Escolar Documentos
Profissional Documentos
Cultura Documentos
Operations
Session3
Commercial Banking
- Large Private Limited cos, Export Import cos
Corporate Banking:
Other Sectors:
-Charities, Non-Profit Organisations, Educational
Institutions , Trusts, Apartment welfare associations
etc
Business Banking
Requirements
Channels of Business
Banking
Business Branch Banking
- through Relationship Managers
Cash Credit
Cash credit is a drawing account
against credit granted by bank
Borrower is permitted to draw on the
account with in a prescribed limit as
when and required.
Save Interest by reducing the
balances whenever they repay even
the part payment
Term loan
Medium and long term loans are called Term loans more than a year
Repayment of such loans is spread over a longer period 5 years or
more. The repayment is generally made in suitable instalments of fixed
amount. (EMIs)
Purpose of Term loans : setting up of new business activity,
renovation, modernisation, expansion/extension of existing units,
purchase of plant and machinery, vehicles, land for setting up a factory,
construction of factory building or purchase of other immovable assets.
These loans are generally secured against the mortgage of land, plant
and machinery, building and other securities.
The normal rate of interest charged for such loans is generally quite
high.
The repayment of the loans is linked to cash flows generated from the
use of such equipment or asset.
Letter of Credit
Documentary Credits, more
commonly known as letters of credit
are a widely used method to effect
payments in domestic and
international trade.
A written undertaking is issued by a
bank (usually referred to as the
issuing bank) on the instructions of
the buyer of goods to the seller. The
use of documentary credits provides
enough safeguards for the parties
Trade Services
Letter of Credit
Bank Guarantee
Bill Discounting
Letter of Credit
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Bank Guarantee
DEFINITION :
Bank Guarantee is an instrument issued by the
Bank in which the Bank agrees to stand guarantee
against the non-performance of some
action/performance of a party. The quantum of
guarantee is called the 'guarantee amount'.
The guarantee is issued upon receipt of a request
from 'applicant' for some purpose/transaction in
favour of a 'Beneficiary'. The 'issuing bank' will pay
the guarantee amount to the 'beneficiary' of the
guarantee upon receipt of the 'claim' from the
beneficiary.
Financial Guarantee
These are used to secure a financial commitment
such as a loan, a security deposit, etc.
These are used to secure a financial commitment
such as a loan, a security deposit, etc.
For example, guarantees of margin money for
stock exchanges. These are issued on behalf of
brokers, in lieu of the security deposit that needs
to be paid at the time of becoming a member of
the exchange.
Performance Guarantee
As the name suggests, Performance
BGs are the ones by which the
issuing bank, also known as the
Guarantor, guarantees the ability of
the applicant to perform a contract,
to the satisfaction of the beneficiary.
Bank agrees to stand guarantee
against the non-performance of
some action/performance of a party.
Bill Discounting
What is Bill Discounting?
Under this type of lending, Bank takes the bill
drawn by borrower on his (borrower's) customer
and pay him immediately deducting some
amount as discount/commission.
The Bank then presents the Bill to the borrower's
customer on the due date of the Bill and collects
the total amount.
If the bill is delayed, the borrower or his customer
pays the Bank a pre-determined interest
depending upon the terms of transaction.
Bill Discounting
The seller can take over the accepted B/E to a
discounting agency bank, NBFC, company,
high net worth individual] and obtain ready
cash. The act of handing over an endorsed
B/E for ready money is called discounting the
B/E.
The margin between the ready money paid
and the face value of the bill is called the
discount and is calculated at a rate
percentage per annum on the maturity value.
Advisory Services
Loan Syndication
Debt Restructuring
Structured Financing
Merger & Acquisition
Private Equity (Raising of Capital)
Loan Syndication
Loan syndication is a lending process in which a
group of lenders provide funds to a single borrower
Mainly used in extremely large loan situations,
syndication allows any one lender to provide a
large loan while maintaining a more prudent and
manageable credit exposure, because the lender
isn't the only creditor.
Loan syndication is common in mergers,
acquisitions and buyouts, where borrowers often
need very large sums of capital to complete a
transaction, often more than a single lender is able
or willing to provide.
Structured Financing
A service that generally involves highly complex
financial transactions offered by many large
financial institutions for companies with very
unique financing needs. These financing needs
usually don't match conventional financial products
such as a loan.
Structured finance has become a major segment in
the financial industry since the mid-1980s.
Collateralized bond obligations (CBOs),
collateralized debt obligations (CDOs), syndicated
loans and synthetic financial instruments are
examples of structured financial instruments.
Merger