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Abhirup Ubale Manish Jadhav Mansi Kumar Shoni Johnson Sushil Padhi 02 23 25 46 51
It is an extension of the euro-currency concept to the East, which provides a link between euro-currency markets and the final borrowers. It provide essential time zone links that are truly worldwide, and ensure that the market operates 24 hours a day. While offshore banking is an integral part of the euromarket, what distinguishes it from the mainstream euro market is that it was specially set up by host countries to promote international banking.
Advantages
Multi-currencies Avoid the risks Tax benefit Maximum flexibility Any interest earned is usually paid free from the deduction of taxation Greater account privacy Less government intervention Benefit of a relationship manager or private bank account manager
Disadvantages
More risky
FINANCIAL MARKETS
DOMESTIC MARKET
Subject to Countrys Regulators, Securities Market Authority Trading Asset Denominated in domestic currency. In India, Government and Corporate debt Banks Loan Stock Market
OFFSHORE MARKET
Subjects to International Character Outside the geographical boundaries of the countrys currency. Involves foreign currency transactions Examples
Funds are employed in financing capital-intensive local projects or turnkey projects undertaken in foreign countries by the exporters of the host country. Funds also may be utilized in manufacturing goods in the offshore zone goods. The goods manufactures may be taken back to the parent country or exported to the other countries. Profits from banking operation are repatriated to the parent bank usually Tax free. Operations of such Units are subject to exchange control current regulation from time to time being in the host country
Initially, International Banking centres were extensions of Domestic centres. Unknown market for banking centres like LONDON and NEWYORK grew rapidly to become OBCs Backed by Govt. Policies and Regulations.
ADVANTAGE: o Eliminates time zones problem between 2 parties of opposite side of world.
o High degree of confidentiality concerning Financial Transactions
Belize
Bermuda (United Kingdom) British Virgin Islands Cayman Islands (United Kingdom) Channel Islands (Jersey, Guernsey, Alderney, Sark and Herm) Cook Islands
Liechtenstein
Luxembourg
Seychelles
Singapore Switzerland Turks and Caicos Islands
OBUs IN SEZ:
As per policy declared by RBI, 2002 - Branches of INDIAN banks located in SEZs are called as Offshore Banking Units
Contd.
BNP pabris bank JP morgan chase bank
INSURANCE
DEPOSITS
SEZs are located in Kolkata, Madhya Pradesh,Uttar Pradesh, Rajasthan, Haryana, Karnataka, New Mumbai, Andra Pradesh Orissa Kerala, Tamil Nadu, Jharkhand and Maharashtra Total sanction for SEZs till March 2007 were 317 in India as against the total developed SEZs in the world were only 379 Banks like SBI, Indian Overseas Bank, Bank of India and Bank of Baroda set up off shore banking units
Offshore Banking in INDIA Financial expert have been pleading to establish an offshore banking centre in India Geographically, India provides distinct advantages in attracting offshore banking units, because of Stable economic & political performance Vast market, Technical manpower. Vital time linked for international money market dealers. In 1996 the sodhani committee on foreign exchange reforms, recommended offshore banking in India. The establishment of offshore banking in India was foreseen when the Foreign Exchange Regulation Act (FERA) was replaced by Foreign Exchange Management Act (FEMA), in1999. Hence, beginning of offshore banking in India is permitted for the first time offshore banking units (OBUs) to be set up in special economic zones (SEZs). SEZs will be deemed to be a foreign territory for the purpose of trade operation and duties so as to led the growth of the economy. The OBUs would be treated as foreign branches of India located in India. Which would carry out mainly wholesale banking operation. OBUs will be regulated and supervised by RBI. It has limited mandate in India. State Bank of India & ICICI Bank have opened the first offshore banking units (OBU) in India at the SEEPZ special economic zone, Mumbai.
Contd..
According to the IMF, between $600 billion and $1.5 trillion of illegal money if laundered yearly that is equal to 2%-5% of the worlds economic output
Moreover, it is believed that the drug money worldwide, approximating to $500 billion, is laundered offshore every year. This is more than the accumulated income of 20% of the worlds poorest nations.
In addition, another $1 trillion is added from tax evasion and some more few hundreds from corruption and fraud.
Thank you