1) What is the Discretionary Fund Management Service (DFMS)?
Ans: A service for those investors interested in investing via regular saving plans or lump sum contributions
DFMS helps you manage the large array of funds life insurance companies have made available to you by selecting funds according to your personal profile and objectives
Investment professionals, backed by a competent administration team, set up and regularly monitor your investment structure and the performance of the funds in which you invest.
Your investments will be rebalanced when necessary according to your risk profile and financial objectives. Locking in profits and minimizing downside moves without reacting to emotional biases is the key to success. Few succeed in this demanding function because they lack the resources or time to manage your investments professionally.
2) Why do I need DFMS? There are already managers for the funds in my portfolio
DFMS rebalances the holdings of your funds based on both individual fund performance as well as a determination of the optimum allocation for your personal needs. Example: a fund manager of a Japan Equity Fund might be doing a great job - but if Japan as a whole were a dangerous market DFMS would not include it in its selection. Most investors choose funds from a large list - their initial choices are often based on:
Previous performance
Familiarity with a provider
Knowledge of certain sectors
More often than not, there are no switches made by investors for years - and any switches that are made are based on emotion, greed, or trying to 'outsmart' the market. By placing fund selection and management decisions in the hands of an objective team of experts, your returns will be enhanced while reducing unnecessary risk wherever possible
3) How does DFMS manage my funds?
The biggest determinant of fund performance is asset allocation - weightings between equities, bonds, cash and alternative investments are key to our strategies. But we do not stop there - we scrutinize each fund regularly based on:
Fund manager's style and track record
Geographic weightings
Currency exposure
Fund turnover (how often do the underlying investments change?)
Volatility (how risky is the fund?)
Performance and risk versus similar funds
Costs
A database of funds is kept and updated regularly - based on this, personalized portfolios are created and monitored.
4) Is my portfolio actively managed?
Yes. We monitor each portfolio and take the necessary steps to maintain the correct balance.
5) How often does DFMS make changes to my portfolio?
There may be no changes within a three-month period, or there may be one each month, depending on the need. Changes are driven by clients' needs and market movements.
6) Does DFMS change a portfolio's asset allocation depending on market conditions?
Not necessarily. Each asset class is assigned a range within which it may move. We alter the actual percentage - within this range depending on macroeconomic and market conditions and prospects.
History has proven that maintaining a range of weightings within each asset class leads to better long-term returns.
Risk
Ah risk! Everyone seems to be an expert. We all talk about risk, discuss it, we think we own it. In fact our whole lives are bathed in a pool of risk. From the moment we are born (infant mortality rate) to how well we fare during our lives (chances of success) and, ultimately, how long we live, all depends on risk.
One would think that our understanding of risk should be pretty good, maybe even excellent. After all, it seems that in everything we do, risk has a role to play. Yet, sadly, this is not the case. Risk assessment remains a “black” art, to be understood and mastered by few.
So what is risk? Is it maturity versus immaturity, experience versus inexperience, OR even greed versus reason? It’s all of them plus more! One common thread running through these “definitions” is tolerance for the unexpected. And this is the definition that we will stick to.
An immense amount of work has been carried out in order to assess risk. Insurance companies thrive and depend on these types of calculations.
In all different facets of everyday life we as individuals are constantly calculating risk. Most of the time we are not even aware we are doing it – crossing the street, the speed at which we drive, how much we eat and drink (one for the road) etc. It’s all a risk calculation. One thing is certain – each and every individual has a unique way of calculating risk.
However, being a financial publication, we will now concentrate on the financial side of risk. Building on what was discussed above, financial risk is just another risk factor in the myriads that swamp our everyday lives. Come to think of it, it’s not even the most important one since it certainly isn’t life-threatening. Yet, if you ask around, about ones risk profile, the first thing they’ll mention is financial risk. They could be living on a volcano precipice or directly over the San Andreas Fault and yet that’s not what they’ll site first. Amazing! Why though?
Money: The king to end all Kings, the End to everything, THE goal. So what does this mean to people like us, in the financial community? It means one thing: in order to be successful in the long haul, we have to mitigate risk. Seems perfectly reasonable but alas, this is not always to everyone’s liking. Everyone seems to like the concept, and yet, when it comes to implementation they start to huff and puff: “My returns aren’t high enough” or our old favourite “My friend told me about this fund, it returned 15% in the last little while. My investments aren’t anywhere near those numbers”.
We started by saying that people in general don’t really understand risk. Further, people don’t really understand their own tolerance to risk. Everyone wants to make the maximum returns. Unfortunately not everyone comprehends that the old axiom “Risk versus Reward” holds true at all times. It is practically impossible to make gains that aren’t matched by possible losses of the same magnitude. All of us can confidently state that we would be very happy with a 15%/pa return on our investment. Would we, with the same confidence, say that we would be unfazed by a 15% loss? Some of you might rush to answer positively. However, please, reach deep inside yourselves and answer truthfully. The reality, more often then not, is that you would be furious and blame the financial manager as incompetent. It may very well be the case but it could also simply mean that you and your financial manager took on more risk than you were able to tolerate.
John (Jack) Bogle, one of the greatest investors of all time, even though not the most popular, once said:
“If you have trouble imagining a 20% loss in the markets, then you shouldn’t be in the markets”.
True indeed, if you are aiming for a 20% return.
The other side if the coin is Warren Buffet (no introduction required) whose investment strategy relied on two basic rules:
1. Don’t lose money and
2. Remember rule 1.
Both of these investors have been extremely successful. Which camp do you belong in?
We, as financial advisors, attempt through knowing our clients, to determine and assess their tolerance to risk. This information will allow us to tailor the investment portfolio to be within an acceptable risk envelope for each specific client. It is true that we’d rather err on the side of caution, at the risk of limiting risk and consequently returns. We do believe though that through this strategy, we are doing what’s best for the clients even though they might not immediately appreciate it. But we are confident that in time, they will.
We’d rather be called “too cautious” and “too risk averse” rather than loose money. Maybe that’s just simply not fashionable anymore but we are not in the fashion business!
We don’t mind being classified like that and in the long run you wouldn’t either!
Copyright© Wealth Management Solutions Inc. - January 2005
WHAT ARE YOU BEING SOLD?
Investors’ natural tendency is to want and expect big returns. Investment companies spend billions in advertising to lure prospects on board. They try to dazzle investors with recent impressive returns from funds. It is human nature that makes individual investors chase funds and strategies that have produced the best returns. We emphasize the past tense in “have produced”. There is nothing easier than hindsight to choose the best performing funds of the past and to advertise them.
Sadly, past returns are only a small part of what determine future performance. In equity funds past performance is not a reliable predictor of future results. If a fund does well in one year, it is possibly because its managers took some extra risks to do so, and eventually those risks will bite them and their investors. It can be just as misleading to focus on returns from the recent past, as it is to focus on a high annualized/average return when a “freak” year produced a performance that was much higher than the norm.
Some of the most respected invested professionals in the world have recently predicted negative to single-digit positive growth in almost all asset classes (equities, bonds, commodities, real estate) for 2005. They cited the lack of good values across the board in a world economy that is only growing at nominal rates.
What should you look for in a portfolio structure? We have identified 6 criteria you should be aware of when considering your portfolio manager:
1. Have you been sold on impressive PAST PERFORMANCE of underlying assets? Always question large double-digit gains of the past, as well as how selective these have been. Past performance is often worthless when it comes to trying to figure out the future. The best use of past performance is to determine how a manager behaved in a particular set of prior circumstances. The hold axiom “If it sounds too good to be true, it probably is” holds here.
2. Is it well DIVERSIFIED? Simple concept: spread the risk among different asset classes and while returns will be moderated, so will the downside. Diversification is a complicated process that involves proper evaluation of the investment sectors and determining the degree of potential correlation between them. It also involves determining the appropriate levels of investment in the various sectors as a direct consequence of a number of factors that are evaluated. The investor must insist that their portfolio manager understands proper portfolio strategies including diversification.
3. Do you understand the RISK involved? The manager must have a clear understanding of what the risk is and relate this to the investor in very clear terms, with both upside and downside outcomes. For example, a “balanced” portfolio will contain a balanced spread among asset classes. Private wealth managers such as Merrill Lynch and UBS generally allocate 40-60% in equities in a balanced portfolio. At WMS we tend to allocate less. Investors should not be confused with terms such as “cautious growth”. What does this mean?
4. Is the choice of assets INDEPENDENTLY chosen? Securities and funds must be chosen because the manager truly believes they are the best under the circumstances. It is highly unlikely that one fund family will satisfy most of a portfolio’s needs. We have seen time and again that for modest portfolios (of less than $1M) most portfolio managers tend to allocate a large part of the portfolio to in-house funds. A word of caution: when you spot the majority of your asset being placed in funds by the same company, be worried!
5. What is the COST of the chosen investments? In a low interest-rate/low return environment, portfolio costs should be kept to a minimum. As such, equity funds with high expense ratios should be avoided (funds-of-funds fall in this category). It is also common that small equity funds (with less than $10M under management) have higher expense ratios because some of the fund fees (as a percentage of total assets) are very high.
6. Is COST-AVERAGING being used? The manager must never buy large positions at the same time. In the same way he must never liquidate large positions at the same time. It is a disservice to the investor to make a clean sweep by selling all existing assets of a new portfolio at once, with no regard to prevailing market conditions, and in order to implement his own strategies immediately. It is also often a mistake not to hold enough cash to take advantage of unforeseen opportunities.
In conclusion portfolio management is a complex task that needs to balance good judgment about the future with equally sound risk management. It will be painful to investors if they let their human nature guide them solely in the direction of greed.
To quote from Bloomberg columnist Caroline Baum:
History repeats itself primarily because human nature doesn't change. On Wall Street, human nature is circumscribed by fear and greed. Among investors, fear seems to be a rare commodity these days.
Copyright© Wealth Management Solutions Inc. - January 2005
THE ART OF PORTFOLIO DIVERSIFICATION
What is Portfolio Diversification?
Portfolio diversification is a strategy whose primary aim is to reduce risk. This is accomplished by defining a portfolio strategy that encompasses diverse sectors and exposure levels and strives to achieve a balance so as to limit losses and thus achieve superior returns.
The theory behind proper portfolio diversification is that it is unlikely that all sectors in a given economic cycle will be affected the same way. Therefore, by designing a portfolio strategy whereby a number of different and relatively uncorrelated sectors are employed, the risk level of the portfolio as a whole is diminished.
Pitfalls:
It’s very important, when designing a strategy to make sure that seemingly uncorrelated sectors are not linked in any way; for example let’s assume that you select shipping as a sector and then energy. Well, they may seem uncorrelated but if the price of energy, say oil, goes up then the shipping sector may be negatively affected due to higher operating costs, which may have a negative impact on profit margins. This is just a crude example but you can see the underlying point.
At WMS, we, conduct extensive research and enforce proprietary procedures to define strategies that strive to achieve truly diversified portfolios. This involves a lot of in-depth analysis, determination of the degree of correlation, and continual re-evaluation and rebalancing of the strategies.
What does it take?
Efficient and effective portfolio diversification is directly proportional to the amount of money invested. The larger the amount the more effective diversification can be. This is not to say that a small portfolio cannot be diversified, but it limits the levels of risk reduction that we can achieve. We have determined through mathematical analysis and proven through empirical data that the minimum portfolio size that lends itself to proper diversification is circa $400,000 USD. We have established what we call the WMS Efficiency Ratio (WER).
We are not going to inundate you with our mathematical/statistical formulas here. It suffices to say that the WER is ultimately a calculated number that is derived from a number of criteria, empirical and otherwise. What we are looking for is the optimum portfolio size.
Applying the WER calculations, we have established that portfolios significantly smaller than $400,000 suffer excessively from a number of perils, purchase/maintenance charges being one of them, which inevitably negatively tax the various purchases that are required in order to have proper diversification and thus achieve the expected returns.
Anything above that number gradually increases the efficiency level of the portfolio (WER) and significantly improves both risk management and potential returns. We have found that portfolios in excess of $500,000 USD are at the optimal level.
Does it always work?
Yes. Portfolio diversification will always reduce the level of risk that a portfolio will be exposed to. The degree of success will vary with portfolio size, how severe the downturn in the overall economy is and numerous other factors. But the bottom line is that the level of risk of a diversified portfolio versus an undiversified one will be significantly less.
Side effects:
Like any hedging strategy, as one strives to reduce risk, there is an inevitable reduction in potential gains as well. The old axiom “risk/reward” is always at play: the more risk you take the higher the potential gains and the higher the possible losses. In order to skew odds our way, we employ a number of alternative investments that, through complicated strategies, manage to take advantage of market inefficiencies and swing better results with less risk.
WMS offers various levels or potential returns that can also be interpreted as levels of risk tolerance that the prospective investor is willing to accept.
Conclusion:
Portfolio diversification is one of a series of sound strategies employed by WMS in order to limit risk and safeguard our investors’ capital.
Diversification is a complicated process that involves proper evaluation of the investment sectors and determining the degree of potential correlation between them. It also involves determining the appropriate levels of investment in the various sectors as a direct product of a number of factors that we evaluate.
When one thinks of investing, one must insist that their portfolio manager understands proper portfolio strategies including diversification.
You will thank us for it!
Copyright© Wealth Management Solutions Inc. - January 2005
WITH A DASH OF FINANCE
Every one of us decides, at some point in our lives, that we should plan for the future. This usually involves some degree of financial planning. It is, unquestionably, very sound thinking and definitely a sign that we’ve reached an age of relative wisdom. We are usually motivated by a number of factors that vary from person to person – but one element is constant – our wish to plan.
Unfortunately, planning in general and financial planning in particular is not everyone’s forte. As a matter of fact planning itself is, for most people, a monumental task. It pays to have some basic knowledge of project planning, because at the end of the day, this is what it really is – a project.
So, what is a project? One definition is:
“A project is a fixed duration undertaking seeking to create a unique output”.
Translating this into our every-day language we arrive at:
“Our financial goal should have a fixed duration where we can measure results and thus determine whether our undertaking has succeeded or failed.”
We can break down our financial project into the following main areas:
• Cost – The cost, in this case, can be fees that we pay our financial advisor or other tangible and intangible charges to the project including the level of investment.
• Time – Our defined timeframe for our financial project
• Scope- A definition of what the expected results should be and what the investment boundaries, if any, are.
• Quality- A measure of the expected level of performance of the investment – this must be relative to acceptable benchmarks.
Be prepared to specify, at most, three out of the four parameters defined above. The fourth one will be a product of negotiation between the client and the project manager. If you are asking “Why three?” you should spend some time looking at the parameters and you will soon determine that the fourth (ANY fourth) can determine the other three! Try it!
Choosing a project manager is vital to the proper execution of any project. In the case of our financial project, it would be a Financial Advisor. Be prepared to state your expectations (above) to the project manager. Be also prepared to be turned down. A good project manager is the one that will only undertake a project if he/she determines that there is a fair expectation of success.
A vital element to agree with the project manager is the level of “auditing” of the ongoing project. This can be a trap for the client and lead to trouble for both the client and the manager. It is imperative that the duration is sufficiently analysed in order to determine appropriate audit points where a sound project assessment can be made. It is important to realise that linearity is not, necessarily, a project attribute i.e. if you are constructing a multi-storey building, you cannot expect to see the floors going up purely as a function of project time – architectural planning, equipment assembly time, material preparation, foundation etc. take precedent over “visible” building completion. For the longest time it might seem that nothing is happening!
The same applies to a financial project - you simply cannot expect to see results in a linear fashion but rather exponentially. Now translate what we just discussed into financial terms – project “auditing” refers to simply checking your statement and evaluating whether the investment is performing up to expectations.
The diagram below attempts to explain this vital point.
Point “A” is the commencement of the financial project. Unplanned audits (the black arrows) would have one disappointed as early as point “B” and more importantly lead to wrong and potentially disastrous conclusions.
A better strategy would be the one indicated by the block arrows. It takes into account the lead-time required for any project to get into “gear”, as it were, and the audit frequency is carefully selected to represent meaningful observation points. This will provide the client a much better view of what’s really happening with the project.
As an aside, there is a theory which states that once you’ve observed the state of anything you have, by definition, altered it. If you spend some time thinking about this statement and its practical implications you may find that you can spot at least one real-life example where this is the case. Food for thought!!
In conclusion, most of us have dealt with projects of varying degrees in our work and in our personal lives. Unfortunately, when it comes to financial planning we tend to place it in a category, more likely a vacuum, of its own. This inevitably can lead to trouble as it does not allow us to treat it in a fashion that we are familiar with and therefore invites misunderstandings and misinterpretations.
We hope that this short note helps to alleviate some of the potential problems and becomes a starting point for sound financial thinking and planning.
1 Just in case you have trouble coming up with an example, here is a bit of background and an explanation. It has long been scientifically established in quantum physics that the mere observation (which can be deemed as participation) of events at the sub-atomic level has consequences in the outcome of these particular events. By the same token, in our every-day life we alter the outcome of events by our own observations or participation even in a non-active form. An example would be our decision to take the bus when we observe a traffic jam from our window. This results in a change of the bus schedule, ever so slightly but in a very real way. Note also that our decision will also affect the traffic jam itself! Often times the alteration of events may happen subliminally i.e. we observe something which affects decisions that, at first glance, may share no common ground with the observation. As the paper says – food for thought!
What do you do when you have some money to invest?
At some point, we are all faced with the issue of what to do with our savings. It seems that, not so long ago, there used to be a simple answer to this question: go to the bank, purchase some government bonds or some other banking product, sit back and collect interest! Economies were localized, slow moving, almost unchanging. So were the interest rates.
Things are more complicated today. Inflation is low, but interest rates are even lower. There is a plethora of investment products out there but unfortunately they are not of the “buy-and-forget” variety. You need to be able to stay on top of your investments and be able to change things according to personal or market conditions – so you’d better have a good understanding of the investments you’ve made. Knowledge is key to success but not the only issue. You must be able to devote a reasonable amount of your time. Most of us do not have the luxury of looking after our investments as a full-time job.
At this point the thought of hiring a professional to manage your savings enters your mind - a wise choice. But where does one begin? There are as many investment managers out there as there are investment products! Everyone you know has a story to tell, some good some not so good. So what now? How do you pick the right company/person to do the job?
Well, for starters, you need to define the goal. The AMOUNT of money involved is the most important element. Why? Well, last time we checked, no one works for free. So in order to be worth having someone else look after your investments, there have to be enough funds available to allow for fees plus provide the sought after returns. So the amount available for investment will determine the type of “product” you’ll be looking for.
Think of it this way: if you were to purchase a car, the most important starting point is how much money you are willing to spend. There is no point in wasting your time at the Ferrari dealership if your budget says Yugo!
What has emerged recently is the trend to try and convince the potential investor that the price of entry into what were once products and services available to the rich has suddenly gone down! Look at the proliferation of Gold credit cards. Is there anyone out there without one? There was a time when these signaled a level of service apart from the crowd. This is no longer the case! The marketers at the issuing institutions have found out that by colouring a card Gold, you can collect a higher fee and provide the same service and credit facilities as before. It’s a moneymaker! Yet people “buy” it and pay the fee for the gold-coloured plastic.
Our point here is that the potential investor must not allow themselves to be misled into believing that they will receive something for nothing. This is a cardinal mistake that most people make. They are sold “private banking services”, or tremendous returns practically for no fees or risk! Seems too good to be true? Well, it is. So, evaluate your own situation carefully, and when you are talking to bankers or financial advisors keep this in mind.
The second important point is defining the DURATION of the investment. Unfortunately, that is an often overlooked point. Having money aside is fine, but if you are planning to purchase a house at the next available opportunity, or put the kids through college next year, then where you place it is of paramount importance! A good financial advisor should be asking these questions and preparing an investment strategy that allows for the requisite liquidity, if appropriate in your circumstances. Also make sure when you are looking at your cash requirement status, to allow for the time it takes for the actual money to appear as cash in your account i.e. there are investments that may require up to 3 months to be fully liquidated.
One other, overlooked point is that most peoples’ circumstances change. Your status at the beginning of the investment horizon and where you are today may have changed enough that it requires a total rebalancing of your portfolio. Do not wait until it’s too late to effect that rebalancing! A good financial advisor is one that is regularly in touch with you and thus able to make the appropriate changes in time to achieve the desired results, whether they are liquidity, security or something else.
The third important element is the level of RISK you are willing to tolerate. You may have heard the phrase “risk/reward” and this is absolutely key! You cannot make 20% a year on your investments with no risk, otherwise everyone would be wealthy and there would be no need for us to be writing this! So caveat emptor is a very appropriate phrase that every potential investor should keep in mind. A good financial advisor is NOT the one that promises huge returns but the one that seems fully grounded and explains the principles and risks involved.
So, to sum up, you can’t get something for nothing, be realistic as to your own needs and circumstances and make sure you understand that in order to make that huge return you must be willing to take a huge risk. We started by asking the question, “how do you pick the right financial advisor to do the job”. Well, if you follow the guidelines in this note and you speak to financial advisors, the answer will be obvious!
Happy investing!
Why do so many individual investors buy high and sell low?
Isn’t it ironic? The old axiom “Buy low, sell high” seems to have everyone confused! It seems simple enough; it’s only four words and it’s pretty straight forward. Then why do so many investors get it backwards?
If you can identify with this, and you are looking for the magic potion that will ooze out of these lines and make you do it right next time, stop reading now!
There is no simple answer. What we will attempt here is to explain why this happens so often and, having that in mind maybe just maybe, you can avoid the first part - Buy high.
Back to basic principles: What causes one to take the big decision, evaluate a security and decide that it’s at an attractive point to buy? The answer may be simpler than you think - Being a social animal. Most people believe that something is a good deal because they heard it on the news, overheard a chat at the local, or just plain talk between friends.
But in order for a company or security to be the topic of conversation, it must have done something spectacular PRIOR to that conversation, and usually it’s because its price has risen. So, continuing our line of reasoning, if it has reached levels that make it a social topic, then it’s probably already overvalued! So, you jump in with both feet only to discover that the price goes nowhere for a while (if you are lucky) and then slowly depreciates.
But of course at this stage, you are not willing to sell. If it was THAT high at some point, it’s going to go there again won’t it? So you wait while it does its snake dance, a little up and a little down (usually more down than up) and you sit there looking at your investment slowly turning sour. For every investor there is a point where they can’t take it any more and therefore, you sell to recover part of your money and fulfill the axiom in reverse.
Be honest! Does it remind you of someone you know? If the answer is yes then read on.
We, as financial advisors/portfolio managers find that most of our clients have experienced this more than once, some with severe consequences before joining our service. In fact, these are our “best” clients in the sense that they’ve suffered and know that managing a portfolio, minimizing risk and turning a profit is not an easy feat!
So, how do professional portfolio managers avoid being caught up in the rumour mill? Well, for starters, we don’t!
What happens is that portfolio managers have numerous sources of information and what distinguishes a good manager from a mediocre one is the ability to filter the volumes of information that arrive and decipher the nuances of the avalanche of data that lands in their offices.
Good portfolio managers have staff that continuously monitor the markets, and perform analysis from scratch. This enables them to arrive at conclusions that are not necessarily reflected in the market as it appears today but as it will be in the future.
Good portfolio managers set price targets and follow them religiously i.e. when a security reaches a certain target value it is sold irrespective of what the general market is doing at the moment. Discipline and adherence to guidelines is a key element of successful management. It sounds easy but in practice, it is quite difficult.
Good portfolio managers know how to properly diversify. The operative word is “properly”. Diversification does not mean buying a whole bunch of stuff but buying a whole bunch of uncorrelated stuff. This way, there is far less risk and less dependence on a given sector or equity.
Good portfolio managers know that they cannot get everything right, thus take the right steps to protect their clients’ portfolios from any possible downside. This knowledge is, at the end of the day, the saving grace.
Alas, buying high and selling low is a fact of life for the individual investor. It cannot be avoided. It will happen to you with the same certainty as death and taxes. If it hasn’t happened yet, take the right steps now so as to avoid it. If it has, then you are either already invested with a professional portfolio manager or you’ve withdrawn from the markets altogether.
Take the right steps now. Talk to your financial advisor and for a change, listen!
A POINT OF VIEW
Currencies are one of the most difficult and controversial aspects of portfolio management. In this paper, we will attempt to analyse the issues involved and try and determine an appropriate strategy for the investor that wants to minimise currency exchange-rate risks in a global portfolio.
The main issues are the following:
1. Investing in multiple, currency-diverse markets
2. Minimising exchange rate risks
3. Determining the appropriate strategy for each circumstance
To start our analysis, consider the following example: An American investor has $10,000 to invest. American interest rates are 3% and British interest rates are 5%. By keeping his money at home, the investor would receive $10,300 at contract maturity (one year). Alternatively he could take his money and convert it into sterling at the prevailing exchange rate, say $1.80 per pound. This would give him £5,555, which in one year’s time will pay £5,833 (at the 5% interest rate).
To eliminate any risk in the transaction, the investor would arrange to sell £5,833 at a fixed price a year from now. If the forward exchange rate is $1.77, the investor would have $10,300 in a year’s time, the same return that he would make on his dollar deposit. If the forward exchange rate were the same as the spot rate ($1.80) then the investor would receive $10,500 in a year’s time, and would have made more money without any risk. So competing investors will push down the forward exchange rate until it hits $1.77, the level at which the two investments end up equal.
The moral of the story is that markets have become very efficient and it’s becoming exceedingly difficult to make “arbitrage” money. So how do you invest in the global marketplace reaping real rewards and minimising exchange-rate risk?
You can’t. The moment you decide to swap some euros for dollars you are taking a risk. There has to be some careful evaluation as to why you are trading one currency for another; if it is because you believe that the target currency is undervalued then you are definitely delving into the realm of very sophisticated currency-modelling techniques that even the experts say are far from perfect. You are taking a gamble!
If you’ve swapped currencies in order to purchase an investment in the target currency then you must be aware that any and all profits may be quickly wiped out by an unfavourable exchange rate movement.
It is very clear that toying with exchange rates is not for the faint of heart. It takes some very serious evaluation and must take into account the personal circumstances of the individual investor. If one lives in Europe and consequently spends euros, what is of essence is that the final product of any given investment should be calculated in euros. There is no point in making a 10% profit in your U.S. stocks if the dollar is down 10% against the euro! You’ve taken risks and seen your rewards evaporated by the exchange rate. Even worse, if your investment is down 2%, then you’ve multiplied those losses six fold!
At WMS, we analyse each investors’ personal and financial situation very carefully and try to determine an appropriate strategy that can take advantage of the wealth of opportunities available in the world markets while always keeping in mind that the client has a “home” currency and ultimately, returns must be measured against that currency.
We evaluate investment opportunities with the exchange rate risk always in the forefront and only make purchases when we think that this particular risk is controlled. We have developed our own proprietary models that take into account a number of parameters which are very specific to the clients’ circumstances and appropriately determine the level of exchange-rate risk for a given portfolio.
To close, have a look at the graph below:
This real-life example demonstrates how currencies can make or break a global investment strategy. Tremendous care and skill are required to navigate these waters.
The graph depicts the Dow-Jones Industrial Average from January 2003 until June 2004.
The green line is the return in USD and the black line is the return in EUROS. As you can clearly see, the USD return is a healthy 24.59% and the return in EUROS is a measly (by comparison!) 6.85%. In other words, an American investor would have been elated with the returns and the brilliance of his/her strategy whereas a European investor MAKING THE SAME INVESTMENT would have been disappointed.
Case and point!
Tuesday, July 6, 2010
Co operative banks in India
The Co operative banks in India started functioning almost 100 years ago. The Cooperative bank is an important constituent of the Indian Financial System, judging by the role assigned to co operative, the expectations the co operative is supposed to fulfil, their number, and the number of offices the cooperative bank operate. Though the co operative movement originated in the West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The cooperative banks in India plays an important role even today in rural financing. The businessess of cooperative bank in the urban areas also has increased phenomenally in recent years due to the sharp increase in the number of primary co-operative banks.
Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.
Cooperative banks in India finance rural areas under:
• Farming
• Cattle
• Milk
• Hatchery
• Personal finance
Cooperative banks in India finance urban areas under:
• Self-employment
• Industries
• Small scale units
• Home finance
• Consumer finance
• Personal finance
Some facts about Cooperative banks in India
• Some cooperative banks in India are more forward than many of the state and private sector banks.
• According to NAFCUB the total deposits & lendings of Cooperative Banks in India is much more than Old Private Sector Banks & also the New Private Sector Banks.
• This exponential growth of Co operative Banks in India is attributed mainly to their much better local reach, personal interaction with customers, their ability to catch the nerve of the local clientele.
Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.
Cooperative banks in India finance rural areas under:
• Farming
• Cattle
• Milk
• Hatchery
• Personal finance
Cooperative banks in India finance urban areas under:
• Self-employment
• Industries
• Small scale units
• Home finance
• Consumer finance
• Personal finance
Some facts about Cooperative banks in India
• Some cooperative banks in India are more forward than many of the state and private sector banks.
• According to NAFCUB the total deposits & lendings of Cooperative Banks in India is much more than Old Private Sector Banks & also the New Private Sector Banks.
• This exponential growth of Co operative Banks in India is attributed mainly to their much better local reach, personal interaction with customers, their ability to catch the nerve of the local clientele.
upcoming forgein banks in india
By 2009 few more names is going to be added in the list of foreign banks in India. This is as an aftermath of the sudden interest shown by Reserve Bank of India paving roadmap for foreign banks in India greater freedom in India. Among them is the world's best private bank by EuroMoney magazine, Switzerland's UBS.
The following are the list of foreign banks going to set up business in India
• Royal Bank of Scotland
• Switzerland's UBS
• US-based GE Capital
• Credit Suisse Group
• Industrial and Commercial Bank of China
Merrill Lynch is having a joint venture in Indian investment banking space -- DSP Merrill Lynch. Goldman Sachs holds stakes in Kotak Mahindra arms.
GE Capital is also having a wide presence in consumer finance through GE Capital India.
India's GDP is seen growing at a robust pace of around 7% over the next few years, throwing up opportunities for the banking sector to profit from.
The credit of banks has risen by over 25% in 2004-05 and the growth momentum is expected to continue over the next four to five years.
Participation in the growth curve of the Indian economy in the next four years will provide foreign banks a launch pad for greater business expansion when they get more freedom after April 2009.
The following are the list of foreign banks going to set up business in India
• Royal Bank of Scotland
• Switzerland's UBS
• US-based GE Capital
• Credit Suisse Group
• Industrial and Commercial Bank of China
Merrill Lynch is having a joint venture in Indian investment banking space -- DSP Merrill Lynch. Goldman Sachs holds stakes in Kotak Mahindra arms.
GE Capital is also having a wide presence in consumer finance through GE Capital India.
India's GDP is seen growing at a robust pace of around 7% over the next few years, throwing up opportunities for the banking sector to profit from.
The credit of banks has risen by over 25% in 2004-05 and the growth momentum is expected to continue over the next four to five years.
Participation in the growth curve of the Indian economy in the next four years will provide foreign banks a launch pad for greater business expansion when they get more freedom after April 2009.
All forgein banks that are working in india
Royal bank of Scotland
More than 3,400 branches in 70+ countries, the 1991 merger Algemene Bank Nederland and Amsterdam Rotterdam Bank had a long-standing presence in India since 1920 in Kolkata known traditionally as a strong "diamond financing bank". ABN AMRO Bank India started functioning in 1991 in Delhi and till date it has branches in Chennai, Pune, Baroda, Hyderabad, Bangalore and Noida servicing multiproduct relationship with customers. It formed AA Securities [I] Pvt. Ltd. in September 1998.
Abn Amro Bank is among the top 10 banks in the world in size and strength with assets over US$504 and an AA credit rating. In more than 320 cities, it is having over 1,00,000 well qualified staffs.
The services of Abn Amro Bank is organised globally in three business lines:
Wholesale Clients
Consumer & Commercial Clients
Private Clients & Asset Management
ABN AMRO Bank in India enjoys a strong image as a corporate bank with comprehensive Global Transaction Services. The investment banking services of the bank is delivered through ABN AMRO (India) Corporate Finance and the Global Financial Market Teams which strive to maintain the permanent position in the marketplace.
ABN AMRO India Bank has launched its Private Banking Services in the country offering a comprehensive range of high quality Portfolio Advisory Services along with a comprehensive transaction execution platform, complemented by personalised Banking and custodial services.
It has also launched its microfinance program. The program is aimed at delivering credit to the poor women of India, especially in the rural areas, through Microfinance Institutions (MFIs).
The Mission
"The mission of ABN AMRO Bank is to create maximum economic value for our shareholders through a constant relationship focus on the financial services needs of our chosen client segments and a strict adherence to our financial targets. We are operating in three principal customer segments, whereby the objective is to maximise the value of each of these businesses as well as the synergies between them. Excellence of service to our clients and leadership in our chosen markets are of paramount importance to our long-term success. The Bank's corporate values play an integral role in the fulfilment of our mission."
The Achievements of ABN AMRO Bank
"Best at Cash Management Award in September 2001" - The Banker
Corporate Finance India : Ranked Second in M&A in the Investment Banking arena in 2001 - Economic Times.
ABN AMRO Securities India : Best Foreign Bond House; No 1 Arranger in Private Sector: Euromoney 2000.
Top Bank on "Management Quality" parameter: Business India 'Best Banks Survey 2000'.
7th Most Admired Commercial Bank in the World: Fortune Magazine, 2000.
Top Foreign Bank in India: Economic Times - CMIE survey 1999.
Second overall in Banking Industry: Financial Express - BRIS survey 1999.
ABN AMRO Private Equity (AAPE)
ABN AMRO Private Equity (AAPE) is one of the leading venture capital firms in the Midwest. Abn Amro Private Equity is headquartered in Chicago with over $300 million of capital under management. ABN AMRO Private Equity invests up to $10 million in privately-held companies.
It focuses its investments in four broad industries i.e.
Business services,
Communications,
Information technology and
Healthcare services
Specific target markets within these broad industry segments include B2B electronic commerce, traditional and e-business services, communications services and infrastructure, Internet applications, and traditional and e-health companies.
ABN AMRO Credit Cards
Abn Amro India provides two types of credit cards to its customers. One is Abn Amro Freedom Credi Card and the other is Abn Amro Smart Gold Card. The credit card consists of package of offers and discounts along with insurances.
ABN AMRO Bank Offices
Head Office:
Amsterdam, The Netherlands
Consumer Clients:
ABN AMRO Bank N.V.
Hansalaya Building
15, Barakhamba Road
New Delhi 110001
Telephone: +91 11 2370 2555
E-mail: in.marketing@in.abnamro.com
Commercial Clients:
ABN AMRO Bank N.V.
DLF Centre
Sansad Marg
New Delhi 110001
Telephone: 91 11 2375 5130
E-mail: in.marketing@in.abnamro.com
Wholesale Clients:
ABN AMRO Bank N.V.
Sakhar Bhavan, 4th floor
Nariman Point
Mumbai 400 021
Telephone: +91 22 56372401
E-mail: in.marketing@in.abnamro.com
Private Clients:
ABN AMRO Bank N.V.
Sakhar Bhavan
Nariman Point
Mumbai 400 021
Telephone: +91 22 2281 8008 Ext. 2025 to 2029
E-mail: in.marketing@in.abnamro.com
Asset Management:
ABN AMRO Asset Management (India) Ltd.
101, Sakhar Bhavan, 10th floor
Nariman Point
Mumbai 400 021
Telephone: +91 22 5656 3841
Internet: www.asset.abnamro.com
Abn Amro India Website
www.abnamro.co.in
The History
King Willem-I issued a royal decree on 29th of March 1824 creating Nederlandsche Handel-Maatschappij (NHM) aiming to revive trade between the Netherlands and the Dutch East Indies. NHM merged with De Twentsche Bank in 1964 to form Algemene Bank Nederland (ABN). Amsterdamsche Bank and Rotterdamsche Bank joined to become Amsterdam Rotterdam (Amro) Bank. Both the banks merged in 1991 as ABN AMRO Bank.
Abu Dhabi Commercial Bank started its business in India in 1980 looking to the fact that India is a major trading partner in U.A.E. import trade.
The trade relationship between the two nations has flourished with the advent of technology, advanced communication, sophisticated transportation and of course, efficient financial services.
Services Offered by Abu Dhabi Commercial Bank in India
1. Account opening: Individuals, Corporates and Brokers can avail this facility of opening an account.
2. Dematerialization: ADCB converts physical securities into an equal number of securities in electronic form. After processing, on request by customers, the certificate along with the DRF is sent to the company who will arrange to credit to the customers DP account.
3. Transfer of securities: Once the depository account is opened, the transfer of securities in the electronic form is effected to and from stock exchanges linked to NSDL. The Bank assists the customers for receiving/delivering securities to complete transactions concluded outside the stock exchanges (off market trades).
4. Keeping track of the securities: The Bank provides monthly statement of DP account reflecting details and quantity of shares owned by the customers.
5. Pledge: An investor can pledge his securities as collateral for availing financial assistance for personal needs.
6. Freeze/Defreeze of accounts: The Bank assists its customers for freezing their account, if they choose so, for a particular time period and no transaction will take place in the DP account. Similarly, customers can also defreeze the account to facilitate transactions when in need.
7. Rematerialisation: ADCB also assists the customers to reconvert back the securities into physical form against specific requests.
Abu Dhabi Commercial Bank NRI Services
Since NRI can invest in shares and securities on repatriable and / or non-repatriable basis depending on the origin of funds (funds emanating from NRE or NRO accounts) for investment, the following requisites of the RBI permission is applied:
DP account opened on Type of transaction RBI permission required/not required
1) Non - Repatriable basis Primary market purchase/sale Not required
2) Non - Repatriable basis Secondary market purchase/sale Required (general permission issued by designated Authorised dealer)
3) Repatriable basis Primary market purchase/sale Not required
4) Repatriable basis Secondary market purchase/sale Required (general permission issued by designated Authorised dealer)
Cash Against Shares (C.A.S.H)
C.A.S.H is an overdraft facility by ADCB against financial securities. It enhances the liquidity of customers, giving the freedom to utilize the money for their business / personal needs.
Advantages of C.A.S.H.
Prime Interest rates
No Annual Fee
Highest loan limit (Maximum Rs.20,00,000/- for individual)
Convenience (Instant access to credit line, by simply writing a cheque
Savings (Pay interest only on the amount you withdraw)
Flexible Payments (Convenient repayment option)
ADCB Branch addresses in India
Mumbai Branch
Abu Dhabi Commercial Bank
Rehmat Manzil,
75, Veer Nariman Road,
Churchgate,
Mumbai 400020 - INDIA
Tel : +91 22 22855658
Fax : +91 22 22870686
NRI Centre
Abu Dhabi Commercial Bank,
NRI Centre,
143, Soona Mahal,
Netaji Subhash Marg,
Mumbai 400020 - INDIA
Tel : +91 22 22830184
Fax : +91 22 22855655
Bangalore Branch
Abu Dhabi Commercial Bank,
Citi Centre,
28 Church Street,
Bangalore 560001 - INDIA
Tel: +91 22 5582000
Fax: +91 22 5582323
Website of Abu Dhabi Commercial Bank
www.adcbindia.com
Bank of Ceylon is a Sri Lanka based bank. In India it has its branch in Chennai. The Bank started its business in Ceylon on 1st August 1939. The first branck of the Bank was opened at Kandy (Sri Lanka) in 1941 and it was followed by branches in Galle, Jaffna and Trincomalee. The first overseas branch of Bank of Ceylon was opened in London in the year 1949.
The Merchant Bank of Sri Lanka Ltd. was set up by Bank of Ceylon in 1982 with the establishment of the BOC Property Development Ltd. It introduced Ceybank Visa Credit Cards
in 1989 in Sri Lanka in collaboration with the VISA International.
The Registered Head Office
Bank of Ceylon,
4, Bank of Ceylon Mawatha,
Colombo - 01
Sri Lanka.
Tel: 2446790-811(22 lines) 2338741 -55
Telex Address: "HEADBANK"
E-mail: boc@sri.lanka.net
Branch Address in India
Bank of Ceylon,
1090, Poonamalee High Road,
Chennai 600 084
INDIA.
Tel: 00 9144 - 26423501, 26420972, 26420973
Fax: 9144 -25325590
Telex: 08141 - 24094 / 08141 - 24095
SWIFT code: BCEYIN5M
E-mail: ceybank@md3.vsnl.net.in
BNP bank
BNP Paribas boasts a long tradition in India in private banking. The bank started its Indian operation from Calcutta in. Since then with offices in most major cities of India, the Bank has a powerful and efficient infrastructure to serve Corporate Banking as well as Private Banking.
Worldwide, BNP Paribas manages assets valued over 100 billion Euros. It is No. 1 in France and it has a presence in all the major centres of international private asset management.
BNP Paribas Bank Collection Services
1. Metro Cash: A local cheque collection service available at all BNP Paribas centers in India.
2. Rapid Cash: A local cheque collection service offered at select non- BNP Paribas centers in India. Available presently in 50 cities.
3. Quick Cash: An outstation cheque collection service covering over 1,700 locations in India. Cheques in your favour, and payable at 1,700 locations are picked up through courier from over 50 centres.
4. BNPP Forecast: Advises the customers over the funds in pipeline to enable them to better plan their cash-flows.
The Advantage to the customers
Only single account operation eliminating the need to open collection accounts at any other centres.
Credit confirmation statement is provided by Cash Management on the day of credit.
Detailed monthly report of charges and information on unpaid cheques are offered.
Single point reference to all queries.
Structured MIS reports for easier reconciliation.
Customized MIS reports to suit customer needs.
Linkages with all ERP platforms such as SAP, BAAN etc are possible
BNP Paribas Bank Payments Services
1. Metro Pay: Prepaid 'account payee' Demand Drafts or Pay Orders issued favouring beneficiary and payable at all BNP Paribas centres in India.
2. Rapid Pay: Prepaid 'account payee' Demand Drafts issued by the Bank and payable at the correspondent banks' through 252 centres in India.
3. Remote Pay: Prepaid 'account payee' Pay Orders at destination on 50 locations in India.
4. Quick Pay: The Bank has a tie-up with one of the largest banks in India to offer its customers payment solutions at over 10,000 locations.
5. Metro Cheque: To make customers trade and other payments easier at all the outlets in India, the Bank has introduced MetroCheque facility. These cheques are payable at par at any of the branches in the country.
6. Cheque Serve: Printing of the cheques (with signatures) done by the Bank on customers behalf.
7. Interest & Dividend Warrants: The Bank offers value-added solutions for interest payments, refund orders, dividend payments etc.
The Advantage to the customers
Outsourcing of payments/ accounts payable functions - bulk & high value - reduces administrative costs and translates to better efficiency
Structured, user-friendly MIS reports for easier reconciliation
Single point contact for faster, efficient and effective query resolution
Single account operation possible, eliminates the need for multiple accounts
Customized MIS to suit individual needs
Linkages to various platforms such as SAP, BAAN possible
Competitive pricing
BNP Paribas Offices in India
Mumbai Branch
French Bank Building,
62, Homji Street,
Fort, Mumbai 400 001.
Tel. : +91-22- 2266 0822 / 0844 / 4518
Fax : +91-22- 2266 5490
Email: pharok.lala@asia.bnpparibas.com
Pune Branch
5 & 6, Godrej Millenium Park,
9 Koregaon Road,
Pune 411001.
Tel. : +91-20- 613 0142 / 45 / 613 4070
Fax : +91-20- 613 4079
Email: nana.sawant@asia.bnpparibas.com
Ahmedabad Branch
203, Sakar II,Ellis Bridge,
Off Ashram Road,
Ahmedabad 380006.
Tel. : +91-79- 657 9880 / 658 0579
Fax : +91-79- 657 9881
Email: sabesan.ananthanarayanan@asia.bnpparibas.com
Gurgaon & New Delhi Branches
East Towers, 1st Floor,
25, Barakhamba Road,
New Delhi 110001.
Tel. : +91-11- 5179 6600
Fax : +91-11- 2332 4188 / 2373 1110
Email: amit.dutt@asia.bnpparibas.com
Kolkata Branch
Stephen House,
4A B. B. D. Bagh East,
Kolkata 700 001.
Tel. : +91-33- 2248 0917 / 1273
Fax : +91-33- 2243 5250
Email: indranil.sengupta@asia.bnpparibas.com
Chennai Branch
Prince towers, 3rd Floor,
25/26 College Road, Chennai 600006.
Tel. : +91-44- 2821 1969 / 1970
Fax : +91-44- 2821 1968
Email: sandeep.mehrotra@asia.bnpparibas.com
Bangalore Branch
3rd floor, Landmark,
21/15, M. G. Road, Bangalore 560 001.
Tel. : +91-80- 559 6777 / 6794
Fax : +91-80- 559 6787
Email: angshuman.chatterjee@asia.bnpparibas.com
Hyderabad Branch
Venkat Plaza, 2nd floor,
6-3-883/5 Punjagutta,
Hyderabad 500 082.
Tel. : +91-40- 2341 0841 / 5566 0222
Fax : +91-40- 2341 0842
Email: krishnamurthy.rajagopalan@asia.bnpparibas.com
Website of BNP Paribas Bank
www.bnpparibas.co.in/
www.citibank.co.in
Citibank India is since 1902. Citibank India was the first bank to lend actively to individuals. Citibank is the largest Consumer Finance lender in the world. Citibank India follows the following principles while dealing to its customers:
Truth in Lending
Superior Products and Services
Quick and Transparent Credit Decisions
Lending is not a transaction, but a relationship
Custodian of Public Funds
Citibank online banking
With citibank online banking one can enjoy the following services from anywhere in the world. For citibank online banking one has to log on to www.citibank.co.in
Redeem your rewards points
Pay Bills Online
Send Demand Draft anywhere in India
Get statements by e-mail
Register for Instant alerts
Mobile Banking
Citibank online Security Tips
Citibank Suvidah
With the Citibank Suvidah Account, one can get the following benefits:
Shop n' win Rewards
Secure your child's future
Instant cash upto thrice your salary
Get rewarded for your account
Citibank Suvidha Account Holders holds over 150,000 highly tech-savvy Account Holders from Bangalore, Mumbai and Delhi alone.
Citibank Cards
Citibank cards are available in a range of flexible and personalized credit and charge that can be managed online. Undermentioned are few types of Citibank Credit Cards in India.
MTV Citibank Card
Indian Oil Citibank Card
Citibank Silver International Card
CRY Card
WWF Card
Times Card
Citibank Cricket Visa Card
Citibank Direct
The Citibank Direct Current Account pays 4.59% AER (4.50% gross). The Citibank Direct is one of the best rates on the market, with no strings attached. No minimum deposit is required for Citibank Direct and no need to pay in ones salary. A minimum annual income of £15,000 is required to open Citibank Direct Account. A chequebook and automatic overdraft facility are not available in Citibank Direct. Moreover Citibank Direct Account is easy to manage.
Citibank NRI
Citibank NRI holds over 160,000 Citibank NRI Account. Citibank NRI Account Holders, holds a minimum balance of Rs. 10 lakhs. Citibank NRI is voted as the most preferred bank of the NRIs.
Citibank South Asia
Singapore Office:
Hock Kern Chua, Country Sales Manager
PROGRESS SOFTWARE CORP (S) PTE. LTD.
No. 1 International Business Park
#03-11 The Synergy
Singapore 609917
Tel: 65 563 1500
Fax: 65 563 1511
Malaysia Office:
Mr. Kah-Khoi Leong, Country Sales Manager
PROGRESS SOFTWARE (M) SDN BHD
Level 36, Menara Citibank
165 Jalan Ampang
50450 Kuala Lumpur
Malaysia
Tel: (603) 2169-6180
Fax: (603) 2169-6168
Citibank Websites
Global : www.citigroup.com
www.citi.com
Singapore : www.citibank.com.sg
Belgium : www.citibank.be
UK : www.citibank.co.uk
Australia : www.citibank.com.au
US : www.citibank.com/us
Malaysia : www.citibank.com.my
India : www.online.citibank.co.in/
China trust Commercial Bank, the largest private bank in Taiwan (the Republic of China) has presence in London, New York, Vancouver, Tokyo, Hong Kong, Jakarta, Manila, Bangkok, Hanoi and Paraguay. In India it has its branch in New Delhi.
To support with greater financial support to the increasing investments of Taiwanese businessmen in India, Chinatrust Commercial Bank established its first Indian Branch in the year 1996 in New Delhi.
Services of Chinatrust Commercial Bank
The following services are offered by Chiatrust Commercial Bank in India:
Corporate Loans Overdraft Line, Short and Long Term Loans, Foreign Currency Loans, Bridge Loans.
Trade Finance Bills & Cheque Collection and Purchase, Pre and Post Shipment Loans, Letter of Credit Issuance/Advising
Conformation/Negotiations, Bank Guarantees, Derivatives and Treasury Services.
Deposits Saving/Current Accounts, Short Term, Long Term, Reinvestment Deposits.
Personal Loans Loan (Overdraft) against Fixed Deposits (Miscellaneous Securities).
Remittance Issuance of Bankers Cheque (Pay Orders), Demand Drafts.
Local & Foreign Mail Transfer, Telegraphic Transfers, Cheque purchase, and Traveller Cheques.
Foreign Trade Services of Chinatrust Commercial Bank
Chinatrust Commercial Bank offers trade related information on Taiwanese Companies. The Products and Services offered are as listed below:
Imports
Issuing Documentary Credits/Guarantees
Loan against Import Bills
Arranging discount of Import Bills overseas
Import Bills for collection
Foreign remittances relating to Import, using SWIFT/Telex
Shipping Guarantee/Delivery Orders
Exports
Packing Credit
Export Bill Negotiations
Export Bill discounting
Advising and confirmation of Documentary Credits
Transfers of Documentary Credits
Export Bills for Collection
Remittances
Foreign Inward remittances using SWIFT/Telex
Foreign Outward remittances using SWIFT/Telex
Advanced remittances relating to Imports
Other Trade Services
Foreign Exchange forward contracts
Taiwan related trade information
Credit enquiries of overseas parties
Forex advisory services
Chinatrust Commercial Bank office in Taiwan
No. 3, Sung Shou Road
Taipei, Taiwan
Tel : +886-2-2722-2002
Fax : +886-2-2723-9775
Website : www.chinatrust.com.tw
Chinatrust Commercial Bank office in India
New Delhi Branch
21-A, Janpath,
New Delhi - 110 001
INDIA
Tel: +91-11-335-6001~ 005
Fax: +91-11-373-1815
Website : www.chinatrustindia.com
e-Mail : ctcbindd@ndf.vsnl.net.in
Deutsche Bank was established in the year 1870 in Berlin, Germany. It was founded to transact banking business of all kinds. It had in view to facilitate trade relations between Germany and all other European countries, and overseas markets.
The Bank is one of the leading worldwide financial service providers with its presence in 74 countries. Its approximate assets is EURO 840 billion.
It ranks to be global leaders in Corporate Banking and Securities, Transaction Banking, Asset Management & Private Wealth Management. It has a significant Retail Banking franchise in Germany and other selected countries in Continental Europe.
Deutsche Bank Products and Services
Corporate and Investment Banking
The Bank offers to corporate and institutional clients a the following products and services:
Equities
Fixed Income
Foreign Exchange
Commodities
Corporate Finance
Asset Finance & Leasing
Relationship Management
Global Cash Management
Global Trade Finance
Trust & Securities Services
Private clients and asset management
The Bank provides the following financial solutions to private and business clients:
Private & Business Clients
Private Wealth Management
DB Real Estate
DWS Investments
Deutsche Asset Management
Scudder Investments
Deutsche Bank Offices in India
Mumbai Branch
Hazarimal Somani Marg-Fort
Mumbai (Bombay) 400 001
India
Tel. : +91 22 2207 4720 up to 24
Delhi Branch
Deutsche Bank ,
Tolstoy House,
15-17 T Marg,
New Delhi-110001
India
Tel. : +91 11 23721155
Gurgaon Branch
DLF Square - DLF City,
Phase II,
Jacaranda Marg
4th Floor
Gurgaon (near New Delhi),
Haryana 122 002
India
Chennai
114 M. G. Road
Ground Floor
600 034 Chennai (Madras)
India
Tel. : +91 44 821 5408
Bangalore
# 123, Shivalaya EPIP Phase II,
Block II Whitefield Industrial Area,
Bangalore 560 066
India
Tel. : +91 80 5119 3300
www.deutschebank.co.in/
HSBC Bank is the largest bank in Hong Kong and second largest group in the world after Citicorp. Before moving its headquarter to London in 1990, it was headquartered in Hong Kong. HSBC India is having branches in Ahmedabad, Bangalore, Chennai, Chandigarh, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kochi, Kolkata, Ludhiana, Mumbai, New Delhi, Noida, Pune, Thane, Trivandrum and Visakhapatnam.
HSBC NRI centres are located in Asia-Pacific, the Middle East, Europe and North America. HSBC NRI centres provide full range of personal and private banking products in India and overseas. HSBC Internet banking adds to the services of HSBC India abroad.
HSBC India, along with HSBC Investment product and HSBC Insurance, it offers international Gold Card and Classic Credit Cards from VISA and MasterCard and debit cards from Visa. HSBC in India gives 24 hour banking services, extensive network of ATMs, integrated Call Centre and also HSBC e-banking.
HSBC Bank India Fact File
The HSBC Group develops and applies advanced technology to the efficient and convenient delivery of banking and related financial services. HSBC Bank India provides the following:
Self-service banking with over 150 in-branch and off-branch ATMs and 24-hour phonebanking.
Trade and corporate banking services with real-time access to a centralised information database
Instantaneous inter-city transactions through online connections between all branches
A state-of-the-art treasury dealing system
A sophisticated card system supporting debit and credit cards, domestic and international VISA, MasterCard, and co-branded cards
A dedicated acquiring system for both MasterCard and Visa transactions
online@hsbc, HSBC internet banking service, provides customers with an integrated and secure platform to access their accounts.
Internet Payment Gateway handles credit card transactions on the internet
The following are few branch locations in India with their telephone numbers
Cities For Banking related queries For Credit card related queries
Ahmedabad 98982 72424 98983 77373
Bangalore 2558 9595 2558 9696
Chandigarh 501 6555 501 6999
Chennai 2526 9595 2526 9696
Coimbatore 98943 72424 98944 77373
Gurgaon 9511 - 2373 8989 9511 - 2373 9696
Hyderabad 2335 8686 2335 8787
Indore 98932 72424 98932 77373
Jaipur 220 8989 510 9696
Kochi 98954 72424 98954 77373
Kolkata 2243 8585 2243 8686
Ludhiana 502 8989 277 3696
Mumbai 2498 2424 2491 0001
New Delhi 2373 8989 2373 9696
Noida 9511 - 2373 8989 9511 - 2373 9696
Pune 5602 8585 5602 8686
Trivandrum 98954 72424 98954 77373
Vadodara 98982 72424 98983 77373
HSBC online
HSBC Internet Banking is available countrywise. Customer can get into HSBC online and can operate their account from anywhere. HSBC online banking is a real time banking. The following are websites of HSBC Bank in some of the major countries.
Global : www.hsbc.com
UK : www.hsbc.co.uk
Canada : www.hsbc.ca
Australia : www.hsbc.com.au
Hong Kong : www.hsbc.com.hk
India : www.hsbc.co.in
JPMorgan Chase Bank, headquartered in New York, was established on July 1, 2004, with the merge of J.P. Morgan Chase & Co. and Bank One Corporation. It operates from over 50 countries and is leading in investment banking, financial services for consumers and businesses, financial transaction processing, asset and wealth management and private equity.
JPMorgan Chase Bank reports on the following six lines of business:
Asset & Wealth Management
Card Services
Commercial Banking
Investment Banking
Retail Financial Services
Treasury & Securities Services
The JPMorgan Chase Bank retail and commercial banking businesses are headquartered in Chicago. Customers can write to the Bank in the following address:
JPMorgan Chase & Co.
1 Bank One Plaza
Chicago, IL 60670
Contact information JPMorgan Chase Bank
Investor Relations
JPMorgan Chase & Co
270 Park Avenue
New York, NY 10017-2070
Tel. : (212) 270-6000
www.jpmorganchase.com/
Standard Chartered Bank in India is the largest international banking Group in India. The Combined Balance Sheet (as at March 31, 2001) of SCB India is Rs. 24515.9 cr. and is having a combined customer base of 2.4 million in retail banking and over 1200 corporate customers.
The key businesses of Standard Chartered Bank in India include consumer banking - primarily credit cards, mortgages, personal loans and wealth management - and - wholesale banking, where the Bank specializes in the provision of cash management, trade, finance, treasury and custody services.
Standard Chartered India was the first to issue first global credit card in India, the first to issue Photocard, the first Picture Card and was the first credit card issuer to be awarded the ISO 9002 certification.
Some other product innovations of Standard Chartered Bank in India include the 'Sapnay' credit card, the international debit card that provides free access to over 1500 Visa ATM's, a first in the banking industry, Mileage, an overdraft facility against the security of a car and Smart Credit, a personal line of credit for salaried customers.
The name is derived from Standard & Chartered. Standard Bank of British South Africa merged with Chartered Bank of India, Australia and China in 1969.
Standard Chartered Bank Quick Facts
Combined Balance Sheet : Rs. 24515.9 cr as on March 31, 2001
Customer base : 2.4 million
Corporate customers : Over 1200
The First : In issuing global credit card in India, in issuing photcard and pucture card in India.
Visa ATMs : 1500
In the onset of new millennium, Standard Chartered Bank purchased the Grindlays Bank from ANZ Group for $1.34 billion and was named Standard Chartered Grindlays Bank and also the acquisition of the Chase Consumer Banking operations in Hong Kong for $ 1.32 billion. Previously, when with ANZ Group, it was known as ANZ Grindlays Bank where ANZ is Australia and New Zealand.
Standard Chartered Credit Cards
Standard Chartered Credit Card can get you going with the privileges within the country. With Standard Chartered Bank Credit Card one is also rewarded with exciting benefits and unique features.
Standard Chartered Credit Cards are of many varieties. Atleast one type of SCB Credit Card out of the entire range can fit to the need of a single person. The varieties of Standard Chartered Credit Cards are as follows:
Standard Chartered Bank Classic
Standard Chartered Bank Classic
Standard Chartered Bank Cricket
Standard Chartered Bank Diva
Standard Chartered Bank Executive
Standard Chartered Bank Executive
Standard Chartered Bank Gold
Standard Chartered Bank Gold
Standard Chartered Bank Sapnay
Standard Chartered Grindlays Classic
Standard Chartered Grindlays Gold
Standard Chartered Grindlays Star TV
Add-on Card is given free with Standard Chartered Bank Credit Card. SCB Credit Card come with the following insurances.
Air accident Cover
General Accident Cover
Add-On Card Cover
No Cover Baggage Cover
Credit Shield on death
No Charge Purchase Protection Cover
In India Standard Chartered Bank has branches in the following cities
Ahmedabad
Amritsar
Bangalore
Chennai
Coimbatore
Delhi
Ernakulam
Gurgaon
Guwahati
Hyderabad
Kanpur
Kolkata
Mumbai
Noida
Pune
Standard Chartered Website
www.standardchartered.com
www.standardchartered.co.in (for India)
Scotia Bank is one of the leading financial institutions of North America. In India it has a presence in Mumbai, New Delhi, Coimbatore, Bangalore and Hyderabad. Through its branch network and ScotiaMocatta, it offers a broad range of corporate and commercial services along with some retail banking products.
Scotia Bank Services offered in India
ScotiaBank offers a range of services from its Indian branches. They are as follows:
Personal Banking
Deposits
Checking and Savings Accounts
Other Currency Accounts
Other Services
Foreign Exchange
Safety Deposit Boxes
Business Banking & Trade
Loans
Local Currency Loans
Other Currency Loans
Deposits
Current Accounts
Term Deposits
Other Currency Deposits
Trade Finance
Letters of Credit
Letters of Guarantee
Collections
Cash Management
Balance Reporting
Wire/SWIFT Transfers
Foreign Exchange
Other Services
Precious Metals Loans
Metals Trading
Base Metals
Scotia Bank Branches and Offices in India
Office of the Country Head
ScotiaMocatta India
82 "C" Wing, Mittal Tower, 8th Floor,
Nariman Point, Mumbai, India 400 021
Phone: +91 22 22836765 / 5636 4223
Fax: +91 22 56551056
E-mail: vpo.india@scotiabank.com
SWIFT: NOSCINBBXXX
New Delhi Branch
ScotiaMocatta India
Dr. Gopal Das Bhavan
28 Bharakhamba Road
New Delhi, India 110-001
Phone: (91-11) 2335-1522 to 28
Fax: (91-11) 2331-2847
E-mail: bns.newdelhi@scotiabank.com
SWIFT: NOSCINBBDEL
Coimbatore Branch
ScotiaMocatta India
Classic Towers,
1547 Trichy Road,
Coimbatore, India 641-018
Phone: (91-42) 2230-3404
Fax: (91-42) 2230-3403
E-mail: bns.coimbatore@scotiabank.com
SWIFT: NOSCINBBCJB
Bangalore Branch
ScotiaMocatta India
S.N. Towers
25/2 M.G. Road
Bangalore, India 560-001
Phone: (91-80) 2558-1415
Fax: (91-80) 2558-1435
E-mail: bns.bangalore@scotiabank.com
SWIFT: NOSCINBBBLR
Director Marketing India, Bullion
ScotiaMocatta India
11 Maker Chambers VI
220 Nariman Point
Mumbai, 400 021 India
Phone: (91-22) 5658 6938 / 41
Fax: (91-22) 2288-1078
E-mail: rajan.venkatesh@scotiabank.com
Hyderabad Branch
ScotiaMocatta India
6-3-346/1 Road No. 1
Banjara Hills, Hyderabad, India 500 034
Phone: (91-40) 5566-2265
Fax: (91-40) 5566-0329
E-mail: bns.hyderabad@scotiabank.com
SWIFT: NOSCINBBHYD
Website of Scotia Bank
www.scotiabank.com
Taib Bank was established in 1955 in India. Its subsidiary in Bangalore, Taib Capital Corporation Ltd. (TCCL) is the first Gulf based financial institution to acquire Foreign Institutional Investor (FII) status in India.
TCCL offers managed funds, private placements and advisory services and also presently offers brokerage services through their newly acquired brokerage operation, TAIB Securities Ltd. (India) which offers access to the National Stock Exchange.
TAIB's Private Banking group now offers personalized Trust Services to assist the wealth management needs of our clients.
Taib Bank's Trust Services
Trusts have been a long-standing and established form of safeguarding wealth. They are flexible and are created on behalf of specified beneficiaries, such as individuals or families, and serve a particular purpose.
Trust Services
Depending upon a client's individual objective and existing situation, the Bank assists its customers in selecting the best structure and location for a trust that meets their needs. Once the parameters have been agreed upon, TAIB then establishes the trust, choose and appoint Trustees and Directors, register an office and provide all other necessary administration support functions to maintain the set-up to best protect the wealth of the client.
Offshore Investment Holding Companies
Similar to its Trust Services, Taib Bank also assists in creating and establishing OIHCs, when a flexible and international vehicle is needed to protect assets, anonymity, and inheritance or for the purpose of tax planning.
Taib Bank's Address
TAIB Bank B.S.C. (c)
TAIB Tower
Diplomatic Area
P.O. Box 20485
Manama
Kingdom of Bahrain
Phone: +973 17 531382
Mobile: +973 3 9767755
Fax: +973 17 916020
Website of Taib Bank
www.taib.com
Taib Bank's Customer Care
Phone - (973) 17549494
E-mail - taibdirect@taib.com
More than 3,400 branches in 70+ countries, the 1991 merger Algemene Bank Nederland and Amsterdam Rotterdam Bank had a long-standing presence in India since 1920 in Kolkata known traditionally as a strong "diamond financing bank". ABN AMRO Bank India started functioning in 1991 in Delhi and till date it has branches in Chennai, Pune, Baroda, Hyderabad, Bangalore and Noida servicing multiproduct relationship with customers. It formed AA Securities [I] Pvt. Ltd. in September 1998.
Abn Amro Bank is among the top 10 banks in the world in size and strength with assets over US$504 and an AA credit rating. In more than 320 cities, it is having over 1,00,000 well qualified staffs.
The services of Abn Amro Bank is organised globally in three business lines:
Wholesale Clients
Consumer & Commercial Clients
Private Clients & Asset Management
ABN AMRO Bank in India enjoys a strong image as a corporate bank with comprehensive Global Transaction Services. The investment banking services of the bank is delivered through ABN AMRO (India) Corporate Finance and the Global Financial Market Teams which strive to maintain the permanent position in the marketplace.
ABN AMRO India Bank has launched its Private Banking Services in the country offering a comprehensive range of high quality Portfolio Advisory Services along with a comprehensive transaction execution platform, complemented by personalised Banking and custodial services.
It has also launched its microfinance program. The program is aimed at delivering credit to the poor women of India, especially in the rural areas, through Microfinance Institutions (MFIs).
The Mission
"The mission of ABN AMRO Bank is to create maximum economic value for our shareholders through a constant relationship focus on the financial services needs of our chosen client segments and a strict adherence to our financial targets. We are operating in three principal customer segments, whereby the objective is to maximise the value of each of these businesses as well as the synergies between them. Excellence of service to our clients and leadership in our chosen markets are of paramount importance to our long-term success. The Bank's corporate values play an integral role in the fulfilment of our mission."
The Achievements of ABN AMRO Bank
"Best at Cash Management Award in September 2001" - The Banker
Corporate Finance India : Ranked Second in M&A in the Investment Banking arena in 2001 - Economic Times.
ABN AMRO Securities India : Best Foreign Bond House; No 1 Arranger in Private Sector: Euromoney 2000.
Top Bank on "Management Quality" parameter: Business India 'Best Banks Survey 2000'.
7th Most Admired Commercial Bank in the World: Fortune Magazine, 2000.
Top Foreign Bank in India: Economic Times - CMIE survey 1999.
Second overall in Banking Industry: Financial Express - BRIS survey 1999.
ABN AMRO Private Equity (AAPE)
ABN AMRO Private Equity (AAPE) is one of the leading venture capital firms in the Midwest. Abn Amro Private Equity is headquartered in Chicago with over $300 million of capital under management. ABN AMRO Private Equity invests up to $10 million in privately-held companies.
It focuses its investments in four broad industries i.e.
Business services,
Communications,
Information technology and
Healthcare services
Specific target markets within these broad industry segments include B2B electronic commerce, traditional and e-business services, communications services and infrastructure, Internet applications, and traditional and e-health companies.
ABN AMRO Credit Cards
Abn Amro India provides two types of credit cards to its customers. One is Abn Amro Freedom Credi Card and the other is Abn Amro Smart Gold Card. The credit card consists of package of offers and discounts along with insurances.
ABN AMRO Bank Offices
Head Office:
Amsterdam, The Netherlands
Consumer Clients:
ABN AMRO Bank N.V.
Hansalaya Building
15, Barakhamba Road
New Delhi 110001
Telephone: +91 11 2370 2555
E-mail: in.marketing@in.abnamro.com
Commercial Clients:
ABN AMRO Bank N.V.
DLF Centre
Sansad Marg
New Delhi 110001
Telephone: 91 11 2375 5130
E-mail: in.marketing@in.abnamro.com
Wholesale Clients:
ABN AMRO Bank N.V.
Sakhar Bhavan, 4th floor
Nariman Point
Mumbai 400 021
Telephone: +91 22 56372401
E-mail: in.marketing@in.abnamro.com
Private Clients:
ABN AMRO Bank N.V.
Sakhar Bhavan
Nariman Point
Mumbai 400 021
Telephone: +91 22 2281 8008 Ext. 2025 to 2029
E-mail: in.marketing@in.abnamro.com
Asset Management:
ABN AMRO Asset Management (India) Ltd.
101, Sakhar Bhavan, 10th floor
Nariman Point
Mumbai 400 021
Telephone: +91 22 5656 3841
Internet: www.asset.abnamro.com
Abn Amro India Website
www.abnamro.co.in
The History
King Willem-I issued a royal decree on 29th of March 1824 creating Nederlandsche Handel-Maatschappij (NHM) aiming to revive trade between the Netherlands and the Dutch East Indies. NHM merged with De Twentsche Bank in 1964 to form Algemene Bank Nederland (ABN). Amsterdamsche Bank and Rotterdamsche Bank joined to become Amsterdam Rotterdam (Amro) Bank. Both the banks merged in 1991 as ABN AMRO Bank.
Abu Dhabi Commercial Bank started its business in India in 1980 looking to the fact that India is a major trading partner in U.A.E. import trade.
The trade relationship between the two nations has flourished with the advent of technology, advanced communication, sophisticated transportation and of course, efficient financial services.
Services Offered by Abu Dhabi Commercial Bank in India
1. Account opening: Individuals, Corporates and Brokers can avail this facility of opening an account.
2. Dematerialization: ADCB converts physical securities into an equal number of securities in electronic form. After processing, on request by customers, the certificate along with the DRF is sent to the company who will arrange to credit to the customers DP account.
3. Transfer of securities: Once the depository account is opened, the transfer of securities in the electronic form is effected to and from stock exchanges linked to NSDL. The Bank assists the customers for receiving/delivering securities to complete transactions concluded outside the stock exchanges (off market trades).
4. Keeping track of the securities: The Bank provides monthly statement of DP account reflecting details and quantity of shares owned by the customers.
5. Pledge: An investor can pledge his securities as collateral for availing financial assistance for personal needs.
6. Freeze/Defreeze of accounts: The Bank assists its customers for freezing their account, if they choose so, for a particular time period and no transaction will take place in the DP account. Similarly, customers can also defreeze the account to facilitate transactions when in need.
7. Rematerialisation: ADCB also assists the customers to reconvert back the securities into physical form against specific requests.
Abu Dhabi Commercial Bank NRI Services
Since NRI can invest in shares and securities on repatriable and / or non-repatriable basis depending on the origin of funds (funds emanating from NRE or NRO accounts) for investment, the following requisites of the RBI permission is applied:
DP account opened on Type of transaction RBI permission required/not required
1) Non - Repatriable basis Primary market purchase/sale Not required
2) Non - Repatriable basis Secondary market purchase/sale Required (general permission issued by designated Authorised dealer)
3) Repatriable basis Primary market purchase/sale Not required
4) Repatriable basis Secondary market purchase/sale Required (general permission issued by designated Authorised dealer)
Cash Against Shares (C.A.S.H)
C.A.S.H is an overdraft facility by ADCB against financial securities. It enhances the liquidity of customers, giving the freedom to utilize the money for their business / personal needs.
Advantages of C.A.S.H.
Prime Interest rates
No Annual Fee
Highest loan limit (Maximum Rs.20,00,000/- for individual)
Convenience (Instant access to credit line, by simply writing a cheque
Savings (Pay interest only on the amount you withdraw)
Flexible Payments (Convenient repayment option)
ADCB Branch addresses in India
Mumbai Branch
Abu Dhabi Commercial Bank
Rehmat Manzil,
75, Veer Nariman Road,
Churchgate,
Mumbai 400020 - INDIA
Tel : +91 22 22855658
Fax : +91 22 22870686
NRI Centre
Abu Dhabi Commercial Bank,
NRI Centre,
143, Soona Mahal,
Netaji Subhash Marg,
Mumbai 400020 - INDIA
Tel : +91 22 22830184
Fax : +91 22 22855655
Bangalore Branch
Abu Dhabi Commercial Bank,
Citi Centre,
28 Church Street,
Bangalore 560001 - INDIA
Tel: +91 22 5582000
Fax: +91 22 5582323
Website of Abu Dhabi Commercial Bank
www.adcbindia.com
Bank of Ceylon is a Sri Lanka based bank. In India it has its branch in Chennai. The Bank started its business in Ceylon on 1st August 1939. The first branck of the Bank was opened at Kandy (Sri Lanka) in 1941 and it was followed by branches in Galle, Jaffna and Trincomalee. The first overseas branch of Bank of Ceylon was opened in London in the year 1949.
The Merchant Bank of Sri Lanka Ltd. was set up by Bank of Ceylon in 1982 with the establishment of the BOC Property Development Ltd. It introduced Ceybank Visa Credit Cards
in 1989 in Sri Lanka in collaboration with the VISA International.
The Registered Head Office
Bank of Ceylon,
4, Bank of Ceylon Mawatha,
Colombo - 01
Sri Lanka.
Tel: 2446790-811(22 lines) 2338741 -55
Telex Address: "HEADBANK"
E-mail: boc@sri.lanka.net
Branch Address in India
Bank of Ceylon,
1090, Poonamalee High Road,
Chennai 600 084
INDIA.
Tel: 00 9144 - 26423501, 26420972, 26420973
Fax: 9144 -25325590
Telex: 08141 - 24094 / 08141 - 24095
SWIFT code: BCEYIN5M
E-mail: ceybank@md3.vsnl.net.in
BNP bank
BNP Paribas boasts a long tradition in India in private banking. The bank started its Indian operation from Calcutta in. Since then with offices in most major cities of India, the Bank has a powerful and efficient infrastructure to serve Corporate Banking as well as Private Banking.
Worldwide, BNP Paribas manages assets valued over 100 billion Euros. It is No. 1 in France and it has a presence in all the major centres of international private asset management.
BNP Paribas Bank Collection Services
1. Metro Cash: A local cheque collection service available at all BNP Paribas centers in India.
2. Rapid Cash: A local cheque collection service offered at select non- BNP Paribas centers in India. Available presently in 50 cities.
3. Quick Cash: An outstation cheque collection service covering over 1,700 locations in India. Cheques in your favour, and payable at 1,700 locations are picked up through courier from over 50 centres.
4. BNPP Forecast: Advises the customers over the funds in pipeline to enable them to better plan their cash-flows.
The Advantage to the customers
Only single account operation eliminating the need to open collection accounts at any other centres.
Credit confirmation statement is provided by Cash Management on the day of credit.
Detailed monthly report of charges and information on unpaid cheques are offered.
Single point reference to all queries.
Structured MIS reports for easier reconciliation.
Customized MIS reports to suit customer needs.
Linkages with all ERP platforms such as SAP, BAAN etc are possible
BNP Paribas Bank Payments Services
1. Metro Pay: Prepaid 'account payee' Demand Drafts or Pay Orders issued favouring beneficiary and payable at all BNP Paribas centres in India.
2. Rapid Pay: Prepaid 'account payee' Demand Drafts issued by the Bank and payable at the correspondent banks' through 252 centres in India.
3. Remote Pay: Prepaid 'account payee' Pay Orders at destination on 50 locations in India.
4. Quick Pay: The Bank has a tie-up with one of the largest banks in India to offer its customers payment solutions at over 10,000 locations.
5. Metro Cheque: To make customers trade and other payments easier at all the outlets in India, the Bank has introduced MetroCheque facility. These cheques are payable at par at any of the branches in the country.
6. Cheque Serve: Printing of the cheques (with signatures) done by the Bank on customers behalf.
7. Interest & Dividend Warrants: The Bank offers value-added solutions for interest payments, refund orders, dividend payments etc.
The Advantage to the customers
Outsourcing of payments/ accounts payable functions - bulk & high value - reduces administrative costs and translates to better efficiency
Structured, user-friendly MIS reports for easier reconciliation
Single point contact for faster, efficient and effective query resolution
Single account operation possible, eliminates the need for multiple accounts
Customized MIS to suit individual needs
Linkages to various platforms such as SAP, BAAN possible
Competitive pricing
BNP Paribas Offices in India
Mumbai Branch
French Bank Building,
62, Homji Street,
Fort, Mumbai 400 001.
Tel. : +91-22- 2266 0822 / 0844 / 4518
Fax : +91-22- 2266 5490
Email: pharok.lala@asia.bnpparibas.com
Pune Branch
5 & 6, Godrej Millenium Park,
9 Koregaon Road,
Pune 411001.
Tel. : +91-20- 613 0142 / 45 / 613 4070
Fax : +91-20- 613 4079
Email: nana.sawant@asia.bnpparibas.com
Ahmedabad Branch
203, Sakar II,Ellis Bridge,
Off Ashram Road,
Ahmedabad 380006.
Tel. : +91-79- 657 9880 / 658 0579
Fax : +91-79- 657 9881
Email: sabesan.ananthanarayanan@asia.bnpparibas.com
Gurgaon & New Delhi Branches
East Towers, 1st Floor,
25, Barakhamba Road,
New Delhi 110001.
Tel. : +91-11- 5179 6600
Fax : +91-11- 2332 4188 / 2373 1110
Email: amit.dutt@asia.bnpparibas.com
Kolkata Branch
Stephen House,
4A B. B. D. Bagh East,
Kolkata 700 001.
Tel. : +91-33- 2248 0917 / 1273
Fax : +91-33- 2243 5250
Email: indranil.sengupta@asia.bnpparibas.com
Chennai Branch
Prince towers, 3rd Floor,
25/26 College Road, Chennai 600006.
Tel. : +91-44- 2821 1969 / 1970
Fax : +91-44- 2821 1968
Email: sandeep.mehrotra@asia.bnpparibas.com
Bangalore Branch
3rd floor, Landmark,
21/15, M. G. Road, Bangalore 560 001.
Tel. : +91-80- 559 6777 / 6794
Fax : +91-80- 559 6787
Email: angshuman.chatterjee@asia.bnpparibas.com
Hyderabad Branch
Venkat Plaza, 2nd floor,
6-3-883/5 Punjagutta,
Hyderabad 500 082.
Tel. : +91-40- 2341 0841 / 5566 0222
Fax : +91-40- 2341 0842
Email: krishnamurthy.rajagopalan@asia.bnpparibas.com
Website of BNP Paribas Bank
www.bnpparibas.co.in/
www.citibank.co.in
Citibank India is since 1902. Citibank India was the first bank to lend actively to individuals. Citibank is the largest Consumer Finance lender in the world. Citibank India follows the following principles while dealing to its customers:
Truth in Lending
Superior Products and Services
Quick and Transparent Credit Decisions
Lending is not a transaction, but a relationship
Custodian of Public Funds
Citibank online banking
With citibank online banking one can enjoy the following services from anywhere in the world. For citibank online banking one has to log on to www.citibank.co.in
Redeem your rewards points
Pay Bills Online
Send Demand Draft anywhere in India
Get statements by e-mail
Register for Instant alerts
Mobile Banking
Citibank online Security Tips
Citibank Suvidah
With the Citibank Suvidah Account, one can get the following benefits:
Shop n' win Rewards
Secure your child's future
Instant cash upto thrice your salary
Get rewarded for your account
Citibank Suvidha Account Holders holds over 150,000 highly tech-savvy Account Holders from Bangalore, Mumbai and Delhi alone.
Citibank Cards
Citibank cards are available in a range of flexible and personalized credit and charge that can be managed online. Undermentioned are few types of Citibank Credit Cards in India.
MTV Citibank Card
Indian Oil Citibank Card
Citibank Silver International Card
CRY Card
WWF Card
Times Card
Citibank Cricket Visa Card
Citibank Direct
The Citibank Direct Current Account pays 4.59% AER (4.50% gross). The Citibank Direct is one of the best rates on the market, with no strings attached. No minimum deposit is required for Citibank Direct and no need to pay in ones salary. A minimum annual income of £15,000 is required to open Citibank Direct Account. A chequebook and automatic overdraft facility are not available in Citibank Direct. Moreover Citibank Direct Account is easy to manage.
Citibank NRI
Citibank NRI holds over 160,000 Citibank NRI Account. Citibank NRI Account Holders, holds a minimum balance of Rs. 10 lakhs. Citibank NRI is voted as the most preferred bank of the NRIs.
Citibank South Asia
Singapore Office:
Hock Kern Chua, Country Sales Manager
PROGRESS SOFTWARE CORP (S) PTE. LTD.
No. 1 International Business Park
#03-11 The Synergy
Singapore 609917
Tel: 65 563 1500
Fax: 65 563 1511
Malaysia Office:
Mr. Kah-Khoi Leong, Country Sales Manager
PROGRESS SOFTWARE (M) SDN BHD
Level 36, Menara Citibank
165 Jalan Ampang
50450 Kuala Lumpur
Malaysia
Tel: (603) 2169-6180
Fax: (603) 2169-6168
Citibank Websites
Global : www.citigroup.com
www.citi.com
Singapore : www.citibank.com.sg
Belgium : www.citibank.be
UK : www.citibank.co.uk
Australia : www.citibank.com.au
US : www.citibank.com/us
Malaysia : www.citibank.com.my
India : www.online.citibank.co.in/
China trust Commercial Bank, the largest private bank in Taiwan (the Republic of China) has presence in London, New York, Vancouver, Tokyo, Hong Kong, Jakarta, Manila, Bangkok, Hanoi and Paraguay. In India it has its branch in New Delhi.
To support with greater financial support to the increasing investments of Taiwanese businessmen in India, Chinatrust Commercial Bank established its first Indian Branch in the year 1996 in New Delhi.
Services of Chinatrust Commercial Bank
The following services are offered by Chiatrust Commercial Bank in India:
Corporate Loans Overdraft Line, Short and Long Term Loans, Foreign Currency Loans, Bridge Loans.
Trade Finance Bills & Cheque Collection and Purchase, Pre and Post Shipment Loans, Letter of Credit Issuance/Advising
Conformation/Negotiations, Bank Guarantees, Derivatives and Treasury Services.
Deposits Saving/Current Accounts, Short Term, Long Term, Reinvestment Deposits.
Personal Loans Loan (Overdraft) against Fixed Deposits (Miscellaneous Securities).
Remittance Issuance of Bankers Cheque (Pay Orders), Demand Drafts.
Local & Foreign Mail Transfer, Telegraphic Transfers, Cheque purchase, and Traveller Cheques.
Foreign Trade Services of Chinatrust Commercial Bank
Chinatrust Commercial Bank offers trade related information on Taiwanese Companies. The Products and Services offered are as listed below:
Imports
Issuing Documentary Credits/Guarantees
Loan against Import Bills
Arranging discount of Import Bills overseas
Import Bills for collection
Foreign remittances relating to Import, using SWIFT/Telex
Shipping Guarantee/Delivery Orders
Exports
Packing Credit
Export Bill Negotiations
Export Bill discounting
Advising and confirmation of Documentary Credits
Transfers of Documentary Credits
Export Bills for Collection
Remittances
Foreign Inward remittances using SWIFT/Telex
Foreign Outward remittances using SWIFT/Telex
Advanced remittances relating to Imports
Other Trade Services
Foreign Exchange forward contracts
Taiwan related trade information
Credit enquiries of overseas parties
Forex advisory services
Chinatrust Commercial Bank office in Taiwan
No. 3, Sung Shou Road
Taipei, Taiwan
Tel : +886-2-2722-2002
Fax : +886-2-2723-9775
Website : www.chinatrust.com.tw
Chinatrust Commercial Bank office in India
New Delhi Branch
21-A, Janpath,
New Delhi - 110 001
INDIA
Tel: +91-11-335-6001~ 005
Fax: +91-11-373-1815
Website : www.chinatrustindia.com
e-Mail : ctcbindd@ndf.vsnl.net.in
Deutsche Bank was established in the year 1870 in Berlin, Germany. It was founded to transact banking business of all kinds. It had in view to facilitate trade relations between Germany and all other European countries, and overseas markets.
The Bank is one of the leading worldwide financial service providers with its presence in 74 countries. Its approximate assets is EURO 840 billion.
It ranks to be global leaders in Corporate Banking and Securities, Transaction Banking, Asset Management & Private Wealth Management. It has a significant Retail Banking franchise in Germany and other selected countries in Continental Europe.
Deutsche Bank Products and Services
Corporate and Investment Banking
The Bank offers to corporate and institutional clients a the following products and services:
Equities
Fixed Income
Foreign Exchange
Commodities
Corporate Finance
Asset Finance & Leasing
Relationship Management
Global Cash Management
Global Trade Finance
Trust & Securities Services
Private clients and asset management
The Bank provides the following financial solutions to private and business clients:
Private & Business Clients
Private Wealth Management
DB Real Estate
DWS Investments
Deutsche Asset Management
Scudder Investments
Deutsche Bank Offices in India
Mumbai Branch
Hazarimal Somani Marg-Fort
Mumbai (Bombay) 400 001
India
Tel. : +91 22 2207 4720 up to 24
Delhi Branch
Deutsche Bank ,
Tolstoy House,
15-17 T Marg,
New Delhi-110001
India
Tel. : +91 11 23721155
Gurgaon Branch
DLF Square - DLF City,
Phase II,
Jacaranda Marg
4th Floor
Gurgaon (near New Delhi),
Haryana 122 002
India
Chennai
114 M. G. Road
Ground Floor
600 034 Chennai (Madras)
India
Tel. : +91 44 821 5408
Bangalore
# 123, Shivalaya EPIP Phase II,
Block II Whitefield Industrial Area,
Bangalore 560 066
India
Tel. : +91 80 5119 3300
www.deutschebank.co.in/
HSBC Bank is the largest bank in Hong Kong and second largest group in the world after Citicorp. Before moving its headquarter to London in 1990, it was headquartered in Hong Kong. HSBC India is having branches in Ahmedabad, Bangalore, Chennai, Chandigarh, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kochi, Kolkata, Ludhiana, Mumbai, New Delhi, Noida, Pune, Thane, Trivandrum and Visakhapatnam.
HSBC NRI centres are located in Asia-Pacific, the Middle East, Europe and North America. HSBC NRI centres provide full range of personal and private banking products in India and overseas. HSBC Internet banking adds to the services of HSBC India abroad.
HSBC India, along with HSBC Investment product and HSBC Insurance, it offers international Gold Card and Classic Credit Cards from VISA and MasterCard and debit cards from Visa. HSBC in India gives 24 hour banking services, extensive network of ATMs, integrated Call Centre and also HSBC e-banking.
HSBC Bank India Fact File
The HSBC Group develops and applies advanced technology to the efficient and convenient delivery of banking and related financial services. HSBC Bank India provides the following:
Self-service banking with over 150 in-branch and off-branch ATMs and 24-hour phonebanking.
Trade and corporate banking services with real-time access to a centralised information database
Instantaneous inter-city transactions through online connections between all branches
A state-of-the-art treasury dealing system
A sophisticated card system supporting debit and credit cards, domestic and international VISA, MasterCard, and co-branded cards
A dedicated acquiring system for both MasterCard and Visa transactions
online@hsbc, HSBC internet banking service, provides customers with an integrated and secure platform to access their accounts.
Internet Payment Gateway handles credit card transactions on the internet
The following are few branch locations in India with their telephone numbers
Cities For Banking related queries For Credit card related queries
Ahmedabad 98982 72424 98983 77373
Bangalore 2558 9595 2558 9696
Chandigarh 501 6555 501 6999
Chennai 2526 9595 2526 9696
Coimbatore 98943 72424 98944 77373
Gurgaon 9511 - 2373 8989 9511 - 2373 9696
Hyderabad 2335 8686 2335 8787
Indore 98932 72424 98932 77373
Jaipur 220 8989 510 9696
Kochi 98954 72424 98954 77373
Kolkata 2243 8585 2243 8686
Ludhiana 502 8989 277 3696
Mumbai 2498 2424 2491 0001
New Delhi 2373 8989 2373 9696
Noida 9511 - 2373 8989 9511 - 2373 9696
Pune 5602 8585 5602 8686
Trivandrum 98954 72424 98954 77373
Vadodara 98982 72424 98983 77373
HSBC online
HSBC Internet Banking is available countrywise. Customer can get into HSBC online and can operate their account from anywhere. HSBC online banking is a real time banking. The following are websites of HSBC Bank in some of the major countries.
Global : www.hsbc.com
UK : www.hsbc.co.uk
Canada : www.hsbc.ca
Australia : www.hsbc.com.au
Hong Kong : www.hsbc.com.hk
India : www.hsbc.co.in
JPMorgan Chase Bank, headquartered in New York, was established on July 1, 2004, with the merge of J.P. Morgan Chase & Co. and Bank One Corporation. It operates from over 50 countries and is leading in investment banking, financial services for consumers and businesses, financial transaction processing, asset and wealth management and private equity.
JPMorgan Chase Bank reports on the following six lines of business:
Asset & Wealth Management
Card Services
Commercial Banking
Investment Banking
Retail Financial Services
Treasury & Securities Services
The JPMorgan Chase Bank retail and commercial banking businesses are headquartered in Chicago. Customers can write to the Bank in the following address:
JPMorgan Chase & Co.
1 Bank One Plaza
Chicago, IL 60670
Contact information JPMorgan Chase Bank
Investor Relations
JPMorgan Chase & Co
270 Park Avenue
New York, NY 10017-2070
Tel. : (212) 270-6000
www.jpmorganchase.com/
Standard Chartered Bank in India is the largest international banking Group in India. The Combined Balance Sheet (as at March 31, 2001) of SCB India is Rs. 24515.9 cr. and is having a combined customer base of 2.4 million in retail banking and over 1200 corporate customers.
The key businesses of Standard Chartered Bank in India include consumer banking - primarily credit cards, mortgages, personal loans and wealth management - and - wholesale banking, where the Bank specializes in the provision of cash management, trade, finance, treasury and custody services.
Standard Chartered India was the first to issue first global credit card in India, the first to issue Photocard, the first Picture Card and was the first credit card issuer to be awarded the ISO 9002 certification.
Some other product innovations of Standard Chartered Bank in India include the 'Sapnay' credit card, the international debit card that provides free access to over 1500 Visa ATM's, a first in the banking industry, Mileage, an overdraft facility against the security of a car and Smart Credit, a personal line of credit for salaried customers.
The name is derived from Standard & Chartered. Standard Bank of British South Africa merged with Chartered Bank of India, Australia and China in 1969.
Standard Chartered Bank Quick Facts
Combined Balance Sheet : Rs. 24515.9 cr as on March 31, 2001
Customer base : 2.4 million
Corporate customers : Over 1200
The First : In issuing global credit card in India, in issuing photcard and pucture card in India.
Visa ATMs : 1500
In the onset of new millennium, Standard Chartered Bank purchased the Grindlays Bank from ANZ Group for $1.34 billion and was named Standard Chartered Grindlays Bank and also the acquisition of the Chase Consumer Banking operations in Hong Kong for $ 1.32 billion. Previously, when with ANZ Group, it was known as ANZ Grindlays Bank where ANZ is Australia and New Zealand.
Standard Chartered Credit Cards
Standard Chartered Credit Card can get you going with the privileges within the country. With Standard Chartered Bank Credit Card one is also rewarded with exciting benefits and unique features.
Standard Chartered Credit Cards are of many varieties. Atleast one type of SCB Credit Card out of the entire range can fit to the need of a single person. The varieties of Standard Chartered Credit Cards are as follows:
Standard Chartered Bank Classic
Standard Chartered Bank Classic
Standard Chartered Bank Cricket
Standard Chartered Bank Diva
Standard Chartered Bank Executive
Standard Chartered Bank Executive
Standard Chartered Bank Gold
Standard Chartered Bank Gold
Standard Chartered Bank Sapnay
Standard Chartered Grindlays Classic
Standard Chartered Grindlays Gold
Standard Chartered Grindlays Star TV
Add-on Card is given free with Standard Chartered Bank Credit Card. SCB Credit Card come with the following insurances.
Air accident Cover
General Accident Cover
Add-On Card Cover
No Cover Baggage Cover
Credit Shield on death
No Charge Purchase Protection Cover
In India Standard Chartered Bank has branches in the following cities
Ahmedabad
Amritsar
Bangalore
Chennai
Coimbatore
Delhi
Ernakulam
Gurgaon
Guwahati
Hyderabad
Kanpur
Kolkata
Mumbai
Noida
Pune
Standard Chartered Website
www.standardchartered.com
www.standardchartered.co.in (for India)
Scotia Bank is one of the leading financial institutions of North America. In India it has a presence in Mumbai, New Delhi, Coimbatore, Bangalore and Hyderabad. Through its branch network and ScotiaMocatta, it offers a broad range of corporate and commercial services along with some retail banking products.
Scotia Bank Services offered in India
ScotiaBank offers a range of services from its Indian branches. They are as follows:
Personal Banking
Deposits
Checking and Savings Accounts
Other Currency Accounts
Other Services
Foreign Exchange
Safety Deposit Boxes
Business Banking & Trade
Loans
Local Currency Loans
Other Currency Loans
Deposits
Current Accounts
Term Deposits
Other Currency Deposits
Trade Finance
Letters of Credit
Letters of Guarantee
Collections
Cash Management
Balance Reporting
Wire/SWIFT Transfers
Foreign Exchange
Other Services
Precious Metals Loans
Metals Trading
Base Metals
Scotia Bank Branches and Offices in India
Office of the Country Head
ScotiaMocatta India
82 "C" Wing, Mittal Tower, 8th Floor,
Nariman Point, Mumbai, India 400 021
Phone: +91 22 22836765 / 5636 4223
Fax: +91 22 56551056
E-mail: vpo.india@scotiabank.com
SWIFT: NOSCINBBXXX
New Delhi Branch
ScotiaMocatta India
Dr. Gopal Das Bhavan
28 Bharakhamba Road
New Delhi, India 110-001
Phone: (91-11) 2335-1522 to 28
Fax: (91-11) 2331-2847
E-mail: bns.newdelhi@scotiabank.com
SWIFT: NOSCINBBDEL
Coimbatore Branch
ScotiaMocatta India
Classic Towers,
1547 Trichy Road,
Coimbatore, India 641-018
Phone: (91-42) 2230-3404
Fax: (91-42) 2230-3403
E-mail: bns.coimbatore@scotiabank.com
SWIFT: NOSCINBBCJB
Bangalore Branch
ScotiaMocatta India
S.N. Towers
25/2 M.G. Road
Bangalore, India 560-001
Phone: (91-80) 2558-1415
Fax: (91-80) 2558-1435
E-mail: bns.bangalore@scotiabank.com
SWIFT: NOSCINBBBLR
Director Marketing India, Bullion
ScotiaMocatta India
11 Maker Chambers VI
220 Nariman Point
Mumbai, 400 021 India
Phone: (91-22) 5658 6938 / 41
Fax: (91-22) 2288-1078
E-mail: rajan.venkatesh@scotiabank.com
Hyderabad Branch
ScotiaMocatta India
6-3-346/1 Road No. 1
Banjara Hills, Hyderabad, India 500 034
Phone: (91-40) 5566-2265
Fax: (91-40) 5566-0329
E-mail: bns.hyderabad@scotiabank.com
SWIFT: NOSCINBBHYD
Website of Scotia Bank
www.scotiabank.com
Taib Bank was established in 1955 in India. Its subsidiary in Bangalore, Taib Capital Corporation Ltd. (TCCL) is the first Gulf based financial institution to acquire Foreign Institutional Investor (FII) status in India.
TCCL offers managed funds, private placements and advisory services and also presently offers brokerage services through their newly acquired brokerage operation, TAIB Securities Ltd. (India) which offers access to the National Stock Exchange.
TAIB's Private Banking group now offers personalized Trust Services to assist the wealth management needs of our clients.
Taib Bank's Trust Services
Trusts have been a long-standing and established form of safeguarding wealth. They are flexible and are created on behalf of specified beneficiaries, such as individuals or families, and serve a particular purpose.
Trust Services
Depending upon a client's individual objective and existing situation, the Bank assists its customers in selecting the best structure and location for a trust that meets their needs. Once the parameters have been agreed upon, TAIB then establishes the trust, choose and appoint Trustees and Directors, register an office and provide all other necessary administration support functions to maintain the set-up to best protect the wealth of the client.
Offshore Investment Holding Companies
Similar to its Trust Services, Taib Bank also assists in creating and establishing OIHCs, when a flexible and international vehicle is needed to protect assets, anonymity, and inheritance or for the purpose of tax planning.
Taib Bank's Address
TAIB Bank B.S.C. (c)
TAIB Tower
Diplomatic Area
P.O. Box 20485
Manama
Kingdom of Bahrain
Phone: +973 17 531382
Mobile: +973 3 9767755
Fax: +973 17 916020
Website of Taib Bank
www.taib.com
Taib Bank's Customer Care
Phone - (973) 17549494
E-mail - taibdirect@taib.com
Banks provide services to the NRI
Almost all the Indian Banks provide services to the NRIs. There are different types of accounts for them. They are:
• Non-Resident (Ordinary) Account - NRO A/c
• Non-Resident (External) Rupee Account - NRE A/c
• Non-Resident (Foreign Currency) Account - FCNR A/c
An Indian resident who is earning forign exchange can also maintain Foreign Currency account in the country with an authorised dealer bank but only to the maximum limit of 50% of such foreign exchange earnings under the Exchange Earners Foreign Currency Account (EEFC) Scheme.
Some of the FAQs given below will make it easy to understand the services provided by banks to the NRIs.
FAQ for NRIs
a. What are the special features of each bank account?
b. Can Non Resident accounts be opened/ operated by the Power of Attorney holder in India, on behalf of the non-resident?
c. What happens to the status of these accounts when the non-resident holder becomes a person, resident in India?
d. What are the various facilities available to NRIs/OCBs?
e. Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them?
f. Can a person of Indian origin acquire any immovable property in India by way of inheritance?
g. Can NRIs and Overseas Corporate Bodies (OCBs) invest in India?
h. What is the extent and application of Foreign Exchange Management Act (FEMA)?
i. What is the penalty for contravention of FEMA?
j. Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?
k. Can an NRI account be opened in the name of crew members of shipping companies?
a. What are the special features of each bank account?
The special features are as under:
NRO A/c.: The funds, credited to this account, cannot be repatriated outside India in foreign exchange, without prior permission of the Reserve Bank of India. Interest, earned is eligible for repatriation outside India, net of Indian taxes. The remittance of interest (net of taxes) will be permitted by the authorised dealer who maintains the account, if the account holder makes an application to the authorised dealer, in the prescribed form. No RBI permission is required for remittance of interest.
NRE A/c.: The funds, standing to the credit of this account, as well as interest earned thereon, are remittable outside India in free foreign exchange, without permission of the RBI. The interest income is not subject to Indian Income-tax. Credits to the accounts should be in the form of remittance in foreign exchange from outside India, as well as other funds, which are eligible to be remitted outside India, in free foreign exchange. Funds, emanating from local sources, are not eligible to be credited to these accounts, unless these funds are otherwise remittable outside India, in terms of the existing Exchange Control Regulations.
FCNR A/c.: These accounts can be opened in four foreign currencies:
o Pounds Sterling;
o US Dollars;
o Japanese Yen;
o Euro.
For the purpose of opening an account, remittance in foreign exchange, in the same currency, should be received in India. The accounts can be opened only as fixed deposits, with a minimum maturity of one year and, a maximum maturity of three years. The principal, as well as interest, earned on these accounts, is remittable outside India, in the same currency or, in other convertible currency, as desired by the account holder. The interest, earned on these deposits, is exempt from Indian Income-tax.
b. Can Non Resident accounts be opened/ operated by the Power of Attorney holder in India, on behalf of the non-resident?
The accounts cannot be opened by the Power of Attorney holder in India. However, the latter can operate the accounts for the purpose of local payments to be made on behalf of the non-resident account holder. The Power of Attorney holder is not permitted to make gifts from these accounts and, is not allowed to make remittances outside India.
c. What happens to the status of these accounts when the non-resident holder becomes a person, resident in India?
The accounts are to be re-designed as resident accounts, when the non-resident account holder becomes a person, resident in India. In the case of fixed deposits opened by the account holder, before becoming resident in India, the contracted rate of interest will be paid till maturity of the deposits. Similarly, FCNR deposits will be eligible to be held in respective currencies till maturity of the deposits, even after the non-resident holder become a resident in India. He will, however, cease to get tax exemption on interest on the erstwhile deposits (NRE/FCNR deposits), after he becomes resident in India. In certain situations, it might be advisable for the account holder to convert the account to a Resident Foreign Currency Account Deposit (RFC)
d. What are the various facilities available to NRIs/OCBs?
The facilities available to NRIs/OCBs for making investment in India are as follows:
o opening and maintenance of bank accounts in India;
o investment in shares and securities of Indian companies, government securities, units of domestic mutual funds and ,deposits with Indian companies/firms;
o investment in immovable properties in India;
o investment in proprietorship/partnership concerns in India.
e. Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them?
Yes. RBI will consider application from NRIs for remittance of assets, inherited by them in India. Such remittance may be permitted up to US$ 100,000 per year.
f. Can a person of Indian origin acquire any immovable property in India by way of inheritance?
A person of Indian origin, resident outside India, may acquire any immovable property in India by way of inheritance from a person, resident outside India, who had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. Immovable property, by way of inheritance, can also be acquired by a person of Indian origin resident outside from a person resident in India.
g. Can NRIs and Overseas Corporate Bodies (OCBs) invest in India?
The Government of India has adopted a liberal policy, with respect to investments by NRIs and OCBs in India. Such investments are allowed, both, through the RBI route and also through the Government route, i.e., through the Foreign Investment Promotion Board (FIPB) NRIs and OCBs are permitted to invest up to 100% equity in real estate development activity and civil aviation sectors. Investment, made by the NRIs and OCBs, are fully repatriable, except in the case of real estate, which has a 3 year lock-in period on original investment and, 16% cap on dividend repatriation. For those proposals that do not qualify under the automatic route, Government approval is granted through FIPB.
h. What is the extent and application of Foreign Exchange Management Act (FEMA)?
FEMA extends to the whole of India. It also applies to all branches, offices and agencies outside India, owned or controlled by a person, resident in India. It also applies to any contravention, there under, committed in or, outside India, by any person to whom the Act applies.
i. What is the penalty for contravention of FEMA?
Any person, contravening FEMA, shall be liable, upon adjudication, to a penalty up to three times the sum involved in such contravention, where such amount is quantifiable, or up to Rupees Two hundred thousand, where the amount is not quantifiable. In addition, where such contravention is a continuing one, the person will be liable to further penalty, which may extend to Rupees Five thousand for every day after the first day, during which the contravention continues.
j. Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?
Yes. A person of Indian origin resident outside India may transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India. A Person of Indian origin resident outside India may also transfer by way of gift agriculture land/farm house/plantation property in India to a person resident in India who is a citizen of India.
k. Can an NRI account be opened in the name of crew members of shipping companies?
Yes, if their posting is not based in India and they derive their income from other country in foreign currency.
• Non-Resident (Ordinary) Account - NRO A/c
• Non-Resident (External) Rupee Account - NRE A/c
• Non-Resident (Foreign Currency) Account - FCNR A/c
An Indian resident who is earning forign exchange can also maintain Foreign Currency account in the country with an authorised dealer bank but only to the maximum limit of 50% of such foreign exchange earnings under the Exchange Earners Foreign Currency Account (EEFC) Scheme.
Some of the FAQs given below will make it easy to understand the services provided by banks to the NRIs.
FAQ for NRIs
a. What are the special features of each bank account?
b. Can Non Resident accounts be opened/ operated by the Power of Attorney holder in India, on behalf of the non-resident?
c. What happens to the status of these accounts when the non-resident holder becomes a person, resident in India?
d. What are the various facilities available to NRIs/OCBs?
e. Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them?
f. Can a person of Indian origin acquire any immovable property in India by way of inheritance?
g. Can NRIs and Overseas Corporate Bodies (OCBs) invest in India?
h. What is the extent and application of Foreign Exchange Management Act (FEMA)?
i. What is the penalty for contravention of FEMA?
j. Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?
k. Can an NRI account be opened in the name of crew members of shipping companies?
a. What are the special features of each bank account?
The special features are as under:
NRO A/c.: The funds, credited to this account, cannot be repatriated outside India in foreign exchange, without prior permission of the Reserve Bank of India. Interest, earned is eligible for repatriation outside India, net of Indian taxes. The remittance of interest (net of taxes) will be permitted by the authorised dealer who maintains the account, if the account holder makes an application to the authorised dealer, in the prescribed form. No RBI permission is required for remittance of interest.
NRE A/c.: The funds, standing to the credit of this account, as well as interest earned thereon, are remittable outside India in free foreign exchange, without permission of the RBI. The interest income is not subject to Indian Income-tax. Credits to the accounts should be in the form of remittance in foreign exchange from outside India, as well as other funds, which are eligible to be remitted outside India, in free foreign exchange. Funds, emanating from local sources, are not eligible to be credited to these accounts, unless these funds are otherwise remittable outside India, in terms of the existing Exchange Control Regulations.
FCNR A/c.: These accounts can be opened in four foreign currencies:
o Pounds Sterling;
o US Dollars;
o Japanese Yen;
o Euro.
For the purpose of opening an account, remittance in foreign exchange, in the same currency, should be received in India. The accounts can be opened only as fixed deposits, with a minimum maturity of one year and, a maximum maturity of three years. The principal, as well as interest, earned on these accounts, is remittable outside India, in the same currency or, in other convertible currency, as desired by the account holder. The interest, earned on these deposits, is exempt from Indian Income-tax.
b. Can Non Resident accounts be opened/ operated by the Power of Attorney holder in India, on behalf of the non-resident?
The accounts cannot be opened by the Power of Attorney holder in India. However, the latter can operate the accounts for the purpose of local payments to be made on behalf of the non-resident account holder. The Power of Attorney holder is not permitted to make gifts from these accounts and, is not allowed to make remittances outside India.
c. What happens to the status of these accounts when the non-resident holder becomes a person, resident in India?
The accounts are to be re-designed as resident accounts, when the non-resident account holder becomes a person, resident in India. In the case of fixed deposits opened by the account holder, before becoming resident in India, the contracted rate of interest will be paid till maturity of the deposits. Similarly, FCNR deposits will be eligible to be held in respective currencies till maturity of the deposits, even after the non-resident holder become a resident in India. He will, however, cease to get tax exemption on interest on the erstwhile deposits (NRE/FCNR deposits), after he becomes resident in India. In certain situations, it might be advisable for the account holder to convert the account to a Resident Foreign Currency Account Deposit (RFC)
d. What are the various facilities available to NRIs/OCBs?
The facilities available to NRIs/OCBs for making investment in India are as follows:
o opening and maintenance of bank accounts in India;
o investment in shares and securities of Indian companies, government securities, units of domestic mutual funds and ,deposits with Indian companies/firms;
o investment in immovable properties in India;
o investment in proprietorship/partnership concerns in India.
e. Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them?
Yes. RBI will consider application from NRIs for remittance of assets, inherited by them in India. Such remittance may be permitted up to US$ 100,000 per year.
f. Can a person of Indian origin acquire any immovable property in India by way of inheritance?
A person of Indian origin, resident outside India, may acquire any immovable property in India by way of inheritance from a person, resident outside India, who had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. Immovable property, by way of inheritance, can also be acquired by a person of Indian origin resident outside from a person resident in India.
g. Can NRIs and Overseas Corporate Bodies (OCBs) invest in India?
The Government of India has adopted a liberal policy, with respect to investments by NRIs and OCBs in India. Such investments are allowed, both, through the RBI route and also through the Government route, i.e., through the Foreign Investment Promotion Board (FIPB) NRIs and OCBs are permitted to invest up to 100% equity in real estate development activity and civil aviation sectors. Investment, made by the NRIs and OCBs, are fully repatriable, except in the case of real estate, which has a 3 year lock-in period on original investment and, 16% cap on dividend repatriation. For those proposals that do not qualify under the automatic route, Government approval is granted through FIPB.
h. What is the extent and application of Foreign Exchange Management Act (FEMA)?
FEMA extends to the whole of India. It also applies to all branches, offices and agencies outside India, owned or controlled by a person, resident in India. It also applies to any contravention, there under, committed in or, outside India, by any person to whom the Act applies.
i. What is the penalty for contravention of FEMA?
Any person, contravening FEMA, shall be liable, upon adjudication, to a penalty up to three times the sum involved in such contravention, where such amount is quantifiable, or up to Rupees Two hundred thousand, where the amount is not quantifiable. In addition, where such contravention is a continuing one, the person will be liable to further penalty, which may extend to Rupees Five thousand for every day after the first day, during which the contravention continues.
j. Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA?
Yes. A person of Indian origin resident outside India may transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India. A Person of Indian origin resident outside India may also transfer by way of gift agriculture land/farm house/plantation property in India to a person resident in India who is a citizen of India.
k. Can an NRI account be opened in the name of crew members of shipping companies?
Yes, if their posting is not based in India and they derive their income from other country in foreign currency.
financial reforms
The last decade witnessed the maturity of India's financial markets. Since 1991, every governments of India took major steps in reforming the financial sector of the country. The important achievements in the following fields is discussed under serparate heads:
• Financial markets
• Regulators
• The banking system
• Non-banking finance companies
• The capital market
• Mutual funds
• Overall approach to reforms
• Deregulation of banking system
• Capital market developments
• Consolidation imperative
Now let us discuss each segment seperately.
Financial Markets
In the last decade, Private Sector Institutions played an important role. They grew rapidly in commercial banking and asset management business. With the openings in the insurance sector for these institutions, they started making debt in the market.
Competition among financial intermediaries gradually helped the interest rates to decline. Deregulation added to it. The real interest rate was maintained. The borrowers did not pay high price while depositors had incentives to save. It was something between the nominal rate of interest and the expected rate of inflation.
Regulators
The Finance Ministry continuously formulated major policies in the field of financial sector of the country. The Government accepted the important role of regulators. The Reserve Bank of India (RBI) has become more independant. Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) became important institutions. Opinions are also there that there should be a super-regulator for the financial services sector instead of multiplicity of regulators.
The banking system
Almost 80% of the business are still controlled by Public Sector Banks (PSBs). PSBs are still dominating the commercial banking system. Shares of the leading PSBs are already listed on the stock exchanges.
The RBI has given licences to new private sector banks as part of the liberalisation process. The RBI has also been granting licences to industrial houses. Many banks are successfully running in the retail and consumer segments but are yet to deliver services to industrial finance, retail trade, small business and agricultural finance.
The PSBs will play an important role in the industry due to its number of branches and foreign banks facing the constrait of limited number of branches. Hence, in order to achieve an efficient banking system, the onus is on the Government to encourage the PSBs to be run on professional lines.
Development finance institutions
FIs's access to SLR funds reduced. Now they have to approach the capital market for debt and equity funds.
Convertibility clause no longer obligatory for assistance to corporates sanctioned by term-lending institutions.
Capital adequacy norms extended to financial institutions.
DFIs such as IDBI and ICICI have entered other segments of financial services such as commercial banking, asset management and insurance through separate ventures. The move to universal banking has started.
Non-banking finance companies
In the case of new NBFCs seeking registration with the RBI, the requirement of minimum net owned funds, has been raised to Rs.2 crores.
Until recently, the money market in India was narrow and circumscribed by tight regulations over interest rates and participants. The secondary market was underdeveloped and lacked liquidity. Several measures have been initiated and include new money market instruments, strengthening of existing instruments and setting up of the Discount and Finance House of India (DFHI).
The RBI conducts its sales of dated securities and treasury bills through its open market operations (OMO) window. Primary dealers bid for these securities and also trade in them. The DFHI is the principal agency for developing a secondary market for money market instruments and Government of India treasury bills. The RBI has introduced a liquidity adjustment facility (LAF) in which liquidity is injected through reverse repo auctions and liquidity is sucked out through repo auctions.
On account of the substantial issue of government debt, the gilt- edged market occupies an important position in the financial set- up. The Securities Trading Corporation of India (STCI), which started operations in June 1994 has a mandate to develop the secondary market in government securities.
Long-term debt market: The development of a long-term debt market is crucial to the financing of infrastructure. After bringing some order to the equity market, the SEBI has now decided to concentrate on the development of the debt market. Stamp duty is being withdrawn at the time of dematerialisation of debt instruments in order to encourage paperless trading.
The capital market
The number of shareholders in India is estimated at 25 million. However, only an estimated two lakh persons actively trade in stocks. There has been a dramatic improvement in the country's stock market trading infrastructure during the last few years. Expectations are that India will be an attractive emerging market with tremendous potential. Unfortunately, during recent times the stock markets have been constrained by some unsavoury developments, which has led to retail investors deserting the stock markets.
Mutual funds
The mutual funds industry is now regulated under the SEBI (Mutual Funds) Regulations, 1996 and amendments thereto. With the issuance of SEBI guidelines, the industry had a framework for the establishment of many more players, both Indian and foreign players.
The Unit Trust of India remains easily the biggest mutual fund controlling a corpus of nearly Rs.70,000 crores, but its share is going down. The biggest shock to the mutual fund industry during recent times was the insecurity generated in the minds of investors regarding the US 64 scheme. With the growth in the securities markets and tax advantages granted for investment in mutual fund units, mutual funds started becoming popular.
The foreign owned AMCs are the ones which are now setting the pace for the industry. They are introducing new products, setting new standards of customer service, improving disclosure standards and experimenting with new types of distribution.
The insurance industry is the latest to be thrown open to competition from the private sector including foreign players. Foreign companies can only enter joint ventures with Indian companies, with participation restricted to 26 per cent of equity. It is too early to conclude whether the erstwhile public sector monopolies will successfully be able to face up to the competition posed by the new players, but it can be expected that the customer will gain from improved service.
The new players will need to bring in innovative products as well as fresh ideas on marketing and distribution, in order to improve the low per capita insurance coverage. Good regulation will, of course, be essential.
Overall approach to reforms
The last ten years have seen major improvements in the working of various financial market participants. The government and the regulatory authorities have followed a step-by-step approach, not a big bang one. The entry of foreign players has assisted in the introduction of international practices and systems. Technology developments have improved customer service. Some gaps however remain (for example: lack of an inter-bank interest rate benchmark, an active corporate debt market and a developed derivatives market). On the whole, the cumulative effect of the developments since 1991 has been quite encouraging. An indication of the strength of the reformed Indian financial system can be seen from the way India was not affected by the Southeast Asian crisis.
However, financial liberalisation alone will not ensure stable economic growth. Some tough decisions still need to be taken. Without fiscal control, financial stability cannot be ensured. The fate of the Fiscal Responsibility Bill remains unknown and high fiscal deficits continue. In the case of financial institutions, the political and legal structures hve to ensure that borrowers repay on time the loans they have taken. The phenomenon of rich industrialists and bankrupt companies continues. Further, frauds cannot be totally prevented, even with the best of regulation. However, punishment has to follow crime, which is often not the case in India.
Deregulation of banking system
Prudential norms were introduced for income recognition, asset classification, provisioning for delinquent loans and for capital adequacy. In order to reach the stipulated capital adequacy norms, substantial capital were provided by the Government to PSBs.
Government pre-emption of banks' resources through statutory liquidity ratio (SLR) and cash reserve ratio (CRR) brought down in steps. Interest rates on the deposits and lending sides almost entirely were deregulated.
New private sector banks allowed to promote and encourage competition. PSBs were encouraged to approach the public for raising resources. Recovery of debts due to banks and the Financial Institutions Act, 1993 was passed, and special recovery tribunals set up to facilitate quicker recovery of loan arrears.
Bank lending norms liberalised and a loan system to ensure better control over credit introduced. Banks asked to set up asset liability management (ALM) systems. RBI guidelines issued for risk management systems in banks encompassing credit, market and operational risks.
A credit information bureau being established to identify bad risks. Derivative products such as forward rate agreements (FRAs) and interest rate swaps (IRSs) introduced.
Capital market developments
The Capital Issues (Control) Act, 1947, repealed, office of the Controller of Capital Issues were abolished and the initial share pricing were decontrolled. SEBI, the capital market regulator was established in 1992.
Foreign institutional investors (FIIs) were allowed to invest in Indian capital markets after registration with the SEBI. Indian companies were permitted to access international capital markets through euro issues.
The National Stock Exchange (NSE), with nationwide stock trading and electronic display, clearing and settlement facilities was established. Several local stock exchanges changed over from floor based trading to screen based trading.
Private mutual funds permitted
The Depositories Act had given a legal framework for the establishment of depositories to record ownership deals in book entry form. Dematerialisation of stocks encouraged paperless trading. Companies were required to disclose all material facts and specific risk factors associated with their projects while making public issues.
To reduce the cost of issue, underwriting by the issuer were made optional, subject to conditions. The practice of making preferential allotment of shares at prices unrelated to the prevailing market prices stopped and fresh guidelines were issued by SEBI.
SEBI reconstituted governing boards of the stock exchanges, introduced capital adequacy norms for brokers, and made rules for making client or broker relationship more transparent which included separation of client and broker accounts.
Buy back of shares allowed
The SEBI started insisting on greater corporate disclosures. Steps were taken to improve corporate governance based on the report of a committee.
SEBI issued detailed employee stock option scheme and employee stock purchase scheme for listed companies.
Standard denomination for equity shares of Rs. 10 and Rs. 100 were abolished. Companies given the freedom to issue dematerialised shares in any denomination.
Derivatives trading starts with index options and futures. A system of rolling settlements introduced. SEBI empowered to register and regulate venture capital funds.
The SEBI (Credit Rating Agencies) Regulations, 1999 issued for regulating new credit rating agencies as well as introducing a code of conduct for all credit rating agencies operating in India.
Consolidation imperative
Another aspect of the financial sector reforms in India is the consolidation of existing institutions which is especially applicable to the commercial banks. In India the banks are in huge quantity. First, there is no need for 27 PSBs with branches all over India. A number of them can be merged. The merger of Punjab National Bank and New Bank of India was a difficult one, but the situation is different now. No one expected so many employees to take voluntary retirement from PSBs, which at one time were much sought after jobs. Private sector banks will be self consolidated while co-operative and rural banks will be encouraged for consolidation, and anyway play only a niche role.
In the case of insurance, the Life Insurance Corporation of India is a behemoth, while the four public sector general insurance companies will probably move towards consolidation with a bit of nudging. The UTI is yet again a big institution, even though facing difficult times, and most other public sector players are already exiting the mutual fund business. There are a number of small mutual fund players in the private sector, but the business being comparatively new for the private players, it will take some time.
We finally come to convergence in the financial sector, the new buzzword internationally. Hi-tech and the need to meet increasing consumer needs is encouraging convergence, even though it has not always been a success till date. In India organisations such as IDBI, ICICI, HDFC and SBI are already trying to offer various services to the customer under one umbrella. This phenomenon is expected to grow rapidly in the coming years. Where mergers may not be possible, alliances between organisations may be effective. Various forms of bancassurance are being introduced, with the RBI having already come out with detailed guidelines for entry of banks into insurance. The LIC has bought into Corporation Bank in order to spread its insurance distribution network. Both banks and insurance companies have started entering the asset management business, as there is a great deal of synergy among these businesses. The pensions market is expected to open up fresh opportunities for insurance companies and mutual funds.
It is not possible to play the role of the Oracle of Delphi when a vast nation like India is involved. However, a few trends are evident, and the coming decade should be as interesting as the last one.
• Financial markets
• Regulators
• The banking system
• Non-banking finance companies
• The capital market
• Mutual funds
• Overall approach to reforms
• Deregulation of banking system
• Capital market developments
• Consolidation imperative
Now let us discuss each segment seperately.
Financial Markets
In the last decade, Private Sector Institutions played an important role. They grew rapidly in commercial banking and asset management business. With the openings in the insurance sector for these institutions, they started making debt in the market.
Competition among financial intermediaries gradually helped the interest rates to decline. Deregulation added to it. The real interest rate was maintained. The borrowers did not pay high price while depositors had incentives to save. It was something between the nominal rate of interest and the expected rate of inflation.
Regulators
The Finance Ministry continuously formulated major policies in the field of financial sector of the country. The Government accepted the important role of regulators. The Reserve Bank of India (RBI) has become more independant. Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) became important institutions. Opinions are also there that there should be a super-regulator for the financial services sector instead of multiplicity of regulators.
The banking system
Almost 80% of the business are still controlled by Public Sector Banks (PSBs). PSBs are still dominating the commercial banking system. Shares of the leading PSBs are already listed on the stock exchanges.
The RBI has given licences to new private sector banks as part of the liberalisation process. The RBI has also been granting licences to industrial houses. Many banks are successfully running in the retail and consumer segments but are yet to deliver services to industrial finance, retail trade, small business and agricultural finance.
The PSBs will play an important role in the industry due to its number of branches and foreign banks facing the constrait of limited number of branches. Hence, in order to achieve an efficient banking system, the onus is on the Government to encourage the PSBs to be run on professional lines.
Development finance institutions
FIs's access to SLR funds reduced. Now they have to approach the capital market for debt and equity funds.
Convertibility clause no longer obligatory for assistance to corporates sanctioned by term-lending institutions.
Capital adequacy norms extended to financial institutions.
DFIs such as IDBI and ICICI have entered other segments of financial services such as commercial banking, asset management and insurance through separate ventures. The move to universal banking has started.
Non-banking finance companies
In the case of new NBFCs seeking registration with the RBI, the requirement of minimum net owned funds, has been raised to Rs.2 crores.
Until recently, the money market in India was narrow and circumscribed by tight regulations over interest rates and participants. The secondary market was underdeveloped and lacked liquidity. Several measures have been initiated and include new money market instruments, strengthening of existing instruments and setting up of the Discount and Finance House of India (DFHI).
The RBI conducts its sales of dated securities and treasury bills through its open market operations (OMO) window. Primary dealers bid for these securities and also trade in them. The DFHI is the principal agency for developing a secondary market for money market instruments and Government of India treasury bills. The RBI has introduced a liquidity adjustment facility (LAF) in which liquidity is injected through reverse repo auctions and liquidity is sucked out through repo auctions.
On account of the substantial issue of government debt, the gilt- edged market occupies an important position in the financial set- up. The Securities Trading Corporation of India (STCI), which started operations in June 1994 has a mandate to develop the secondary market in government securities.
Long-term debt market: The development of a long-term debt market is crucial to the financing of infrastructure. After bringing some order to the equity market, the SEBI has now decided to concentrate on the development of the debt market. Stamp duty is being withdrawn at the time of dematerialisation of debt instruments in order to encourage paperless trading.
The capital market
The number of shareholders in India is estimated at 25 million. However, only an estimated two lakh persons actively trade in stocks. There has been a dramatic improvement in the country's stock market trading infrastructure during the last few years. Expectations are that India will be an attractive emerging market with tremendous potential. Unfortunately, during recent times the stock markets have been constrained by some unsavoury developments, which has led to retail investors deserting the stock markets.
Mutual funds
The mutual funds industry is now regulated under the SEBI (Mutual Funds) Regulations, 1996 and amendments thereto. With the issuance of SEBI guidelines, the industry had a framework for the establishment of many more players, both Indian and foreign players.
The Unit Trust of India remains easily the biggest mutual fund controlling a corpus of nearly Rs.70,000 crores, but its share is going down. The biggest shock to the mutual fund industry during recent times was the insecurity generated in the minds of investors regarding the US 64 scheme. With the growth in the securities markets and tax advantages granted for investment in mutual fund units, mutual funds started becoming popular.
The foreign owned AMCs are the ones which are now setting the pace for the industry. They are introducing new products, setting new standards of customer service, improving disclosure standards and experimenting with new types of distribution.
The insurance industry is the latest to be thrown open to competition from the private sector including foreign players. Foreign companies can only enter joint ventures with Indian companies, with participation restricted to 26 per cent of equity. It is too early to conclude whether the erstwhile public sector monopolies will successfully be able to face up to the competition posed by the new players, but it can be expected that the customer will gain from improved service.
The new players will need to bring in innovative products as well as fresh ideas on marketing and distribution, in order to improve the low per capita insurance coverage. Good regulation will, of course, be essential.
Overall approach to reforms
The last ten years have seen major improvements in the working of various financial market participants. The government and the regulatory authorities have followed a step-by-step approach, not a big bang one. The entry of foreign players has assisted in the introduction of international practices and systems. Technology developments have improved customer service. Some gaps however remain (for example: lack of an inter-bank interest rate benchmark, an active corporate debt market and a developed derivatives market). On the whole, the cumulative effect of the developments since 1991 has been quite encouraging. An indication of the strength of the reformed Indian financial system can be seen from the way India was not affected by the Southeast Asian crisis.
However, financial liberalisation alone will not ensure stable economic growth. Some tough decisions still need to be taken. Without fiscal control, financial stability cannot be ensured. The fate of the Fiscal Responsibility Bill remains unknown and high fiscal deficits continue. In the case of financial institutions, the political and legal structures hve to ensure that borrowers repay on time the loans they have taken. The phenomenon of rich industrialists and bankrupt companies continues. Further, frauds cannot be totally prevented, even with the best of regulation. However, punishment has to follow crime, which is often not the case in India.
Deregulation of banking system
Prudential norms were introduced for income recognition, asset classification, provisioning for delinquent loans and for capital adequacy. In order to reach the stipulated capital adequacy norms, substantial capital were provided by the Government to PSBs.
Government pre-emption of banks' resources through statutory liquidity ratio (SLR) and cash reserve ratio (CRR) brought down in steps. Interest rates on the deposits and lending sides almost entirely were deregulated.
New private sector banks allowed to promote and encourage competition. PSBs were encouraged to approach the public for raising resources. Recovery of debts due to banks and the Financial Institutions Act, 1993 was passed, and special recovery tribunals set up to facilitate quicker recovery of loan arrears.
Bank lending norms liberalised and a loan system to ensure better control over credit introduced. Banks asked to set up asset liability management (ALM) systems. RBI guidelines issued for risk management systems in banks encompassing credit, market and operational risks.
A credit information bureau being established to identify bad risks. Derivative products such as forward rate agreements (FRAs) and interest rate swaps (IRSs) introduced.
Capital market developments
The Capital Issues (Control) Act, 1947, repealed, office of the Controller of Capital Issues were abolished and the initial share pricing were decontrolled. SEBI, the capital market regulator was established in 1992.
Foreign institutional investors (FIIs) were allowed to invest in Indian capital markets after registration with the SEBI. Indian companies were permitted to access international capital markets through euro issues.
The National Stock Exchange (NSE), with nationwide stock trading and electronic display, clearing and settlement facilities was established. Several local stock exchanges changed over from floor based trading to screen based trading.
Private mutual funds permitted
The Depositories Act had given a legal framework for the establishment of depositories to record ownership deals in book entry form. Dematerialisation of stocks encouraged paperless trading. Companies were required to disclose all material facts and specific risk factors associated with their projects while making public issues.
To reduce the cost of issue, underwriting by the issuer were made optional, subject to conditions. The practice of making preferential allotment of shares at prices unrelated to the prevailing market prices stopped and fresh guidelines were issued by SEBI.
SEBI reconstituted governing boards of the stock exchanges, introduced capital adequacy norms for brokers, and made rules for making client or broker relationship more transparent which included separation of client and broker accounts.
Buy back of shares allowed
The SEBI started insisting on greater corporate disclosures. Steps were taken to improve corporate governance based on the report of a committee.
SEBI issued detailed employee stock option scheme and employee stock purchase scheme for listed companies.
Standard denomination for equity shares of Rs. 10 and Rs. 100 were abolished. Companies given the freedom to issue dematerialised shares in any denomination.
Derivatives trading starts with index options and futures. A system of rolling settlements introduced. SEBI empowered to register and regulate venture capital funds.
The SEBI (Credit Rating Agencies) Regulations, 1999 issued for regulating new credit rating agencies as well as introducing a code of conduct for all credit rating agencies operating in India.
Consolidation imperative
Another aspect of the financial sector reforms in India is the consolidation of existing institutions which is especially applicable to the commercial banks. In India the banks are in huge quantity. First, there is no need for 27 PSBs with branches all over India. A number of them can be merged. The merger of Punjab National Bank and New Bank of India was a difficult one, but the situation is different now. No one expected so many employees to take voluntary retirement from PSBs, which at one time were much sought after jobs. Private sector banks will be self consolidated while co-operative and rural banks will be encouraged for consolidation, and anyway play only a niche role.
In the case of insurance, the Life Insurance Corporation of India is a behemoth, while the four public sector general insurance companies will probably move towards consolidation with a bit of nudging. The UTI is yet again a big institution, even though facing difficult times, and most other public sector players are already exiting the mutual fund business. There are a number of small mutual fund players in the private sector, but the business being comparatively new for the private players, it will take some time.
We finally come to convergence in the financial sector, the new buzzword internationally. Hi-tech and the need to meet increasing consumer needs is encouraging convergence, even though it has not always been a success till date. In India organisations such as IDBI, ICICI, HDFC and SBI are already trying to offer various services to the customer under one umbrella. This phenomenon is expected to grow rapidly in the coming years. Where mergers may not be possible, alliances between organisations may be effective. Various forms of bancassurance are being introduced, with the RBI having already come out with detailed guidelines for entry of banks into insurance. The LIC has bought into Corporation Bank in order to spread its insurance distribution network. Both banks and insurance companies have started entering the asset management business, as there is a great deal of synergy among these businesses. The pensions market is expected to open up fresh opportunities for insurance companies and mutual funds.
It is not possible to play the role of the Oracle of Delphi when a vast nation like India is involved. However, a few trends are evident, and the coming decade should be as interesting as the last one.
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