Month: January 2019

The worldwide growth in international trade and investment during the previous decades brought about renewed interest in offshore lending, transforming it from simply a business that was primarily engaged in the financing of trade, into a much broader enterprise which is heavily involved in transactional lending. Offshore international capital loans have been extended by banks for many years.

An international loan, in its simplest form is financing given by a foreign lender to a U.S. borrower. Likewise, when a foreign borrower obtains financing from the US, the loan is also said to be international in nature. A better definition of international loan therefore would be any capital that was made offshore or across the border.

Often, international loans exhibit the same characteristics as with domestic lending, such as import and export financing. Loans to foreign and local companies, partnerships, and individuals including, foreign entities of US corporations that borrow on their own without any form of support from the parent are also available to bolster international capital management.

As with domestic banking, there are international business loans, real estate and commercial. Offshore banking bank transactions can also include international mortgage or home loans and repeat financing. Some capital sources can even act as consultants in international loan packaging or provide cash payday loan services. International loan providers and lenders provide personal and payday loans, construction and project financing among others.

But while foreign credit markets or international capital markets have more moving parts than do domestic markets, they differ only in detail and not in the basic offshore bank formation. For the lender, lending principles are the same in Rhode Island and in any offshore bank Bahamas may have. The same principles, understanding the transaction, adequate knowledge and understanding of the borrower, risk definition and a clear indication that the loan will be repaid, still apply.

The borrower, meanwhile, defines his needs for funds, develops overall financial strategy which will structure the loan in a way that makes the most sense, and negotiates with the offshore bank formation to meet his requirements. These reciprocate the lender’s ability to make funds available, and the patterns used in making them available and interact with his standards.

Mobile banking is a new and exciting way to bank for the customers in India. It not only has the multiple banking operations but also has quite a few support functions. Yet, it hasnt reached across India, as anticipated -RBI suggested. However, the growth in mobile banking in India is extremely encouraging. Here are few facts that will surprise you.

There is more than 7% month-on-month growth in the number of mobile transactions in India. This is based on the monthly transactions by August 2013.
By September 2013, the users have exchanged around Rs. 1565 Cr though the mobile transactions.

Though, the year-on-year growth is phenomenal, it cannot be considered well received when only a small fraction of the Indian banking customers are using it. When you realize the number of functionalities available, it is surprising that more numbers of people are not using it. The banking and allied functionalists available via mobile banking application are:
Locate the nearest branch of the bank via Google maps
Order a new cheque book
Check the status of new cheque book
Transfer funds
Check the balance available in the account
Take the mini-statement of the account
Pay utilities bills, credit card bills, insurance premiums, etc.
Make donations
Top up mobile recharge
The demat account services such as purchasing mutual funds, cancelling transactions, check NAVs, etc.

Arguably, all these services are not available in all the mobile banking apps released by all the banks. There is no sufficient response to the already-launched apps either. The research indicates that the primary reasons for this low-responsive state are:
Compatibility: The existing apps are not compatible with the various types of smartphones available in the market. Though, the smartphone market in India is expanding at the extraordinary rates, it is challenging to identify and release as many versions of the banking applications in the respective app stores. So, all interested customers dont get the app for mobile banking.
Awareness: All the bank customers are not aware of these apps. In spite of the promotions, this information hasnt penetrated down to all the social strata.

With few changes, the growth of smartphone banking in India can go in the high gear. It will become a routine concept. However, there are considerable infrastructure challenges. We still need to overcome them. With the right marketing and information strategy in place, interest and participation in the phone banking operations will reach sky high.

The State Bank of India is set to introduce green-channel banking to promote paperless work and reduce footfall of customers in the already over-burdened ATMs and branches. p>

SBI general manager for network-I D Mozumdar said here on Saturday that apart from regular counters, a new counter was being opened in which customers could swipe their ATM cards and enter the pin code to receive cash from the person manning the counter. “In this way, there will be no requirement for paperwork and the process of money withdrawal will be fast,” he said.

Under the financial inclusion scheme of the Reserve Bank of India, SBI has been asked to take up responsibilities in 43 of the 156 “under-banked” blocks of the state, besides extending banking facilities to 408 villages having a population of over 2,000 people. Mozumdar said SBI would connect 200 villages by March this year through different banking techniques. “We do not require brick and mortar branches these days to extend banking facilities because technology has made the work easier and SBI is fortunate to have all the modern banking technology,” he said.

All 200 villages where SBI is planning to launch services by March will be on technology platform that includes micro-ATM or mobile-based banking in which the customers having a mobile phone can access his or her account through the cell phone and bio-metric smart cards by which a user is identified on a hand-held machine through finger prints. Business correspondents appointed by bank will also disburse cash along with printed receipts and through kiosk-mode in which the bank provides a laptop with face-reading and voice-recognition software to enable transactions.

Collateral management is something that is used in banking to help secure against the chances of somebody defaulting on a payment. It has been used for hundreds of years but has only been common and regularized since the 1980s.

The History of Collateral Management Solution

The first time that securities lending were used officially was in the 1980s by the Bankers Trust and the Salomon Brothers. They would take collateral to help protect them against their lenders potentially defaulting on any payments and losing out on the money. However, there are now standards legally on the collateral management solution and this did not happen until 1994.

Since then, technology has advanced and banking software is now widely available to help with determining the collateral based on the amount of loan required. There is also much more scrutiny over the solution and it has become something that is rather complex.

Lowering the Credit Risk

There are many people who are looking to borrow money, whether it is to buy a home, a car or even just to pay off the debts. When the amount gets to a certain amount, there is much more risk on the banks as there is no guarantee that the borrower will be able to pay back the money, this is when the securities lending comes in.

The collateral will be used to help reduce the risk and is something that has become extremely popular since 2008, when the economic crisis hit. It is also commonly used on those who have defaulted on loans in the past but need to borrow money to stay afloat.

The Types of Collateral

When it comes to using banking software, there are different types of collateral on offer. They each have their own risks and their own benefits but it is up to the bank as to the type of collateral management solution used.

Letters of credit and guarantors are used commonly for those who have very bad credit. This offers the chance for someone else to shoulder the debt if the original borrow is not able to pay off the debt. Of course, this form of securities lending has many risks to the guarantor since the debt will fall onto them and they will need to ensure they can pay it off or make arrangements with the original borrower.

Real estate and equity are other common options for collateral. When someone wants to borrow a large amount of money, they will usually put their home up as equity or the home will automatically be used as security in the banking software when taking out a mortgage. The pros to this is, that the borrower does not usually have to put up any money beforehand but there are risks in losing the house if defaults are made.

Cash is another option and has been noted to be one of the most popular. Surprisingly, cash is used in 82% of times, claims the ISDA.

What Is Collateral Management?

A collateral management solution is the full process of granting the loan, verifying details and the collateral and then giving advice on the types of collaterals that will help to reduce the risk to credit. However, there are other functions to this management. Securities lending also makes it possible for a borrower to gain more money than one would without the collateral in place.

Prime Services offered by a commercial bank include processing of payments by way of telegraphic transfer, issuing bank drafts and bank cheques, accepting money on term deposits, lending money through overdraft or through installment, providing letter of credit, safe keeping of documents, currency exchanges thereby enacting the role of a financial supermarket. The Commercial Bank lays more importance on loans that it provides to its customers. These loans are Secured Loans, Mortgage Loans & Unsecured Loans. A secured loan is one in which a borrower pledges some asset as collateral against the loan. A mortgage loan is granted to purchase property against security provided to the bank until the mortgage is paid of in full. The mortgage or loan can be repaid in easy installments. Unsecured loans are granted without any specific securities, under marketing packages like credit cards, debit cards, corporate bonds, etc. All in all a commercial bank raises funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time (or term) deposits & loans it to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets are loans and bonds.

Commercial Banking in India categorizes itself into project finance & working capital. In the case of Project Finance banks in India offers long & short term loans to business houses to set up their projects. These kinds of loans are issued after approval from banks core credit validating committee. The Project Finance segment in the commercial department is highly competitive with different players in the department trying to get the best deals done by enticing different corporate houses and business organizations to opt for the loan by providing lucrative offers. Working Capital or Capital Funds are issued by banks to corporate or business houses to meet diverse needs and requirements of the business community. Working capital finance is specialized line of business and is largely dominated by the commercial banks.

Commercial Banking in India saw dramatic changes in the last decade after Indias integration with world economy. These economic reforms and the entry of private players saw nationalized banks revamp their service and product portfolio to incorporate new, innovative customer-centric schemes. Marketing and brand building programs were also given a new thrust in the new liberalized banking scenario. Promotional budgets were hiked to cater to the new and large discerning target audience. To meet the personalized needs of the customer and in order to differentiate its services, banks repositioned themselves in specialized fields, like housing loans, car finance, educational loans etc. to optimally service the customer. As of today Commercial Banking in India dominates other areas of banking such as retail banking and investing banking, solely due to influx and the term called installments that lures the customers to opt for loans to satisfy their business needs whether it is corporate or personal needs in terms of a mortgage loan. Commercial banking in India has definitely brought in a new dimension to regulation of finances in the Indian market.