farm houses, or Trading in Transferable Development Rights (TDRs), or Investment in capital market including margin trading and derivatives.
iii. iv.
3. FINANCE/SERVICES TO EXPORTERS
UCO GOLD CARD FOR EXPORTERS
UCO launches Gold card for creditworthy exporters - Simplified access to export credit on very good terms: Better terms of credit including rates of interest than those extended to other exporters by the Bank. Processing of applications for credit faster than for other exporters.Simpler norms, subject to specific requirements in each case, if any. 'In-principle' limits for a period of 3 years with a provision for automatic renewal, subject to fulfillment of the terms and conditions of sanction. Preference for grant of packing credit in foreign currency (PCFC), subject to availability of foreign currency funds. Lower charges schedule and fee-structure than those provided to other exporters.
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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 Ifacilities 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 corporates may also book forward contracts with UCO in respect of future export credit drawls, if required, as per the guidelines/directives provided by RBI.
The corporates /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.
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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.
e) Bank Guarantees:
UCO, Indian on behalf of exporter are constituents, issued in issues guarantees to in favor of
beneficiaries abroad. The guarantees may be Performance and Financial. For exporters, guarantees compliance RBI guidelines.
4. FINANCE/SERVICES TO IMPORTERS
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b) Letter of Credit:
On account of UCO's presence in international market for decades, UCO has established itself as a well known international bank. L/Cs of UCO are well accepted in the International market. For any special requirement UCO can get the L/C confirmed by the top international banks. 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 and with a worldwide network of correspondents and our overseas branches facilitates prompt & efficient services to the importers. L/C facility is granted to the importers on satisfying credit exposure norms of the Bank.
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d) Bank Guarantees:
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, through its worldwide network of correspondents, Indian branches and overseas branches, offers prompt inward and outward foreign remittance facilities at very competitive rates. The use of SWIFT network adds to reliability and efficient handling. The remittances are handled by our International Banking Branches and
Authorized Forex Branches. The outward remittances of customers of other branches are also remitted through these branches. Through our well-spread network of branches in India, inward remittances reach every nook & corner in India. UCO has tie-up arrangements with Western Union Money Transfer.
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professionally skilled staff to handle forex treasury operations efficiently. UCO deals in all the important international currencies
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Corporate/Projects, EEFC Accounts, and Remittance etc. are all available to corporate customers from UCO.
UCO is establishing a Derivative Desk in India to offer various Derivative Products, such as IRS, FRA, Cross-currency Options, and Currency Swaps with Cross-currency Interest Rate Swap etc. With this UCO will also offer structured products suitable for Corporates 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.
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UCO can provide the following main services:i) Collection of bills both Documentary and Clean. ii) Advising/confirming of L/Cs opened by banks iii) Discounting of Bills drawn under L/Cs iv) Maintenance of foreign currency accounts in S$ and HK$ v) Maintenance of Rupee accounts in India vi) Making foreign currency payments/remittance on behalf of customers of banks.
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UCO's excellent service with competitive charges provides a good Correspondent Banking solution. UCO's overseas branches are active in discounting of usance international trade bills. With foreign currency resources of overseas branches, UCO offers the most competitive rates for discounting of these bills. The bills under the L/Cs of the most of the Indian Banks as well as International Banks are also discounted at competitive rates. These transactions are undertaken by them within the Bank/Country Exposure ceilings prescribed by UCO.
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i)
Arranging/granting
External
Commercial
Borrowings
by way of Foreign
Currency Loans, FRNs, and Bonds for the Indian corporates. ii) Arranging/underwriting International Syndicated Loans for the Indian
corporates. iii) Participating in the International Loan Syndications. iv) Granting loans backed by Export Credit Agencies. iv) Providing import finance for Indian Corporates.
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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CHAPTER - VII INTERNATIONAL BANKING SERVICES BANK OF INDIA (CASE STUDY) OF STATE
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 corporates are able to avail single-window Euro services from the Bank's Frankfurt branch. These services include:-
A. TRADE FINANCE
Trade finance includes gamut of services which include credit for both pre shipment and post shipment activities. These primarily include:-
Export Avenue
Rupee Export Credit (Pre-Shipment and Post-Shipment)
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PRE-SHIPMENT EXPORT CREDIT:Pre- Shipment credit (Packing Credit) is extended to the exporters for financing purchase, processing, manufacturing or packing of goods prior to shipment. This would mean any loan or advance can be extended by SBI on the basis of: a) Letter of Credit opened in the favor of the customer 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 lodgment 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. 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.
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POST-SHIPMENT EXPORT 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. Postshipment 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-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.
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SBIs Pre-shipment Credit in Foreign Currency (PCFC) facilitates funds in foreign currency. SBIs 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 Banks Foreign Department, based at Calcutta, is the nodal centre for raising and deploying offshore and onshore funds for lending under PCFC.
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
SBI offers Letters of Credit to facilitate purchase of goods in international trading operations. The bank's vast network of branches and correspondent banks enables ones enterprise to sustain a seamless flow of business on a wide platform. Further, the bank's informed trade finance crew can provide with sophisticated credit and trade information, and market knowledge, helping 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.
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A. IMPORT AVENUE
Foreign Currency import credit
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
Suppliers' Credit essentially represents credit sales affected 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 upto 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.
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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. 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 '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
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 Rupee Vostro accounts of International Banks and Institutions are maintained and serviced at SBIs 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.
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C. MERCHANT BANKING
SBIs Merchant Banking Group is strongly positioned to offer perfect financial solutions to the respective business. It provides the resources, convenience and services to meet the needs of the customer 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.
Products and services include:1) 2) 3) 4) 5) Arranging External Commercial Borrowings (ECB) Arranging and participating in international loan syndication Loans backed by Export Credit Agencies Foreign currency loans under the FCNR (B) scheme Import Finance for Indian corporate
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.
SBIs 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.
Credit facilities offered:- Various types of credit facilities, both non fund
and fund based that project exporters may need at the time of bidding and / or for execution of the project is extended by the Bank.
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Fund based facilities include:i) Pre-shipment credit both in Indian rupees and in foreign currency to financial assistance for procuring/ manufacturing/ processing/
extend
packing/ shipping goods meant for export. ii) Rupee/ Foreign currency supplier's credit: - When a project export is on deferred credit terms, we meet the financial requirement of our exporter in Indian rupees or foreign currency. v) Buyers credit: Bank also participates in grant of credit to foreign buyers under the Buyers Credit Scheme of Exim Bank.
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.
18 June 2002 file it to cabinet attach label to it bookmark it send to friends add it to tracker currency converter
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CHAPTER VIII 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
The discount rate comprises a number of dues, fees, assessments, network charges and mark-ups merchants are required to pay for accepting credit and debit cards, the largest of which by far is the Interchange fee. Each bank or ISO/MLS has real costs in addition to the wholesale interchange fees, and creates profit by adding a mark-up to all the fees mentioned above. There are a number of price models banks and ISOs/MLSs use to bill merchants for the services rendered. Here are the more popular price models:
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 transactions into 3 groups (tiers) and assigns a rate to each tier based on a criterion established for each tier.
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QUALIFIED RATES
A qualified rate is the percentage rate a merchant will be charged whenever they accept a regular consumer credit card and process it in a manner defined as "standard" by their merchant account provider using an approved credit card processing solution. This is usually the lowest rate a merchant will incur when accepting a credit card. The qualified rate is also the rate commonly quoted to a merchant when they inquire about pricing. The qualified rate is created based on the way a merchant will be accepting a majority of their credit cards. For example, for an internet merchant, the internet interchange categories will be defined as Qualified, while for a physical retailer only transactions swiped through or read by their terminal in an ordinary manner will be defined as Qualified.
A consumer credit card is keyed into a credit card terminal instead of being swiped A special kind of credit card is used like a rewards card or business card
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.
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The non-qualified rate is usually the highest percentage rate a merchant will be charged whenever they accept a credit card. In most cases all transactions that are not qualified or mid-qualified will fall to this rate. This may happen for several reasons such as:
A consumer credit card is keyed into a credit card terminal instead of being swiped and address verification is not performed A special kind of credit card is used like a business card and all required fields are not entered
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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CONCLUSION
Banks have influenced economies and politics for centuries. Historically, the primary purpose of a bank was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers. Banking services have expanded to include services directed at individuals, and risk in these much smaller transactions is pooled.
International banking has become an important aspect of world economy. It deals with various aspects of financial services. Banks offer many different channels to access their banking and other services. Though international banking concept is quite old, it has acquired certain new characteristics and dimensions.
Now international banking has become a very important for international trading and financial transaction. Its importance is increasing through the globalization of world economy and we will see its benefits in the near future very soon.
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Bibliography
a) International Banking Finance - By ICFAI b) Merchant Banking - By K.C. Gupta
Webligraphy
a) www.icfai.org b) www.google.co.in c) www.flipcart.com d) www.wikipedia.com e) www.scribd.com f) www.managementparadise.com
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