Project On International Banking

Project Submitted at “Sree Narayana Guru College of Commerce” BY MTIUL HAQUE
INTERNATIONAL BANKING
Bachelor of Commerce
Banking & Insurance
SEMESTER V
2014-2015
Submitted by
Matiul Haque
Roll no. 32
SREE NARAYANA GURU COLLEGE OF COMMERCE
P.L. LOKHANDE ROAD, CHEMBUR MUMBAI, 400089.
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Bachelor of commerce
Banking & Insurance
SEMESTER V
2014-2015
Submitted
In partial fulfillment of the requirement for the

award of Degree of Bachelor of Commerce -
Banking & Insurance
By
Matiul Haque
Roll no. 32

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DECLARATION
I MR. MATIUL HAQUE from SREE NARAYANA GURU COLLEGE OF

COMMERCE student of T. Y. B.B.I(SEM V) here by submitted my project on
INTERNATIONAL BANKING, I also declare that this project which has been the
partial fulfillment of the requirement of the degree of “T. Y. B.B.I of the Mumbai
University has been result of my own efforts.
Student signature
MATIUL HAQUE
Roll no. : 32

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CERTIFICATE
This is to certify that Mr. Matiul Haque roll no. 32 of B.com Banking and
Insurance Semester V (2014-15) has successfully completed the project on
International banking under the guidance of Khan Kazanfar.
Karishma kasare Dr. Ravindran Karthadi

Course Co-ordinator Principal
KHAN KAZANFAR
Project Guide / Internal Examiner
External Examiner
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ACKNOWLEDGEMENT
I gratefully acknowledge and express deep appreciation to many people who have
made this project possible and visible. Many thanks to our guide Prof. Khan
Kazanfar seems pretty small compared to the months of tremendous support and
indulgence She gave. Her review, comments, corrections and suggestions have
enormously enriched my project. Without cheerful support and motivation of our
Professional Course Coordinator Prof. Karishma Kasare and my class Teacher
Aparna Ujaoney Ma'am, this project would not have seen the light of the day. I am
also grateful to our Principal Dr. Ravindaran Karthadi. It gives me immense
pleasure to present this project in the course of Banking and Insurance.
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EXECUTIVE SUMMARY
It is a matter of immense satisfaction and happiness to present this project on International

Banking, This project present the subject matter in simple and convincing language, I sincerely
hope this project will endow with added utility to readers, I will be highly thankful for
suggestion for improving this project, I owe a great to many, who supported me and motivated
me, I would like to express my gratitude to my Principal Ravindran Karthadi sir and my course
co-coordinator Mrs. Karishma Kasare and my project guide Mrs. Khan Kazanfar.
OBJECTIVE:
This study on International Banking is important not only to an organization, shareholders, and
banking sector but also to an Indian economy as a whole. Due to globalization and liberalization
our economy is opening its door for reforms.
While in foreign developing countries, international banks besides performing the usual
commercial banking functions play an effective role in their economic development.
METHODOLOGY:
PRIMARY DATA / SECONDARY DATA
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TABLE OF CONTENT
Sr. no. Topics Page No.

1 International Banking 1
2 Role of International Commercial Banks in Developing 10

Countries
3 International Bank Accounts 13
4 International Banking Institutions 20
5 International banking regulations and privacy 25
6 Swiss Banking 27
7 State Bank of India 35
8 Advantages of International Banking 57
9 Disadvantages of International Banking 60
10 Conclusion 64
11 Bibliography 65
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1.International Banking
International Banking is a process that involves banks dealing with money and credit between
different countries across the political boundaries. It is also known as Foreign/International
Banking. In another words, International Banking involves banking activities that cross national
frontiers. It concerns the international movement of money and offering of financial services
through off shore branching, correspondents banking, representative offices, branches and
agencies, limited branches, subsidiary banking, acquisitions and mergers with other foreign
banks. All the basic tools and concepts of domestic bank management are relevant to
international banking. However, special problems or constraints arise in international banking
not normally experience when operating at home.
In particular: Business activities have to be transacted in foreign languages and
 Under foreign laws and regulations. Information on foreign countries needed by a

particular bank
 Wishing to operate internally may be difficult to obtain. Control and communication
systems are normally more complex, for foreign than for domestic operations. Risk level
may be higher in foreign markets.
 Foreign currency transaction is necessary.
 International bank managers require a broader range of management skills than
managers who are concerned only with domestic problems. It is more difficult to observe
and monitor trends and activities in foreign countries.
Larger amounts of important work might have to be left to intermediaries, consultants and
advisers.
International banking deals with all banking transactions-private and governmental- of two or
more countries. Private Banks undertake such transactions for profit; governments may be for
provision of various services.
Reasons for Engaging in International Banking

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Banks undertake international operations in order to expand their revenue/profit base, acquire
resources from foreign countries, or diversify their activities. Specific reasons expanding
operations abroad include the saturation of domestic market; discovery of lucrative opportunities
in other countries; desire to expand volume of operations in order to obtain economy of scale.
Further motives for operating internationally are as follows:
• Commercial risk can be spread across several countries.
• Facilitation of international businesses and trade.
• Involvement in international banking can facilitate experience curve effect
• Economies of scope might become available
• Reduce cost of service delivery
• Recognition and reputation
History of International Bank
It is an unfortunate fact that Europeans have always been subjected to relatively heavy tax
burdens. This was as true on the British Isles as it was on the continent. Faced with the prospect
of watching their hard earned assets and wealth diminish with every out-reach of the tax
collector’s hand, they were ripe for a solution. And a solution came--the small, island nation state
known as the Channel Islands convinced these frustrated depositors that deposits placed in its
banks could be free from scrutiny and hence the heavy-handed taxation burden. The Euros were
convinced--and soon this service thrived, with other small jurisdictions becoming savvy to this
foreign capital-attracting status and they began to revamp their banking institutions, adopting
sound, pragmatic banking rules and regulations that eased the potential concerns of investors and
depositors. The International bank was off to a running start!And soon the term “International
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banking” became synonymous with any smaller, haven jurisdiction that offered safe, secure,
confidential banking with practical regulations. Soon the rest of the world was “in the know”,
and began to look at these havens as viable solutions to their needs. Americans, Africans, Asians,
etc., found these international bank accounts quite useful for a myriad of reasons. Unlike their
banks at home, these international banks were not regularly subjected to political turmoil or
economic strife, and were most welcome for their stability and asset protection benefits.
In the years since they have come into greater use and thus more visible, international banking
accounts have been unfairly portrayed by the media and by the larger jurisdictions as the
stomping grounds of the criminal underground--a veritable haven for their illicitly-obtained
assets and funds, or the choice locales for their money-laundering schemes. Money-wise
investors and depositors have long known that these prejudices could not be further from the
truth. They know that international banks can be remarkably effective havens for assets and
funds in need of safe, secure, confidential keeping. They know that these banks can safeguard
their funds from the perils of civil, economic, or political strife in their home countries. Today,
international banks continue to keep their end of the bargain and continue to provide a safe,
confidential haven for those seeking to safeguard their assets and funds from the perils of undue
regulation and taxation.Many a discriminating depositor has benefited from the safe,
confidential, and low taxation environment that an International banking account has to offer.
While it is important to assess your goals and discuss these with a competent, experienced agent
before leaping into un-chartered waters, there are many unquestionable benefits provided by
establishing an international bank account. Their reputation among depositors and investors for
providing a viable banking location featuring protection from liability and confidentiality is
growing, and international banks will continue with this hard-earned reputation for asset
protection, tax reduction, depending on your jurisdiction, and superb confidentiality of deposits.
Modes of International Banking
There are a lot of available methods for entry into international banking Operations. This
include; Correspondent Banks, Representative Offices, Branches and Agencies, Limited
Branches, Subsidiary Banks, Bank Acquisitions and Bank Mergers.
Correspondent Banks
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In order to adequately provide needed international banking services, commercial banks establish
a network of foreign correspondent banks to supplement their own facilities worldwide.
Frequently, the expense of establishing a related banking entity, such as overseas branch, is not
warranted due to the low volume of transactions concluded for the banks’ international clients.
Therefore, to provide services while keeping costs minimal, account relationships are developed
with foreign banks to facilitate international payment mechanisms between the institutions.
Deposit accounts are opened at the correspondent banks, which enable them to make direct
payments overseas by means of debiting and crediting the respective accounts with settlement to
be made at a later date. Such accounts are termed due to (or nostro) accounts and due from (or
vostro) accounts on the bank’s books. In addition to payment accounts, correspondent bank
relationship facilitates transactions such as letters of credit, documentary collection, foreign
exchange services, and loan services for a bank’s international clients. Thus, the correspondent
bank relationship gives the domestic bank apresence in overseas markets, which permits
international transactions to be concluded.
Representative Offices
A representative’s office is both the most commonly used and the most limited in function of all
foreign banking operating internationally. The international representative office functions
mainly as liaison between correspondent banks and the parent bank. Representative offices are
usually prohibited from engaging in general banking activities, although they may receive checks
for forwarding to the home office, solicit loans for the home office, and develop customer
relations. However, they may not receive deposits or make loans. Generally, representative
offices serve as the preliminary step to other forms of banking activity since they are a relatively
inexpensive means of establishing a presence in a new location.
Branches and Agencies
Depending upon the extent of services that the institution wishes to offer, either a branch or an
agency may be established. The basic definition of “branch” and “agency” may be found in the
U.S. International Banking Act of 1978. A branch is any office of a foreign bank at which
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deposits are received. On the other hand, an agency is any office at which deposits may not be
accepted from citizens or residents of the U.S. if they are not engaged in international activities,
but at which credit balance may be maintained. Thus, the principal difference between branches
and agencies is that agencies cannot accept deposits for U.S citizens or residents and can only
maintain credit balances related to their international activities. In addition, agencies cannot
engage in either fiduciary or investment advisory activities with the exception of acting as
custodians for individual customers.
Agencies do engage in a variety of activities to finance international trade, such as the handling
of letters of credit.
Both agencies and branches are principally active in international market.
As extensions of the foreign parent bank, branches are generally subject to more stringent state
regulation than agencies due to the more extensive nature of their operations. The powers of a
federal branch are similar in scope of those of a national bank; these branches possess full
deposit-taking, loan, and commercial banking powers in addition to other trust powers. They are
also subject to duties, restrictions, and limitations similar to those of a national bank organized in
the same area.
Limited Branches
In pursuant to the International Banking Activities, an additional means by which a foreign bank
may participate in foreign banking market is through a so-called limited federal branch.
Basically, this is an office chartered by the Comptroller of the Currency subject to the condition
that the foreign bank enter into an agreement with the country’s apex bank or regulatory
authorities restricting the branch’s deposit-taking activities to those permitted by law. Since this
office may be established outside the foreign bank’s home state, they are restricted to deposit
taking activities of an international nature.
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Subsidiary Banks
Foreign banks gain control of subsidiary banks by establishing new institutions or by acquiring
existing domestic banking institutions and these subsidiaries generally may engage in a full line
of banking activities. With respect to the designation of a foreign bank subsidiary, the term
“bank” and subsidiary” has the same meaning as those provides by section 2 of the Bank
Holding Company Act (BHCA). A subsidiary bank of a foreign bank may be either a national or
a state bank. State banks are governed by the laws of the state in which they are located, while
national banks are chartered by the Comptroller of the Currency under the National Bank Act. In
United States for example, although foreign ownership is not restricted, non-U.S. citizens may
not form a majority of a national bank’s Board of Directors.
Bank Acquisitions
Firms willing to gained access to international banking operations may also adopt the acquisition
approach by acquiring indigenous or domestic banks. However, the acquisition process is guided
by stringent conditions. For instance, Under the United States Bank Holding Company Act, the
Federal Reserve Board must approve the acquisition of direct or indirect control of a U.S. bank
by a domestic or foreign bank holding company. Various factors are considered in the approval
or denial of a BHC application. These include analysis of the competitive effect of the
acquisition, the acquirer’s financial and managerial resources, and future prospects of the bank
being acquired, community needs, and the applicant’s organizational structure.
Bank Mergers
Bank mergers is another option that is opened to those who whishes to provide international
banking services in foreign countries. There are several reasons for a foreign bank merging with
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a domestic bank. For example, this provides an expedient and economical means of expanding
into new markets; it becomes easier to establish an identity on a state-wide basis; and the bank is
able to continue smooth operations with experienced management and personnel.
2. Role of International Commercial Banks in Developing Countries
While in foreign developing countries, international banks besides performing the usual
commercial banking functions play an effective role in their economic development. These roles
include the followings.
• Mobilization of Savings for Capital Formation
• International commercial banks help in overcoming savings through a network of branch

banking. People in developing countries have low incomes but the banks induce them to
save by introducing varieties of deposit scheme to suit the needs of individual depositors.
They also mobilize idle savings of the few rich.
• By mobilizing savings, the banks channel them into productive investments. Thus, they
help in capital formation of a developing country.
Financing Industry
The international commercial banks finance the industrial sector. They provide short time,
medium-term and long-term loans to industries. Besides, they underwrite the shares and
debentures of large scale industries. Thus, they not only provide finance for industry but also
help in developing the capital market, which is underdeveloped in such countries.
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Financing Trade
The international commercial banks help in financing both internal and external trades. The
banks provide loans to retailers and wholesalers to stock which they deal. They also help in the
movement goods from one place to another by providing all types of facilities such as
discounting and accepting bills of exchange. Moreover, they finance both exports and imports of
developing countries by providing exchange facilities to importers and exporters.
Financing Agriculture
The international commercial banks help the large agricultural sector in developing countries in a
number of ways. They provide loans to traders in agricultural commodities. They provide
finance directly to agriculturists for the marketing of the modernization and mechanization of
their farms, for providing irrigation facilities and for developing lands.
Help in Monetary Policy:
The international commercial banks help in economic development of a country by faithfully

following the monetary policy of the country’s central bank. In fact, the central bank depends
upon the commercial banks for the success of its monetary management in keeping with
requirement of a developing economy.
Features of international banking
• International banks provide access to politically and economically stable jurisdictions.

This may be an advantage for that resident in areas where there is a risk of political
turmoil who fear their assets may be frozen, seized or disappear.
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• Some international banks may operate with a lower cost base and can provide higher
interest rates than the legal rate in the home country due to lower overheads and a lack of
government intervention.
• Interest is generally paid by international banks without tax 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.
• Some international 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.
• International banking is often linked to other structures, such as international companies,

trusts or foundations, which may have specific tax advantages for some individuals.
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3. International Bank Account.
An Offshore Bank Account
As with any "bank", onshore or offshore, there is one primary deposit account that is managed by
software. It's been hundreds of years since your local bank had a space reserved on the shelf for
'your money'. Even the largest U.S. national bank has a primary deposit account and everything
is computerized. The same goes for your offshore bank, you have your financial institution and a
deposit account that is computer managed. We assist you with acquiring and configuration of
your online banking and account management software when you start your offshore bank. Your
bank offshore account is set up and is the transaction center of your finance company.
Depositors, deposit, spend and wire money in and out of the account through your online system.
How Offshore Bank Accounts Work
When you start an offshore bank, your account will work the same way all bank accounts do.
Below is a diagram showing how your offshore bank account works.
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Receiving / Sending Money with Your Offshore Bank
Your primary deposit account with be with a much larger offshore bank in a jurisdiction that you
choose. Just as your local bank, having a single account with a larger bank, here we are
replicating banking infrastructure on a smaller scale for your offshore bank. With few clients, or
rather, low client activity, your single deposit account can very well be the primary transaction
hub. However once you start increasing the number of depositors and the amount of
inbound/outbound banking activity, it might be necessary to start performing bulk transactions
to/from your offshore bank. This is done through a holding company that has several offshore
bank accounts that are used to perform larger transaction volume. In the most cases when you
start an offshore bank, your transaction frequency will not require the use of holding companies
to manage bulk transfers.
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Offshore Bank Accounting
Your offshore bank will be fully managed by the industry leading banking software. Each client
will have secure access to their account and just like all other types of financial recording,
computer systems will automatically account for everything. Initial deposits will be recorded by
client identification and each transaction will be identified by secure ID and related to the client
account. This is how the actual banking takes place. Client accounts are merely a long list of
transactions that control the access to funds in the master bank deposit account, in this case, the
offshore bank account for your finance company.
International Bank Account Setup
Most international banks will require an eligible introducer. This is someone who already has a
relationship with the bank. InternationalCompany.com is an eligible introducer for many
financial institutions throughout the world. Common items that may be necessary when setting
up international bank accounts:
• Application forms with original signatures
• Valid passport copy or driver's license
• Banking references
• Corporate legal documents
International banks have different requirements. Once the international bank account has been
processed, the confirmation is sent typically via email. At that time the bank will wait for a wire
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transfer of initial deposit in order to activate your new account. Some expenses include opening
fee, additional banking cards (if applicable), courier and other expenses. Again, these will vary
between the international banking account providers. Once the bank account is active, you
typically receive online access to create your user account and password. You may also receive
items such as an easy-to-use digital signature device, test key table and other enabling tools to
access your account balance and perform transactions quickly, easily, privately and
securely.InternationalCompany.com has helped thousands of customers worldwide set up
international bank accounts and establishes private financial accounts and asset protection plans.
A trusted provider that has relationships with the right international jurisdictions should conduct
these services with you.
International banking service
Once your international bank account has been established, you will enjoy the luxury of
numerous international banking services including:
• International platinum debit credit cards, allowing you access to your money from over
20,000 ATM machines located across the world. Credit cards can be issued under your
international IBC name, affording you complete privacy when accessing your funds.
• Internet access to your account, ability to verify account balances, transfer funds and
make stock purchases. This will enable you to conduct all your banking affairs from the
comfort of your home.
• International trading / brokerage accounts for online trading of stocks and bonds in global
International markets.
• Corporate checks can be issued in the name of your IBC name with your IBC name
printed on each check operating the same as domestic onshore checking account.
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International Bank Accounts and Security
Banking privacy and security is a major concern. It is a priority that you and your money are
safe. InternationalCompany.com regularly recommends banking institutions that participate in a
central banking system. The system is highly regulated and implements stringent accounting
practices, which provides a stronger infrastructure and independent oversight for local
international banks. Many institutions provide secure and private international banking accounts
to American and foreign corporations and local government officials. The institutions provide
employment and support the local economy. Because of the economy's dependence on the
financial services sector, the privacy and financial safety laws are a longstanding and stable. It is
critical that all prospective clients make the right choice of jurisdiction. We perform extensive
research on many of the top international bank account providers and are glad to provide helpful
information to help you make the proper choice.International banks in some countries participate
in mandated financial protection insurance systems. Security and privacy is taken very seriously.
International banking security and privacy is statutorily enforced, meaning, it's the law, limiting
any information whatsoever to be shared with a third party, including foreign governments.
Naturally, laws permit international bank account providers to share information in cases of
severe criminal acts or terrorism. Banking privacy is not taken lightly. In Switzerland, for
example, any employee violating a customer's privacy is punished severely by law including stiff
fines and jail time.Here are some jurisdictions that are private banking financial centers:
• Antigua
• Bahamas
• Barbados
• Channel Islands (Jersey and Guernsey)
• Dominica
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• Gibraltar
• Hong Kong
• Isle of Man
• Labuan, Malaysia
• Liechtenstein
• Montserrat
• Nauru
• Nevis
• Singapore
• Switzerland
• Turks and Caicos Islands
4. International Banking Institutions
Recommended International Banking Jurisdictions
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International Banking Jurisdictions Listed in order: here is a list of the international banking
jurisdictions are the most advantageous for providing financial safety, privacy, convenience and
return on investment.For initial deposits of over $200,000:
• Switzerland
• Luxembourg
• Lichtenstein
• Isle of Man
InternationalCompany.com specializes in bank accounts in Switzerland; please visit our entire

section on Swiss Banking.For deposits under $200,000, here are the recommended jurisdictions:
• Caribbean (many countries, call for details)
• Latvia
Banking within European Union Jurisdictions
While the scrutiny may be lower and the confidentiality and privacy higher in the lower tax
haven jurisdictions, potential account holders should note that an agreement between European
Union members (and those falling under its purview or jurisdiction) known as the European
Union Savings Tax Directive 2005 may adversely affect their privacy if they are subject to it--
The EU Tax Directive may limit the confidentiality and privacy of certain accounts held in
international banks if these banks happen to be situated in a jurisdiction subject to it.
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As of this writing, the member countries of the European Union are as follows:
Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland,
Portugal, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
Any jurisdictions that is a commonwealth, governed by, or a consigner of these nations and their
laws is subject to the EU Tax Directive. Others may also willingly comply, such as Switzerland
and the United States.Stated simply, the EU Savings Tax Directive 2005 is an agreement
between the EU Member States that allows for the exchange of financial or transactional
information. This agreement is known as the “automatic exchange of information option” and is
the hallmark of the Directive.
The International jurisdictions that are not subject to EU laws or directives do not participate in
this agreement and thusly afford depositors of those jurisdictions an increased level of
confidentiality. Other International Bank Account Jurisdictions
There are many other international jurisdictions that provide many of the same benefits that the
EU versions do, but not bound to the EU Directive. This can be an extremely important
consideration for an investor or depositor looking for a specific benefit for his funds that just
cannot be met by a jurisdiction subject to EU Directive reporting.
Though this is an important consideration, it should not automatically be assumed that it is

always most advantageous to bank in a non-EU Directive adhering jurisdiction. If a potential
depositor meets the initial deposit amount requirements, has his banking goals in alignment with
his bank and its jurisdiction, then an established international locations such as Switzerland can
be better suited to his needs. However, there are very competent jurisdictions not subject to the
EU Tax Directive with initial deposit requirements vastly lower than those of the “established”
jurisdictions. For example, some jurisdictions like Panama and Belize can require as little as
$500 or $1000 US to start.
Geography
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Before the internet explosion of the mid-90, account holders and potential depositors in
international banks would literally have to walk into a bank (or send an authorized representative
to do so) in order to establish an account, transact funds, or formalize agreements. The old “lock
box and key” method reigned supreme. However, since the mid-90’s, there has been a veritable
explosion in services heretofore unimaginable in many service industries worldwide, and this of
course includes international banking. Gone are the days of having to actually walk into the
bank--now, most of the services are a keystroke away, with world wide web access to accounts
and funds. With credit card like debit cards and the advent of electronic funds transfers, virtual
signatures, and the virtually limitless access to the internet, international banking has been
revolutionized into a simpler solution for many individuals and corporations. No matter if your
bank is in the Grand Canyon state or Grand Cayman, most of the features offered by banks are
just a mouse click away. Assuming that all of the precautions are met and adhered to, the
confidentiality of any deposit or investment is as secure as it’s ever been.
Additional Banking Information
International banking accounts operate in the same manner as any domestic bank account. The
client receives a bank account debit card or credit card and online access, wire transfer access
and can perform the typical bank account transactions, plus more. International banks offer many
of the same conveniences and customer service. When selecting your institution it is important
that you choose the provider that is right for your scenario.Many international banking
institutions will allow you to set up a bank account for as little as a $2500 initial deposit, and in
other cases, much less. All of the recommended international bank account providers are highly
regulated and adhere to strict international privacy laws. Private accounts typically require a
higher initial deposit. However those are negotiable depending on the overall account goals and
projections. Any provider of international banking accounts that is recommended by
InternationalCompany.com is accessible via phone, fax and email and attentive to your needs,
yet very discreet.
Your international bank account balance will earn interest, usually free of local taxation in the
bank's jurisdiction. Many countries, including the US, tax worldwide income. The interest rates
are usually higher and the fees are competitive. Many fortune 500 companies, including oil
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companies take advantage of international banking. Some of the more popular tax haven
jurisdictions have hundreds of first-rate banks from which to choose. Financial institutions in
private jurisdictions do not report customer account information to any foreign governments, or
theirs, so it is up to the account holder to do so. InternationalCompany.com establishes thousands
of business structures, bank accounts, privacy and protection plans worldwide. Protecting and
growing the finances of our clients are our biggest concerns.
International Banking institutions offer a wide variety of benefits, when it comes to privacy
Switzerland is hard to beat.
5. International banking regulations and privacy
Our international bank accounts are situated in countries with strict confidentiality enforced by
law. No information can be given to outside parties, including foreign governments and tax
authorities, regarding your banking activities. There are no taxes rendered on accounts. Tax
avoidance not considered a crime in these countries. There are no statures in relation to taxation,
making it is impossible for outside litigation to be brought against you and your bank account.
Banks will not even acknowledge the presence of your account.
The international banking sector is regulated far more strictly than banks at home. Each
international bank must hold greater reserves than their domestic counterparts. All banking
deposits are fully insured. As an extra safety measure all international institutions are rigorously
audited by central banks of each jurisdiction, safeguarding all banking deposits and the
international banking system at large
Where Should an International Bank Account be Established?
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It is important that the proper jurisdiction be selected when deciding which jurisdiction to use as
an international banking jurisdiction. The majority of the international jurisdictions have prudent,
sound regulations in place geared towards safeguarding the deposits and maintaining their
confidentiality. However, some weigh their benefits in taxation, while others in confidentiality,
and so forth. Though they all offer a comparatively confidential and secure environment, it bears
consideration to outline what the banking goals are and then choose the jurisdiction accordingly.
A small minority of the international jurisdictions does a poor job of managing and regulating
their banking institutions, but the informed investor or advisor will deem these as unsuitable for
themselves or their clients. Further, these poorly organized and run jurisdictions are often
manipulated by illicit depositors and hence prove easy targets of the FATF (Financial Action
Task Force) looking for money laundering or other criminal activity.
STATE BANK OF INDIA
Profile
Spreading its arms around the world, the SBI’s International Banking Group delivers the full
range of cross-border finance solutions through its four wings – the Domestic division, the
Foreign Offices division, the Foreign Department and the International Services division.
The Domestic wing provides services like merchant banking, shipping finance and project export
finance. The Foreign Offices wing offers the entire range of international trade and industrial
finance products, while the Kolkata-based Foreign Department undertakes treasury and currency
operations.The International Services division renders specialized services like correspondent
banking, global link services and country and bank risk exposure monitoring. Being India’s
largest and most trusted commercial bank, the SBI offers you a network of relationships
unmatched in strength and span by any other Indian financial entity.
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The bank has a network of 131 offices/branches in 32countries spanning all time zones. The
SBI’s international presence is supplemented by a group of Overseas and NRI branches in India
and correspondent links with over 522 leading banks of the world. SBI’s international joint
ventures and subsidiaries enhance its global stature.
The bank has carved a niche for itself in Euro land with branches strategically located in Paris,
Frankfurt and Antwerp. Indian banks and corporate are able to avail single-window Euro
services from SBI Frankfurt.
These strengths are reinforced by a dedicated and highly skilled team of professionals deployed
by the bank in each specific segment.
TRADE FINANCE
Introduction
SBI Understand there is much stake involved in Export Import business Global economic,
political situations, anything and every thing that affects you and your business. SBI offers the
trusted financial solution to all your complex Trade finance related fund needs (both in Indian
rupee and foreign currencies).
The gamut of our services include credit for both pre shipment and post shipment activities.
EXPORT AVENUE
RUPEE EXPORT CREDIT (PRE-SHIPMENT AND POST-SHIPMENT)
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SBI understands and values your Pre shipment and post shipment commitments. our trade
finance cell offers both Pre shipment and Post shipment credit in rupee denominated terms to
exporters having firm export orders or confirmed letters of credit.
• Avail Rupee export credit at most competitive rates at 449 branches.
• Pre-Shipment Export Credit
SBI offers Pre-shipment Credit (Packing Credit) to the exporters, for financing purchase,
processing, manufacturing or packing of goods prior to shipment.
This would mean any loan or advance extended to you by SBI on the basis of:
a) Letter of Credit opened in your favor 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 lodgement 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. 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.
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Post-shipment 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. The details of pre-shipment and post-
shipment credit in foreign currency are mentioned below.
PRE-SHIPMENT CREDIT IN FOREIGN CURRENCY (PCFC)
SBI‘s Pre-shipment Credit in Foreign Currency (PCFC) is just what you need, when you are
looking for funds in foreign currency. Avail it to meet your manufacturing, processing and
packing fund requirements at international interest rates. Just not this, you can also cover the cost
of both domestic as well as imported inputs of SBI’s PCFC gives you 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 your
exclusive convenience. Our Foreign Department, based at Kolkata, is the nodal centre for
raising and deploying international and onshore funds for lending under PCFC.
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EXPORT BILL REDISCOUNTING
Introduction
Avail SBI's export bill rediscounting (EBR) for post shipment finance at international rates of
interest. PCFC will be liquidated with the discounting of bills under EBR scheme. The foreign
currency of the bill will be applied to PCFC in foreign currency and if there is any surplus of the
bill after adjusting to PCFC, the surplus portion will be converted into Indian rupees and credited
to the exporter's CC or Current account.
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. Take your pick from any of the four
designated currencies: US Dollar, Pound Sterling, Euro and the Japanese Yen. Contact any of
our 64 forex-intensive branches handling EBR.
IMPORT AVENUE
Letter of Credit
Leverage SBI's reputation and goodwill in the global market! Avail of SBI's Letters of Credit for
your purchases in international and domestic trading operations.SBI offers Letters of Credit to
facilitate purchase of goods in international trading operations. Backed by SBI's strong
reputation, you will be able to build better trust in trade and forge business relationships
faster.The bank's vast network of branches and correspondent banks enables your enterprise to
sustain a seamless flow of business on a wide platform.
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Further, the bank's informed trade finance crew can provide you with sophisticated credit and
trade information, and market knowledge, helping you 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.
Foreign Currency import credit
This 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.
Suppliers Credit
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Suppliers' Credit essentially represents credit sales effected 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 up to 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. 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. 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. 9400 billion now) per import transaction. The 'all-in-cost'
per annum, payable for the credit does not exceed 6 months LIBOR + 200 basis points.
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 bank has deployed a dedicated Correspondent Relations section to
attend exclusively to create, nurture, cultivate and continue relationship in correspondent
banking.
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The Correspondent Relations section helps SBI’s correspondents market and distributes their
products for various applications of the bank and its Customers. Meanwhile, the bank’s Foreign
Department, based in Kolkata (Calcutta), handles all operational aspects of correspondent
banking, including all matters pertaining to the exchange of test keys and swift authenticator
keys (SAK), appointment of correspondents, maintenance and reconciliation of Nostro accounts,
and treasury management. All trade and retail transactions are handled by the vast network of
SBI's branches. However, only designated branches handle International Banking activities.
Designated branches enjoy delegated authority to receive/pay through the NOSTRO accounts
maintained by the Foreign Department.
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.
Products and Services
• Creating, nurturing, cultivating and maintaining SBI’s network of over 522 correspondent
relationships.
• Providing support to the correspondents in marketing and distribution of their products

for various applications of the SBI and its clients.
• Complaint Resolution of correspondents.
• Setting up Standard Settlement Instructions
• SWIFT Channel of SBI (In India)
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• Swift Linked Offices ( 146 In Number at Various Locations )
• SWIFT Authenticator Keys are centralized at SOC (Prior Clearance of FD is required for
exchange of SAKs).
• Although FD is SWIFT Linked, messages regarding fund transfers, Letters of Credit,

Guarantees, etc., should not be sent to them. These should be sent to the branches
concerned giving Branch Code No., Name of the Branch, Name of Beneficiary and
Account No.
• Use correct BIC Number of the branch for which the message is meant (list appended).
• Draw Payment Orders only in currencies mentioned in the schedule of Agency

Arrangements (as agreed upon between SBI and correspondents).
• Payment Instructions containing all relevant details should be sent to the branch
concerned for execution of the payment order with specific details as to where cover
funds have been provided.
• Cover funds for remittances should be provided to the respective Nostro account with full
details viz., branch name, code number, name of the beneficiary etc., in accordance with
the Agency Arrangements. Messages for paying funds into our Nostro Account without
any authenticated payment instruction directly to the drawee branch result in delay,
inconvenience to beneficiary and embarrassment to remitter. Branches may be advised to
get full details from remitter before sending remittances (please refer to Standard
Settlement Instructions).
• Payments relating to our Associates/ Subsidiaries may not be sent to our branches as they
maintain their own nostro accounts and have their own arrangements for such payments
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MERCHANT BANKING
SBI’s Merchant Banking Group is strongly positioned to offer perfect financial solutions to your
business. We specialize in the arrangement of various forms of Foreign Currency Credits for
Corporate.
We provide the resources, convenience and services to meet your needs 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.
We are internationally the most Preferred Bank by Export Credit Agencies for Guarantees in
case of the Indian Clients or Projects.
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SBI being an Indian entity has no India exposure ceiling. Our Primary focus is On Indian Clients.
SBI’s seasoned Team of professionals provides you with Insightful credit Information and helps
you Maximize the Value from the transaction.
SBI’s PRODUCTS AND SERVICES
1. Arranging External Commercial Borrowings (ECB)
2. Arranging and participating in international loan syndication
3. Loans backed by Export Credit Agencies
4. Foreign currency loans under the FCNR (B) scheme
5. Import Finance for Indian corporate
PROJECT EXPORT FINANCE
State Bank of India is an active participant in the area of finance of Project export activities.
These activities will mainly involve financing the fund based and non fund based requirements
of the project exporters.
• Export of engineering goods on deferred payment terms
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• Execution of turnkey projects abroad
• Execution of overseas civil construction contracts abroad
• Exports of services are the contracts for export of consultancy, technical and other
services.
Project export contracts are generally of high value and exporters undertaking themarerequired to
offer competitive terms to be able to secure orders from foreign buyers in the face of stiff
international competition.
Our vast network of branches spread all over the country which are authorized to handle trade
related transactions,substantial presence overseas with branches/offices in allmajorcommercial
centers of the world covering all time zones and our strong network of correspondent
relationship with top ranking banks in several countries adds to our competitive strengths to
facilitate and meet various requirements of project exporters. More over we also enjoy the
comprehensive credentials in International banking community.
REGULATORY FRAMEWORK
Exchange Control Regulations:
The exchange control regulations relating to Project and Service Exports revised from time to
time are contained in the Memorandum of Instructions on Project and Service Exports (PEM)
issued by Reserve Bank of India. The directions contained in the PEM are issued under Section
10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999)
Authority structure for clearance of Project Export proposals:
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Reserve Bank of India has laid down the authority structure for clearance of project export
proposals based on the value of contract:
• Contract value up to USD 100 mio– Authorized Dealer
• Contract value above USD 100 mio – Working Group
Thus proposals with contract value up to USD 100 mio can be cleared at State Bank of India and
proposals with contract value above USD 100 mio, the reference to Working Group is done by
SBI as the Sponsoring Bank on behalf of our customer.
EXPORTER GOLD CARD
State Bank of India has launched "SBI EXPORTERS GOLD CARD SCHEME" to meet the
working capital needs of exporters with good track record and credit worthiness, subject to their
fulfilling the specified eligibility norms. The salient features of the scheme are as under:
Assessment norms have been simplified and for units with export turnover up to Rs. 100 crore
simplified assessment in terms of Nayak Committee norms will be made within specified time
norm not exceeding 25 days in case of new sanctions and 15 days in case of renewals.
Further relaxations, subject to certain conditions, in the form of automatic renewal of limits after
the three year tenure as also simplified method for effecting annual step-up in limits is being
examined by the Bank.
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.
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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.
International Credit/Debit cards and Internet Banking facilities shall be extended to the SBI
Exporters Gold Card holders on priority basis.
TREASURY
Profile
India's largest bank is also home to the country's biggest and most powerful Treasury,
contributing to a major chunk of the total turnover in the money and forex markets. Through a
network of state-of-the-art dealing rooms in India and abroad, backed by the assured expertise of
informed professionals, the SBI extends round-the-clock support to clients in managing their
forex and interest rate exposures.SBI's relationships with over 700 correspondent banks are also
leveraged in extracting maximum value from treasury operations. SBI's treasury operations are
channeled through the Rupee Treasury, the Forex Treasury and the Treasury Management
Group.
The Rupee Treasury deals in the domestic money and debt markets while the Forex Treasury
deals mainly in the local foreign exchange market. The TMG monitors the investment, risk and
asset-liability management aspects of the Bank's overseas offices.
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Rupee Treasury
The Rupee Treasury carries out the bank’s rupee-based treasury functions in the domestic
market. Broadly, these include asset liability management, investments and trading. The Rupee
Treasury also manages the bank’s position regarding statutory requirements like the cash reserve
ratio (CRR) and the statutory liquidity ratio (SLR), as per the norms of the Reserve Bank of
India.Products and Services
• Asset Liability Management (ALM): The ALM function comprises management of

liquidity, maturity profiles of assets and liabilities and interest rate risks.
• Investments: SBI offers financial support through a wide spectrum of investment

products that can substitute the traditional credit avenues of a corporate like commercial
papers, preference shares, non-convertible debentures, securitized paper, fixed and
floating rate products. SBI invests in primary and secondary market equity as per its own
discretion.
These products allow you to leverage the flexibility of financial markets, enable efficient interest
risk management and optimize the cost of funds. They can also be customized in terms of tenors
and liquidity options.
SBI invests in these instruments issued by your company, thus providing you a dynamic
substitute for traditional credit options. The Rupee Treasury handles the bank’s domestic
investments.
Trading
The bank’s trading operations are unmatched in size and value in the domestic market and cover
government securities, corporate bonds, call money and other instruments. SBI is the biggest
lender in call.
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For-ex Treasury (FX)
The SBI is the country’s biggest and most important Forex Treasury, both in the Interbank and
Corporate Foreign Exchange markets, and deals with all the major corporate and institutions in
all the financial centers in India and abroad.The bank’s team of seasoned, skilled and
professional dealers can tailor customized solutions that meet your specific requirements and
extract maximum value out of each market situation.
The bank’s dealing rooms provide 24-hour trading facilities and employs state-of-the-art
technology and information systems. SBI’s relationships with over 700 correspondent banks and
institutions across the globe enhance the strength of the Forex treasury.
The FX Treasury can also structure and facilitate execution of derivatives including long term
rupee-foreign currency swaps, rupee-foreign currency interest rate swaps and cross currency
swaps.
Overseas Treasury Operation
The Treasury Management Group (TMG) is a part of the International Banking Group (IBG) and
functions under the Chief General Manager (Foreign Offices). As the name implies the
department monitors the management of treasury functions at SBI’s foreign offices including
asset liability management, investments and for-ex operations.
Products and Services
• Asset Liability Management (ALM): The ALM function comprises management of

liquidity, maturity profiles of assets and liabilities and interest rate risks at the foreign
offices.
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• Investments: Monitoring of investment operations of the foreign offices of the bank is

one of the principal activities of TMG. The main objectives of investment operations at
our foreign offices, apart from compliance with the regulatory requirements of the host
country, are (a) safety of the funds invested, (b) optimization of profits from investment
operations and (c) maintenance of liquidity. Investment operations are conducted in
accordance with the investment policy for foreign offices formulated by TMG.
• The activities include appraisal of the performance of the foreign offices broad
parameters such as income earned from investment operations, composition and size of
the portfolio, performance vis-à-vis the budgeted targets and the market value of the
portfolio.
• For-ex monitoring: Monitoring of for-ex operations of our foreign offices is done with
the objective of optimizing of returns while managing the attendant risks.
• Forex and Interest rate (Foreign Currency) derivatives: TMG also plays an important role
in structuring, marketing, facilitating execution of foreign currency derivatives including
currency options, long term rupee - foreign currency swaps, foreign currency interest rate
swaps, cross currency swaps and forward rate agreements. Commodity hedging is one of
the recent activities taken up by TMG.
• Reciprocal Lines: The department is also responsible for maintenance of reciprocal lines
with international banks.
Portfolio Management & Custodial Services
The Portfolio Management Services Section (PMS) of State bank of India has been set up to
handle investment and regulatory related concerns of Institutional investors functioning in the
area of Social Security.
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The PMS forms part of the Treasury Dept. of State Bank of India, and is based at Mumbai.PMS
was set up exclusively for management of investments of Social Security funds and custody of
the securities related thereto. In the increasingly complex regulatory and investment environment
of today, even the most sophisticated investors are finding it difficult to address day to day
investment concerns, such as
• adherence to stated investment objectives
• security selection quality considerations
• conformity to policy constraints
• investment returns
The team manning the PMS Section consists of highly experienced officers of State Bank of
India, who have the required depth of knowledge to handle large investment portfolios and
address the concern of large investors. The capabilities of the team range from Investment
Management and Custody to Information Reporting.
SBI OPENS INDIA'S FIRST INTERNATIONAL BANKING UNIT
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State Bank of India has opened the first International Banking Unit (OBU) in India at the
SEEPZ 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.The OBU will be deemed
as an overseas branch of the Bank and undertake the following activities:
1. Raise funds in convertible foreign currency as deposits and borrowings from Non
Residents sources.
2. Transact in foreign exchange with residents in India who are eligible to enter into or
undertake such transactions in terms of various Rules and Regulations as framed under
Foreign Exchange Management Act, 1999.
3. Open foreign currency accounts abroad as well as with other OBUsin India
4. Trade in foreign currencies in the overseas market and also with banks in India where
both legs of the transactions are denominated in foreign currencies.
5. Provide customized loan and liability products for the benefit of clients
6. Maintain Special Rupee account with an Authorized Dealer in India out of the
convertible foreign exchange resources for meeting local expenses
7. Buy Rupees from an Authorized Dealer in India to fund the Special Rupee Account.
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
45
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. We kindly request you to use this Certification
instead of approaching directly State Bank of India's branches.
This Certification only covers State Bank of India and its branches and does not cover its
subsidiaries and joint ventures. If the Certification is required from our subsidiaries and joint
ventures, please contact them directly.
8. Advantages of International Banking
• International 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. However it is
often argued that developed countries with regulated banking systems offer the same
advantages in terms of stability.
• Some international banks may operate with a lower cost base and can provide higher
interest rates than the legal rate in the home country due to lower overheads and a lack of
government intervention. Advocates of international banking often characterize
government regulation as a form of tax on domestic banks, reducing interest rates on
deposits.
• International finance is one of the few industries, along with tourism, in which
geographically remote island nations can competitively engage. It can help developing
countries source investment and create growth in their economies, and can help
redistribute world finance from the developed to the developing world.
• Interest is generally paid by international 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.
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• Some international 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.
• International banking is often linked to other structures, such as international companies,

trusts or foundations, which may have specific tax advantages for some individuals.
• Many advocates of international banking also assert that the creation of tax and banking
competition is an advantage of the industry. Critics of the industry, however, claim this
competition as a disadvantage, arguing that it encourages a "race to the bottom" in which
governments in developed countries are pressured to deregulate their own banking
systems in an attempt to prevent the off shoring of capital.
9. Disadvantages of International Banking
• International bank accounts are less financially secure. In banking crisis which swept the
world in 2008 the only savers who lost money were those who had deposited their funds
in international branches of Icelandic banks such as Kaupthing Singer & Friedlander.
Those who had deposited with the same banks onshore received all of their money back.
In 2009 However only international centers such as the Isle of Man have refused to
compensate depositors 100% of their funds following Bank collapses. Onshore depositors
have been refunded in full regardless what the compensation limit of that country has
stated thus banking international is historically riskier than banking onshore.
• International banking has been associated in the past with the underground economy and
organized crime, through money laundering
• Following September 11, 2001, international 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.
• International jurisdictions are often remote, and therefore costly to visit, so physical
access and access to information can be difficult. Yet in a world with global
47
telecommunications this is rarely a problem for customers. Accounts can be set up online,
by phone or by mail.
• International private banking is usually more accessible to those on higher incomes,

because of the costs of establishing and maintaining international accounts. However,
simple savings accounts can be opened by anyone and maintained with scale fees
equivalent to their onshore counterparts. The tax burden in developed countries thus falls
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.
• International bank accounts are sometimes touted as the solution to every legal, financial
and asset protection strategy but this is often much more exaggerated than the reality.
International Banking Myths
International banking comes with a stigma, so many entrepreneurs and business professionals
cringe at the mere mention that their money can be safely kept in an International bank account.
Images of fast, expensive boats, drug kingpins, and white suits come instantly to mind. This
perception, of course, has not been helped by the proliferation of bad Hollywood movies,
television shows, and negative portrayal in the press--they could not be further from the
truth.The fact is that international financial centers (OFC) or banks, also known as tax havens,
exist mostly for the purpose of providing asset protection, asset growth, tax reduction, depending
on your jurisdiction, and excellent service for foreign individuals and corporations, large and
small, around the world. While not as glamorous nor exotic as they are so often portrayed,
international banking and financial centers can present real world solutions to many of the issues
facing people looking for asset protection from pending lawsuits, or as a way to mitigate the
ramifications of a local unstable government. To be sure, an international bank account can also
provide asset protection from the ordinary perils of things such as divorce, poor market
conditions, or extraneous litigation that is so often a marked consideration in the Western world.
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International Bank Accounts, Money Laundering, and Other Criminal

Activity
It would be a misstatement to state that no illicit funds find their way into International bank
accounts--but as we will soon see, that isn’t really saying much. In reality, those jurisdictions that
the average lay person would least suspect to be guilty of this or other illegal banking activities
have turned out to be the major money laundering and criminal enterprise-funding centers in the
world. And the United States is chief among them, with an estimate half of all of the money
laundered in the world laundered within its 50 states. This half translates to a conservatively-
achieved estimate of $300 billion US.Of course, the United States is not the only high-tax, or
“large” jurisdiction that is home to this activity, with other countries such as the UK and
Germany sharing in this dubious distinction.So although the haven international banking
jurisdictions are perceived to be the ideal locale for the financing of the criminal underworld, the
reality is that the high-tax jurisdictions house the vast majority of these funds, with the low-
taxation havens representing a much smaller percentage overall.
These types of facts, of course, are very rarely ever reported by news and print media, or by the
jurisdictions that are frankly quite embarrassed by these astonishing figures.
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Conclusion
As a student of BBI I had a great opportunity to do a project of “International

Banking” which was indeed a wonderful experience and has enhanced my
knowledge in banking sector. This study on International Banking is important not
only to an organization, shareholders, and banking sector but also to an Indian
economy as a whole. Due to globalization and liberalization our conomy is
opening its door for reforms. The onset of International banking will undoubtedly
accelerate the pace of structural change within the Indian banking system. The
financial institutions as a segment will essentially convert into banks.
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Case Study:
Kotak Mahindra Bank: Gearing up for the future

Bank profile
Established in 1985, the Kotak Mahindra group is one of India’s leading financial services
conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group’s flagship
company, received a banking license from the Reserve Bank of India (RBI). With this, KMFL
became the first non-banking finance company in India to become a bank – Kotak Mahindra
Bank Limited.
Business drivers
In 2009, Kotak Bank decided to transform its Core Banking Solution (CBS). The existing legacy
system for retail and corporate banking had not been updated even once in the last 7 years, and
was laboring under the load of the bank’s rapid growth. It rested on branch server architecture;
had become increasingly expensive to maintain and fix; and presented several performance
issues including being unavailable to the bank’s back office during end of day operations. But
most importantly, the solution lacked vital functionalities, such as NEFT/RTGS Payments, Flexi
Deposits, Sweeps, and so on. Unfortunately, the CBS had been customized over the years to such
a large extent that it was a herculean task to migrate to the latest version of the existing legacy
system. Under the circumstances, total replacement seemed an easier alternative.
Key selection criteria
The bank considered a number of core banking technology vendors, before shortlisting Finacle.
Over a period of 4 months, they evaluated each of these vendors through a series of
demonstrations, product walkthroughs, functionality mapping exercises and technology reviews.
At the end of this process, the Bank reached two conclusions – one, that it was indeed unviable
to upgrade to the latest core banking offering from their existing vendor, and two, that Finacle
was the best fit, both functionally and technologically, for their requirements.
A key factor, which swung the decision in favor of Infosys and Finacle was their alignment with
Kotak Mahindra Bank’s future aspirations. The bank clearly intended the new CBS to support
their ambitious growth plans. This was evident even from their RFP, which contrary to most,
made little mention of the solution’s current attributes, focusing instead on its future
functionalities. Infosys’ response to the RFP indicated that Finacle was best placed to fulfill the
bank’s expectations. Also, it was already compliant with Indian regulations, which was an added
advantage.
Solution components
Core banking
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Key success factors
 One of the biggest reasons for this success was the teams’ unrelenting focus on achieving
what they had set out to do, which was to eliminate the problems of the existing system
and ensure that there was no disruption of business during and after the Finacle “go live”.
 Accomplished this through an unprecedented amount of testing which saw more than 100
“end of days”, and simulations of operations right through to April 2012 prior to going
live
 The bank’s insistence on testing every offering before giving it the go ahead – as well as
its vast test case repository – was a contributing factor in the smooth execution
 The availability of the production environment at the simulation stage itself, which gave
the bank and the implementation team a realistic preview of the results that they could
expect after going live on the new system.
Benefits
 Agility and short time to market

 Scalability to support future growth
 44% increase in new accounts added in the quarter succeeding implementation
 Increase in new sales, cross sales and fee income
 New offerings, such as RTGS Payments, Sweeps and Standing Instructions
 24x7 back office
52
Bibliography
BOOKS:
International Banking and Finance

By Dr. Chandra Hariharan Iyer
• http://www.offshorecompany.com
• http://www.confidentialbanking.com/
• http://www.statebankofindia.com/
• http://www.offshorebank.net/
• http://www.sterlingoffshore.com
• http://taxhavenco.com
• http://www.offshorecompany.com
• www.wikipedia.com
• www.nvestopedia.com
• www.moneycontrol.com
53

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Project Submitted at “Sree Narayana Guru College of Commerce” BY MTIUL HAQUE

SREE NARAYANA GURU COLLEGE OF COMMERCE

P.L. LOKHANDE ROAD, CHEMBUR MUMBAI, 400089.

In partial fulfillment of the requirement for the

SREE NARAYANA GURU COLLEGE OF COMMERCE

I MR. MATIUL HAQUE from SREE NARAYANA GURU COLLEGE OF

SREE NARAYANA GURU COLLEGE OF COMMERCE

Karishma kasare Dr. Ravindran Karthadi

It is a matter of immense satisfaction and happiness to present this project on International

PRIMARY DATA / SECONDARY DATA

Sr. no. Topics Page No.

2 Role of International Commercial Banks in Developing 10

3 International Bank Accounts 13

4 International Banking Institutions 20

5 International banking regulations and privacy 25

7 State Bank of India 35

8 Advantages of International Banking 57

9 Disadvantages of International Banking 60

In particular: Business activities have to be transacted in foreign languages and

 Under foreign laws and regulations. Information on foreign countries needed by a

Reasons for Engaging in International Banking

• Commercial risk can be spread across several countries.

• Facilitation of international businesses and trade.

• Involvement in international banking can facilitate experience curve effect

• Economies of scope might become available

• Reduce cost of service delivery

• Recognition and reputation

History of International Bank

Modes of International Banking

Branches and Agencies

Both agencies and branches are principally active in international market.

2. Role of International Commercial Banks in Developing Countries

• Mobilization of Savings for Capital Formation

• International commercial banks help in overcoming savings through a network of branch

Help in Monetary Policy:

The international commercial banks help in economic development of a country by faithfully

Features of international banking

• International banks provide access to politically and economically stable jurisdictions.

• Interest is generally paid by international banks without tax deducted. This is an

• International banking is often linked to other structures, such as international companies,

3. International Bank Account.

An Offshore Bank Account

How Offshore Bank Accounts Work

Receiving / Sending Money with Your Offshore Bank

Offshore Bank Accounting

International Bank Account Setup

• Application forms with original signatures

• Valid passport copy or driver's license

• Corporate legal documents

International banking service

International Bank Accounts and Security

• Channel Islands (Jersey and Guernsey)

• Turks and Caicos Islands

4. International Banking Institutions

Recommended International Banking Jurisdictions

InternationalCompany.com specializes in bank accounts in Switzerland; please visit our entire

• Caribbean (many countries, call for details)

Banking within European Union Jurisdictions

Though this is an important consideration, it should not automatically be assumed that it is