UNIVERSITY OF MUMBAI

A REPORT ON
OFFSHORE BANKING

SUBMITTED BY:
IYAPPA NAIR

T.Y.B.COM (BANKING AND INSURANCE)

SEMESTER V

ACADEMIC YEAR 2016-17

PROJECT GUIDE:
PROF. MEHUL BARAI

VIVEK EDUCATION OF SOCIETY

VIVEK COLLEGE OF COMMERCE
SIDDHARTH NAGAR, GOREGAON (W)
MUMBAI 400104.

DECLARATION

I IYAPPA NAIR, a student of third year bachelor of commerce banking

and insurance, vivek college of commerce, hereby that I have completed
project on OFFSHORE BANKING in semester V of academic year
2016-17.

This information submitted is true and original to best of my knowledge.

SIGNATURE OF STUDENT DATE:

IYAPPA NAIR

CERTIFICATE

This is to certify that, IYAPPA NAIR of third year bachelor of commerce,

vivek college of commerce, has completed project on OFFSHORE

BANKING in semester V of the academic year 2016-17.

Internal examiner
External examiner

Co-ordinator
Principal
Prof. Suvarna Raikar
Dr. Nandita Roy

College stamp

ACKNOWLEDGEMENT

To list who all helped me is difficult because they are so numerous and the
depth is so enormous.
I would like to acknowledge the following as being idealistic channel and
fresh dimension in the Completion this project.
I take this opportunity to think the university of Mumbai for giving me
chance to do this project.
I would like to thank my project Dr. Nandita Roy, for providing the
necessary facilities required for completion of this project.
I like this opportunity to thank our co-ordinator Prof. Suvarna Raikar, for
her moral support and guidece .
I would also like to express my sincere gratitude towards my project guide
Prof. Mehul

Barai, whose guidance and care made the project

successful.
I would also like to thank my b college library, for providing various
reference books and magazines related to my project.
Lastly, I would like to thank each and every who directly or indirectly
helped me to complete project, especially my parents and my peers who
supported me throughout my project.

IYAPPA NAIR

INDEX

Sr.no

TOPICS

1.

INTRODUCTION

2.

ROLE OF RBI IN OFFSHORE

BANKS

3.

FUNCTIONS OF OFFSHORE
BANKING IN INDIA

4.

DIFFERENCES OF OFFSHORE
BANK AND COMMERCIAL
BANK
ADVANTAGES &
DISADVANTAGES

4.
5.

FEATURES OF OFFSHORE
BANKING

6.

PUNJAB NATIONAL BANK

7.

INTEREST RATES IN OBU

8.

NEED FOR OFFSHORE BANK

TODAY

9.

CONCLUSIONS

Pg.no

OFFSHORE BANKING
MEANING:
A Offshore Bank is a bank located outside the country of
resident of depositors, Which is mostly in a low tax or no tax
area that provided financial and legal advantage to their
deposits. Which will held to generate additional profit for
example UK registered offshore bank can provide service to
client from any county except to permanent Non resident of UK.
This is main formal different between offshore bank and
onshore bank.

HISTORY OF OFFSHORE BANKING IN INDIA

The establishment of offshore centres in India was foreseen

when the Foreign Exchange Regulation Act (FERA) was replaced
by the Foreign Exchange Management Act, 1999 (FEMA). The
concept of offshore banking in India is introduced through
Special

Economic

Zones(SEZ)

in

the

Exim

policy

1997-

2002.Offshore banking formally started in India from 2002.

Branches of Indian banking business to non-residents. Hence
they are designated as Offshore Banking Units

Offshore banking in India can be discussed from two

different angles;
1) Indian Banks such as State bank of India, Punjab National
Bank, Bank of Baroda, ICICI, etc. Have set up offshore
banking Units in SEZs. SBI was the first bank t set up the
Offshore Banking Unit in SEEPZ ( a SEZ located at Andheri).
2) Indian Bank such as State Bank of India, Bank of Baroda.
Indian Overseas banks, bank of India, HDFC bank have set
up their Offshore Units abroad at place Like Singapore,
Cayman Islands, Hong Kong, Colombo, and so on.

FUNCTIONS OF OFFSHORE BANKING

IN INDIA

1) Deposits and Savings:

Offshore bank provide the same service of onshore bank
thus. It is an organisation which deposits the savings and
it also provide Investment services for its consumer
2) Borrowings and Landings of Foreign Currency:
The measure functions of offshore banking is Borrowing
and Landing short and long term in Currencies ($, Yen,
Euro, etc.) which are held outside countries are origin, by
banks organisation and Individuals.
3) Banking Activities:
Subject to the terms of its license the offshore banks will
be able to undertake any from banking activities such as
Debt

factoring,

foreign

currency

management

lease

finance etc.
4) Financial Services:
Offshore banks provide financial service to its clients. This
include Letter of Credit, Electronic fund Transfer etc.
5) Merchant banking Activities:
They also perform important

of

Merchant

banking

activities, that is Issue Management Raising of capital

through issue of Equity shares and Foreign currency Bonds
6) Deals with Derivative Market:
They also dealing derivative instruments for speculator
and Risk Management purpose. They covers the risk such
as Currency risk, Credit risk, Interest risk, etc.

IMPORTANCE OF OFFSHORE BANKING

1) Offshore banking has now become an important segment of the
international financial system. Offshore banking is simply a practice of
working with an offshore bank.
2) An offshore bank refers to a bank located outside the country where the
depositor lives. Usually, these banks may be located in such a jurisdiction
with substantial financial as well as legal advantages.

3) Offshore banks provide a continuum of services in connection with

financial management, such as, deposit taking, money transmissions,
creation of provision of foreign exchange, trade finance, credit facilities,

investment and fund management, corporate administration, and trustee

service.
4) Creation of a bank account with an offshore bank is great alternative
particularly for those who have to travel frequently or someone whose
career changes a lot.

5) People prefer offshore banking for a myriad of other purposes such as

expansion

of

your

business,

tax-free

investment, and
anonymity with regard to financial matters, asset protection, and estate
planning. A specialty of offshore banking is that an account can be
opened with an offshore bank simply as a saving account. Account can also be
opened to carry out main business functions.
6) Apart from these, through an offshore bank, you can even make
investments and take loans.
7) This type of banking has now been legally used by many individuals and
corporations worldwide.

8) Offshore banking is usually preferred by people falling under three

categories, such as, high net worth individuals, expatriates, and business
owners
9) Nowadays, many of the corporate clients including multinational corporations,
large industrial as well as trading companies, shipping companies, and
banking corporations, are also getting attracted to the benefits offered by
offshore banking.

10)

One of the prime benefits of offshore banking is that it provides

access to economically as well as politically stable jurisdictions. This

proves to be advantageous to such people whose residing area has risks of

political disorders.
11). There are certain offshore banks that function with low cost base, which
in turn can offer higher interest rates to the depositors when compared to
their home country.

12)

Another great benefit is that it is a great way for developing

countries to enhance their economic growth, since offshore banking

allows redistributing finance from the developed economies to the
developing economies.
13)

Offshore banking is usually associated with formations including

offshore trusts, offshore foundations, and offshore companies, which in

turn may provide some kind of benefits in the form of tax as well as asset
protection.

14)

As a healthy competition is seen in the industry of offshore

banking regarding tax benefits, it enables to choose the most appropriate

facility offering tax advantages.
15)

In addition, offshore banking allows you to easily move your

assets, if you want to join an employment or spend long periods outside

your home country.

FEATURES OF OFFSHORE BANKING

1) Offers higher level of privacy as opposed to the local
banks
2) No taxation

3) Protection against financial insecurities and instabilities in

the local economy
4) Less restrictive regulations
5) Easy access deposits
6) Except for the developed nations that offer for complete
financial

stability,

individuals

from

the

various

undeveloped countries that are surrounded with instability

may opt to resort to offshore banking for better steadiness
in assets and resources
7) Offshore banks offer better rate of interest
8) Offers features that banks in the domestic realm may not
possess like unspecified bank account etc.

ADVANTAGE OF OFFSHORE BANKING

1)Access to politically and economically stable nations:
Offshore banks can sometimes provide access to politically and
economically stable jurisdictions. This will be an advantage for
residents in areas where there is risk of political turmoil, who
fear their assets may be frozen, seized or disappear (see the
Corral to For example, during the 2001Argentine economic
crisis). However it is often argued that developed countries with
regulated banking systems offer the same advantages in terms
of stability.

2) Lower cost base with high returns:

S o m e o ff s h o re b a n k s m a y o p er a t e w i t h a l o w er c o st
b a s e a n d c a n p ro v i d e h i g h e r interest rates than the legal
rate in the home country due to lower overheads and a lack o f
g o v e rn m e n t

i n t e r v en t i o n .

Ad v o c a t e s

of

o ff s h o re

b a n k i n g o ft e n c h a r a c t e r i z e government regulation as a
form of tax on domestic banks, reducing interest rates on
deposits.3)

3)Growth of Developing Countries:

O ff s h o r e

fi n a n c e i s o n e o f t h e f e w

a l o n g w i t h tourism,

in

which

industries,

geographically remote

island nations can competitively engage. It can help developing

c o u n t r i e s s o u rc e i n v e s t m e n t a n d c re a t e g ro w th i n
t h e i r e c o n o m i e s , a n d c a n h e l p redistribute world finance
from the developed to the developing world.

4) Tax free income:

Interest is generally paid by off shore banks without tax
being deducted. This is an advantage to individuals who do
not pay tax on 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.

5) Financially engineered banking services:

Some offshore banks offer banking services that may not be
available from domestic banks such as anonymous bank

accounts, higher or lower rate loans based on risk and

investment opportunities not available elsewhere.

DISADVANTAGES OF
OFFSHORE BANKING

1)Association:
Offshore banking has been associated with the underground
economy and organized crime, through money laundering.

Following September 11, 2001, offshore banks and tax

havens, along with clearing houses, have been accused of
helping various organized crime gangs, terrorist groups, and
other state or non-state actors.

2)Tax:
The existence of offshore banking encourages tax evasion,
by providing tax evaders with an attractive place to deposit
their hidden income.
3) Offshore jurisdictions are often remote, so physical access
and access to information can be difficult. Yet in a world
with global telecommunications this is rarely a problem.
Accounts can be set up online, by phone or by mail.
4) Developing countries can suffer due to the speed at which
money can be transferred in and out of their economy as
hot money. This Hot money is aided by offshore
accounts,

and

can

increase

problems

in

financial

disturbance.
5) Offshore banking is usually more accessible to those on
higher incomes, because of the costs of establishing and
maintaining
developed

offshore
countries

accounts.
thus

falls

The

tax

burden

in

disproportionately

on

middle-income groups. Historically, tax cuts have tended

to result in a higher proportion of the tax take being paid
by high-income groups, as previously sheltered income is
brought back into the mainstream economy

OFFSHORE BANK ACCOUNT

COSTS

1) Off shore

bank

account

are

frequently

opened

under the name of an off shore company.

2) The reason for this is the increased privacy as all
banking transactions, if traced, would be under the
name of the offshore company, not the client.
3) Establishing an offshore bank account in this way co u l d
c o s t b e t w e e n $ 3 5 0 t o $ 5 5 0 , p l u s t h e co s t o f
setting

up

company

the

typically

offshore

company

an

off shore

costs

between

$1495

and

$2,495.
4) So, one could expect the total offshore account costs
to be about the $1845 for both.
5) I t i s e s s e n t i a l t h a t a n y p o t en t i a l o w n er o f a n
o ff s h o re

bank

a c co u n t

should

re s e a rc h

th e

necessary information to make a strong, informed

decision when proceeding with an

offshore bank

account

an

setup

and

f o rm i n g

o ff s h o re

c o m p a n y.
6) Off shore Bank Accounts have to be opened with an
initial deposit to activate the account.
7) Although, some off shore provider's bank account
types, fees, interest rates, etc. vary; most offshore
financial institutions (OFCs) have competitive costs and
a high level of bank account security.
8) Additionally, the interest rates tend to be higher than in
the

UK

and

EU,

providing

an

extra benefit for those saving abroad.

9) Process fees, courier charges and various small costs
(for notary, etc.) will be incurred during the process of
establishing an offshore bank account.
10) The Off shore Company UK has helped thousands
of individuals and companies open private banking
accounts, offshore companies and corporations and can
assist you in establishing the right offshore vehicles for
you.

ROLE

OF

RESERVE

BANK

OF

INDIA

IN

OFFSHORE BANKING
The role of Reserve Bank of India has been very critical in
initiating the process of offshore banking in India. For plenty of
years, the various Indian banks had been trying to convince the
Reserve Bank of India to introduce offshore banking in the
country. Eventually, the Reserve Bank of India understanding
the needs and prospects of offshore banking in India, allowed
the setting up of offshore units in the special economic zones.
Many of the Indian banks made use of that provision to set up
offshore banks in India.

Reserve bank of India Offshore banking units guidelines

Scheme for Setting up of Offshore Banking Units (OBUs) In
Special Economic Zones (SEZs)
The Government of India has introduced the Special Economic Zone
(SEZ) scheme with a view to providing an internationally
competitive

and

hassle

free

environment

for

export

production. As per the Governments policy, SEZs will be a

specially delineated duty free enclave and deemed to be a
foreign territory for the purpose of trade operations and duties /
tariffs so as to usher in export-led growth of the economy. It was
also indicated by the Union Commerce Minister in his speech

announcing the Exim Policy for 2002-07 that for the first time, Offshore
Banking Units (OBUs) would be permitted to be set up in SEZs. These
units would be virtually foreign branches of Indian banks but
located in India. These OBUs, inter alia, would be exempt from
CRR, SLR and give access to SEZ units and SEZ developers to
international finances at international rates.

The Scheme:
1) Eligibility Criteria:
Banks operating in India viz. public sector, private sector and
foreign banks authorized to deal in foreign exchange are
eligible to set up OBUs. Such banks having overseas branches
and experience of running OBUs would be given preference.
Each of the eligible banks would be permitted to establish only
one OBU which would essentially carry on wholesale banking
operations.

2) Licensing:

Banks would be required to obtain prior permission of the RBI for

opening an OBU in a SEZ under Section 23(1)(a) of the Banking
Regulation Act, 1949. Given the unique nature of business of
the OBUs, Reserve Bank would stipulate certain licensing
conditions

such

as

dealing

only

in

foreign

currencies,

restrictions on dealing with Indian rupee, access to domestic

money market, etc. on the functioning of the OBUs. The parent
bank's application for branch license should itself state that it
proposes to conduct business at the OBU branch in foreign
currency only. No separate authorization with respect to the OBU
branch would be issued under FEMA. As currently in vogue with
respect to designating a specific branch for conducting foreign
exchange business, the parent bank may designate the branch in
SEZ as an OBU branch. A separate Notification No. FEMA71/2002-RB
dated September 7, 2002 issued by the Exchange Control Department
(ECD) of RBI on OBUs is enclosed.

3) Capital:
Since OBUs would be branches of Indian banks, no separate assigned
capital for such branches would be required. However, with a view to
enabling them to start their operations, the parent bank would be
required to provide a minimum of US$ 10 million to its OBU.

4) Reserve Requirements
a) CRR

RBI would grant exemption from CRR requirements to the parent bank
with reference to its OBU branch under Section 42(7) of the RBI Act,
1934.

b) SLR
Banks are required to maintain SLR under Section 24(1) of the Banking
Regulation Act, 1949 in respect of their OBU branches. However, in
case of necessity, request from individual banks for exemption
will be considered for a specified period under Section 53 of the
Banking Regulation Act, 1949.

5) Resources and deployment

The sources for raising foreign currency funds would be only
external. Funds can also be raised from those resident sources

to the extent such residents are permitted under the existing

exchange

control

regulations

to

invest/maintain

foreign

currency accounts abroad. Deployment of funds would be

restricted to lending to units located in the SEZ and SEZ
developers. Foreign currency requirements of corporate in the
domestic area can also be met by the OBUs. If funds are lent to
residents in the Domestic Tariff Area (DTA), existing exchange
control regulations would apply to the beneficiaries in DTA.

6) Permissible Activities of OBUs

OBUs would be permitted to engage in the form of business mentioned
in Section 6(1) of the BR Act, 1949 as stipulated in the enclosed ECD
Notification no. FEMA71/2002-RB dated September 7, 2002and
subject to the conditions of the license issued to the OBU
branches.

7) Prudential Regulations
All prudential norms applicable to overseas branches of Indian banks
would apply to the OBUs. The
OBUs would be required to follow the best international practice of 90
days' payment delinquency norm
For income recognition, asset classification and provisioning. The OBUs
may follow the credit risk management policy and exposure limits set
out by their parent banks duly approved by their Boards.
The OBUs would be required to adopt liquidity and interest rate
risk management policies prescribed by

RBI in respect of overseas branches of Indian banks as well as within

the overall risk management and
ALM framework of the bank subject to monitoring by the Board at
prescribed intervals.
The bank's Board would be required to set comprehensive
overnight limits for each currency for these branches, which
would be separate from the open position limit of the parent
bank.

8)

Anti-Money Laundering Measures

The OBUs would be required to scrupulously follow "Know Your
Customer (KYC)" and other anti-money laundering instructions
issued by RBI from time to time. Further, with a view to
ensuring that anti-money laundering instructions are strictly
compiled

with

undertaking

by

cash

the

OBUs,

they

transactions,

and

are

prohibited

from

transactions

with

individuals.

9) Regulation and Supervision

OBUs will be regulated and supervised by RBI through its Exchange
Control

Department,

Department

of

Banking

Operations

Development and Department of Banking Supervision.

and

10) Reporting requirements

OBUs will be required to furnish information relating to their
operations as are prescribed from time to time by RBI.

11) Ring fencing the activities of OBUs

The OBUs would operate and maintain balance sheet only in foreign
currency and would not be allowed to deal in Indian Rupees except
for having a special Rupee account out of convertible fund to
meet their day to day expenses. These branches would be
prohibited to participate in domestic call, notice, term, etc.
money market and payment system. Operations of the OBUs in rupees
would be minimal in nature, and any such operations in the domestic
area would be through the Authorized Dealer (distinct from OBUs)
which would be subject to the current exchange control
regulations in force. The OBUs would be required to maintain
separate Nostro accounts with correspondent banks which would be
distinct from Nostro accounts maintained by other branches of
the same bank. The Ads dealing with OBUs would be subject to
ECD regulations.

12) Priority sector lending

The loans and advances of OBUs would not be reckoned as net
bank credit for computing priority sector lending obligations.

13) Deposit insurance

Deposits of OBUs will not be covered by deposit insurance.

India

provides

distinct

advantages

in

attracting

offshore

banking units, because it has a stable economic and political

performance, a vast market, technical manpower that
could fi nd employment in these centers. Another advantage
is that the Indian market would open a little before the Tokyo
market closes, and close before New York opens, thus
providing a vital time link for international money market
dealers. In an era where many Indian corporations are
functioning abroad and many corporations are granted
permission to seek overseas finance, establishing an offshore
unit will help tap the resources:
Exporters would benefit in terms of finer margins on loans and
better foreign exchange rates available via an offshore banking
unit. The benefits of multi-currency operations which, to an
extent, minimize currency fluctuation risk will be an added
advantage:
1. Salaries paid by offshore banks and local.

2. Expenditure incurred by them contributes to the economy's

welfare. For smaller countries, the benefit would be greater.
For a larger country such as India, however, this may not
form a significant portion of the total income.
3. India may earn revenue in the form of license fees, profit
taxes imposed on the banks operating in the area. It may
also get the benefit of banks' funds in the form of capital
and liquidity requirements.

4. The country can gain improved access to the international

capital markets.
5. The domestic financial system may become more efficient
through

increased

competition

and

exposure

of

the

domestic banks to the practices of offshore banks.

6. Offshore banking centers will provide opportunities to train
the local staff which will, in turn, contribute to faster
economic growth.
7. Offshore banking units would help channelize non-resident
Indian investments.

8. Setting up offshore banking centers would trigger enforced

development of more advanced communication facilities
a must for their functioning.

THE SCOPE FOR OFFSHORE BANKING

IN INDIA
The favorable factors for an OFC in India are well known. These
include availability of skilled and quality banking, legal
professionals, vastly Improvised Tele communication systems
ensuring connectivity, the time zone advantage. The benefit by

way of fillip to local economy is also well understood. However,

clearly the regulatory regime governing it would be critical.
Accordingly the proponents of offshore banking would need to
address the key concerns of the regulator. Apart from the
apprehension of offshore banking being used for dubious ends
and

in

financial crime, the regulator would also be concerned about

the systemic risks to the financial system. It would perhaps not be
inappropriate to evolve a regulatory framework with a road map for
informed public debate. Such a framework would need to
address issues such as First, should only offshore banking be
permitted or other activities within the umbrella of an OFC?
Some of the other activities may appear as meeting specific needs
such as insurance, fund management, trusts, etc. Second, for an
OFC being set up should there be a single regulator for all the
activities of the OFC or different regulators mirroring the
pattern in the corresponding onshore sub sectors? Also, should
there a single regulator for onshore and offshore banks? Third,
should there licensing of firms in the OFC as it is currently stipulated for
OBUs in SEZs? Or should it be simple incorporation as is the
practice in most OFCs? Or should licensing be restricted to
financial intermediaries? Fourthly, granted that licensing would
be required for OBUs, who would be the eligible parties not
just banks operating in India as per current policy, but also
foreign banks, their subsidiaries/ affiliates? What would be the
permissible activities? Here again the regulator would need to
strike a balance between the fundamental objective of ensuring
financial stability and the business growth compulsions of the

OBUs. For instance, if private banking were to be permitted, the

requirements of confidentiality would need to temper the antimoney laundering safeguard measures. The RBI is today well
respected in the international community as a proactive
regulator in the adoption of international standards and the
maintenance of financial stability while at the same time, aiding
development and growth. A slew of policies adopted by RBI in
the last few years have been aimed at strengthening the
banking system. These include adoption of prudential norms,
consolidated supervision, connected lending, using technology to
upgrade settlement systems, payment systems, widening and
deepening the various segments of the financial markets, the
unrelenting emphasis on up gradation of risk management
systems of financial intermediaries. The gradualist approach to
financial liberalization has paid rich dividend. The way forward
appears to involve at the first step, an assessment of the
robustness of the existing legislative and regulatory framework
may be done keeping in view the principles of cross border
cooperation,

information

sharing

transparency,

ongoing

monitoring. Perhaps certain overseas jurisdictions with whom

India can have reciprocal arrangements can be identified, that
will ensure proper due diligence while licensing OBUs and subsequent
supervision.

PUNJAB NATIONAL BANK (PNB) Parent Bank

PNB is one of the premier banking institutions of India with a glorious

history of 117 years (est. in 1895), and is one of the top Public Sector
Banks in India, owned predominantly by the Govt. Of India. PNB is
listed on the Bombay Stock Exchange and other major Stock
Exchanges of the country.
Since its humble beginning in 1895 with the distinction of being the
first Indian bank to have been started with Indian capital, PNB has
achieved significant growth in business which at the end of March
2012 amounted to $ 123 Billion (Rs.673363 cores). Today, with assets
of more than $ 83 Billion (Rs.4,58,194 core), PNB is ranked at 195 th
amongst Top 500 Global Banks, as per Brand Finance Global Banking
500 for 2011 and features at the 25th place amongst the Top 50 most
valued corporate brands by Brand Finance-ET. It is the 2nd largest
bank in country with network of 5675 branches (including 5 oversea
branches) and customer base of more than 7 Cores.
More importantly, during 2011-12, PNB has been recognized as the
Best in Corporate Social Responsibility (CSR) Overall by World HRD
Congress and been recognized as the Best Socially Responsive Bank
by the Business World & PwC. Above all, the Bank was recognized as

the " Best Bank " by Business India.

The OBU of PNB is situated at Santa cruz Electronics Export Promotion
Zone (SEEPZ), Andheri East in Mumbai (Bombay), the financial capital
of India, and is a Deemed Foreign Branch of PNB, although located
within the country.

HOW DOES IT ADD VALUE FOR YOU

1) Multi Currency Deposits accepted.

2) Maturities ranging from 15 days to 5 years. Deposits for 15 days up to 1 month
are accepted subject to minimum deposit amount of USD 100,000/-, GBP
60,000/- and EURO 100,000/3) Attractive Rates of interest on Deposits.
4) Multi Currency Borrowing option.
5) Competitive Rates of interest on Borrowings.
6) Rates of interest linked to LIBOR of corresponding period.
7) Full reparability of maturity value of deposits.
8) Investment opportunity that affords better returns at no additional risk.
9) Render service at par with international banks.

Interest rates on OBU deposits

Interest rates on Foreign Currency deposit being accepted by OBU has been
reviewed and it has been decided that OBU will offer the following interest
rates on USD, GBP & EUR deposits with effect from 01st Aug 2012 (Subject to
change)

(Percent per Annum)

Period of Deposit

US Dollars

15 days

0.22**

1 Month

0.25**

2 Months

0.34**

3 Months

0.45

5
6

Above 3 Months up to 6
months
Above 6 Months to less than 1
year

0.70
1.47

1 Year to less than 2 Years

3.05

2 Years to less than 3 Years

2.42

3 Years to less than 4 Years

3.48

10

4 Years to less than 5 Years

3.63

11

5 Years only

3.79

Contact Us

Mail

:Punjab

National

Bank

Offshore

Banking

Unit,

SEEPZ,

Andheri

(E),

Mumbai 400096, INDIA

Telephone :Branch

Head

(Chief-00-91-22-28291631

Manager)
Sr. Manager
Manager
FAX

E-mail

:satyavrat@pnb.co.in

-00-91-22-28293300
-00-91-22-28293222
-00-91-22-28293333

chandrakant@pnb.co.in
obu@pnboffshore.com
ganeshpawar@pnboffshore.com

Why You Need an Offshore Bank

Account Today
1)Dilute Your Political Risk

Today, the biggest threat to your savings isnt market risk. Its
your own government.
Theres no doubt government poses an increasing risk to your
savings. Governments are sinking hopelessly deeper into
insolvency. Predictably, they are turning to the same desperate
measures theyve used throughout history.
Its only prudent to expect more bail-ins (as weve seen in
Cyprus), bank deposit taxes (as weve seen in Spain),
retirement savings nationalizations (as weve seen in Poland,
Hungary, Portugal, and Argentina), and capital controls (as
weve seen in Cyprus and Iceland), among other destructive
actions. And these are just a few recent examples.
If you think these kinds of things cant happen in your country,
think again.
According to Judge Andrew Napolitano:
...people who have more than $100,000 in the bank are
targets for any government thats looking for money to shore
up its own inability to manage its finances.
A big part of any strategy to reduce your political risk is to
place some of your savings outside of the immediate reach of
thieving bureaucrats in your home country. Setting up a foreign
bank account in the right jurisdiction is a convenient way to do
just that.

That way your home government cant easily confiscate,

freeze, or devalue all of your money with a couple of taps on
the keyboard. If your home government imposes capital
controls, an offshore bank account would help ensure you could
access your money when you need it most.
In short, keeping some of your savings in the right foreign bank
can largely protect you from madness in your home country.

2)Sounder Banking Systems and Banks

Almost all of the banking systems in Western countries are
fundamentally unsound. Theyve leveraged themselves to the
hilt. The promises of insolvent governments are all that back
them. Worse, most of these banks only keep a tiny bit of cash
on hand to meet customer withdrawal requests. This means, in
the event of another Lehman-style financial shock, you could
have trouble accessing your money.
Many people put more thought into what reality show they are
going to watch on TV tonight than which bank they choose to
be custodians of their savings. Many dont even realize they
have other practical options.
There are banks in stable jurisdictions with low debt that dont
gamble with customer deposits (i.e. your money). Many of
these banks are much better capitalized, keep more cash on
hand, and are otherwise much more conservatively run than
those in the U.S.

These offshore banks are almost always more responsible

custodians of your hard earned savings.

3)Asset Protection
Maybe you think its just other people who live on the lawsuit
firing lineand you live somewhere else. Think again.
The Legal Resource Network reports that 15 million lawsuits are
filed in the U.S. every year.
That works out to a new lawsuit for one out of every 12 adults
each yearyear after year. Unless youre exceptionally lucky,
sooner or later your turn will come. Youre not going to like it.
Its no fluke that 80% of the worlds lawyers, over 1.2 million of
them, work in the U.S. Thats where the action is. Your money is
the trophy theyre competing for.
While there is no such thing as 100% protection, a foreign bank
account can help make you a less attractive target.
An offshore bank account also protects you from overzealous
government agencies armed with the summary power to freeze
your assets. Thats because their reach doesnt extend beyond
the U.S.
If you ever find yourself in a wrestling match with a government
agency or a frivolous lawsuit, a foreign bank account give you
resources you can count on.

4)Currency Diversification

Holding foreign currencies is a great way to diversify your

portfolio

risk,

protect

your

purchasing

power,

and

internationalize some of your savings.

Chances are, though, your domestic bank offers few, if any,
options for holding foreign currencies.
Offshore banks, on the other hand, commonly offer convenient
online platforms for holding foreign currencies.

5)Higher Interest Rates for Your Deposits

In what amounts to a war on savers, the European Central Bank
and the Fed have manipulated interest rates to near historic
lows. These artificially low interest rates effectively transfer
wealth away from savers, who would otherwise enjoy higher
returns on their deposits, to borrowers.
In fact, if you live in the West, theres a good chance the
interest youre earning on your savings isnt even keeping pace
with the real rate of inflation.
If you look abroad, though, you can find banks that pay
significantly higher interest rates than what youd find at home.

6)Ensure Access to Medical Care Abroad

If youre unable to receive timely treatment in your home
country,

an

increasing

possibility

with

the

disastrous

Obamacare, you may want to access medical care abroad.

In the worst-case scenario, this could mean the difference
between life and death.

Suppose, for whatever reason, you cannot get the medical care
you need in your home country and you have to go abroad. You
would have to transfer money abroad to pay for it. However, if
your home government has already imposed capital controls, it
could be difficult or impossible to pay for the medical care you
need.
This is where having a foreign bank account, which isnt
hostage to capital controls in your home country, can help
ensure you can always pay for the medical care you need.

7)The Ability to Act Quickly

When it comes to international diversification, its always better
to be a year early than a minute too late. Once a government
has imposed capital controls or levied bank accounts, its too
late to protect your money.
If you dont already have one, you should open an offshore
bank account now, even if its a small one. Just having one
available, regardless of how much money you initially put in it,
gives you meaningful benefits. It gives you the option to act
quickly and transfer more money abroad in the future, should
the situation warrant it.

8)Maintain Limited Privacy

Americans who have an aggregate of $10,000 or more in
foreign financial accounts at any time during the year must
report it. However, if the aggregate total of your foreign
financial accounts remains under $10,000 for the year, and you
are not using a trust, LLC, or other structure, you dont

necessarily have to report it. Always consult with your tax

advisor on these matters.

9)Peace of Mind
An offshore bank account is like an insurance policy. It helps
protect you from unsound banks and banking systems and the
destructive actions of a bankrupt government. It also makes
you a hard target for frivolous lawsuits and ensures you can
pay for medical care abroad. Knowing that youve taken a big
step to protect yourself should give you more peace of mind.

10) Maximize Your Personal Freedom

Having a foreign bank account gives you more options. More
options means more freedom.
Its a crucial step in freeing yourself from absolute dependence
on any one country.
Achieve that freedom, and it becomes very difficult for any
government to control your destiny.

CONCLUSION
In offshore banking, finding the right offshore service(s) that will allow you
achieve your objectives at a reasonable cost and within the shortest possible
time frame is paramount and should be considered with the utmost importance.
Considering that the stock markets are continuously changing, the way that your
offshore banking is handled must be in the best order, if not perfect. The bottom
line is for you to find an offshore services firm that can service your needs and,
has your interests and objectives at heart since it is your retirement benefits you
are most likely to use. If you are able to find this type of institution then you can
rest assured that your offshore account will grow successfully and will provide
your needs well into the twilight of your life.

Bibliography
There are no sources in the current document.

References
There are no sources in the current document.