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By
- Anish Nair
- Bibekanand Mishra
- Dewanshu Kumar
- Pranav Nagar
- Prateek Goyal
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Need for Fee Based Services
Volatility in the interest rate regime havecompelled banks to explore the various noninterest based income
Fierce competition is prevailing in the Indian
economy The non-interest income activities of banks are
also on the increase in recent years Stabilized the total income of banks Increase in non-interest income as a source of
funds for banks would also greatly be helpfulfor maintaining the financial soundness ofbanks
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Fee Based Services
Corporate Fee Based Services Cash Management Services
Treasury Services
Trading Facilities
Letter of Credit Bank Guarantee
Factoring and Forfeiting Services
Correspondent Banking
Leasing Bill Discounting
Trust Operations
Custodial Services
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Fee Based Services
Retail Fee Based Services
Credit cards
Remittance
Insurance
Wealth Management
Miscellaneous Services
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Fee Based Services
FOREX Services
Merchant banking
Underwriting
Project Counseling
Supply Chain Management
Mergers and Amalgamations
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Corporate
Fee
Based
Services
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Cash Management Services In United States banking, cash management, or treasury
management, is a marketing term for certain servicesoffered primarily to larger business customers.
These include:
Account Reconcilement Services.
Advanced Web Services.
Automated Clearing House.
Balance Reporting Services.
Cash Concentration Services.
Zero Balance Accounting.
Controlled Disbursement and wire transfer.
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Treasury Services
Treasury services is a function of an investment bank
which provides transaction, investment, and informationservices for chief financial officers or treasurers.
These Generally include:-
Accounts Receivable services.
Accounts Payable services.
Liquidity Management services.
Reporting Services.
Trade Finance Services.
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Trading Facilities
A person or group of persons that provides a physical or
electronic facility or system in which multiple participantshave the ability to execute or trade agreements,contracts, or transactions by accepting bids and offersmade by other participants in the facility or system.
This includes:- Online share trading facilities.
Multilateral trading facility.
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Trading Facilities
Trade Service for Importers : Import Bills for Collection and letters of credit.
Bank Guarantee.
Trade Service for Exporters :
Export Bills for Collection and Bank Guarantee. Outward Bill.
Credit Bill Negotiation.
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Letter Of Credit
Letter of credit implies one has found a creditorthat is willing to loan
It is an irrevocable payment undertaking
The issuing bank makes available the Proceeds,
to the Beneficiary of the Credit provided Letters of credit accomplish their purpose by
substituting the credit of the bank for that of thecustomer, for the purpose of facilitating trade
Two types: Primary Mechanism: Commercial letter of credit
Secondary Mechanism: Stand by letter of credit
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Bank Guarantee A commercial instrument in the nature of a contract,
intended between two parties, to secure compliancewith the contract
It is a guarantee made by a bank on behalf of acustomer should it fail to deliver the payment,
essentially making the bank a co-signer for one ofits customer's purchases
In case of breach of contract the beneficiary canencash the guarantee and avail the amountimmediately without having to undergo any litigation
Types: Conditional
Unconditional
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Factoring and Forfeiting Services
Forfeiting and factoring are services in internationalmarket given to an exporter or seller.
Forfeiting typically involves the following cost elements:
Commitment fee, payable by the exporter to the
forfeiter for latters commitment to execute a specificforfeiting transaction at a firm discount rate with in aspecified time.
Discount fee, interest payable by the exporter for theentire period of credit involved and deducted by theforfeiter from the amount paid to the exporter against theavailed promissory notes or bills of exchange.
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Correspondent Banking
A correspondent account is an account (oftencalled a nostro or vostro account) establishedby a large banking institution to receivedeposits from, make payments on behalf of, orhandle other financial transactions for smallerfinancial institutions
The Banks LC stands acceptable in theinternational market
Suppliers can confirm LCs from any of the
correspondents Quick collection of export bills as well as
outward remittances towards imports
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Leasing
Leasing is a process by which a firm can obtain the use
of a certain fixed assets for which it must pay a series ofcontractual, periodic, tax deductible payments.
Leases are most advantageous to companies that areacquiring equipment that is subject to technological
obsolescence. Leasing companies typically fund leasesand then get their funding for the transaction from abank, because they are not capitalized enough.
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Bill discounting
Bill discounting is a major activity with some of thesmaller Banks. Under this particular type oflending, Bank takes the bill drawn by borrower onhis(borrower's) customer and pay him or her
immediately deducting some amount asdiscount/commission. The Bank then presents theBill to the borrower's customer on the due date ofthe Bill and collect the total amount. If the bill is
delayed, the borrower or his customer pay theBank a pre-determined interest depending uponthe terms of transaction.
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Trust Operations
Act as Executors/Administrators
Permission from Office of the Comptrollerof the Currency
Strict adherences to rules governing onhow the bank administers its fiduciarypowers
Personal Trust: Living trusts &
Testamentary trusts Corporate Trusts: Estate Admin & Bond
Admin
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Custodial Services
A Custodian bank, or simply custodian, is a specialized
financial institution responsible for safeguarding a firm'sor individual's financial assets and is not likely to engagein "traditional banking.
Its Responsibilities include:
hold in safekeeping assets/securities such as stocks,bonds and commodities.
arrange settlement of any purchases and sales of suchsecurities.
collect information on and income from such assets. maintain currency/cash bank accounts, effect deposits
and withdrawals and manage other cash transactions.
perform foreign exchange transactions.
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Retail
Fee
Based
Services
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Credit cards
It allows its holder to buy goods and services based onthe holder's promise to pay for these goods andservices. The issuer of the card creates a revolvingaccount and grants a line of credit to the consumer (orthe user) from which the user can borrow money forpayment to a merchant or as a cash advance to theuser.
One credit card, multiple APRs.
Lower credit score, higher APR APR includes interest, not fees.
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Remittance
It is transfer of money by a foreign worker tohis or her home country
The banks help their NRI customers to availthe highest benefit of the exchange rates while
transferring money Modes:
SWIFT(Society for worldwide inter bank financialtelecommunication)
Bankers Cheque
Demand Drafts Mail Transfers Telegraphic Transfers Travellers Cheque
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Insurance
Distributors for both Life and Non lifeinsurance products
Insurance companies tie up with banks as
well as Irda recommendation of every bankbeing allowed for tie ups with 2 life, 2 nonlife and 2 health care Insurance companies
Increased penetration for Insurers (rural
areas as well) The Commission fee charged is regulated
by Irda
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Wealth Management Wealth management is an investment advisory
discipline that incorporates financial planning,investment portfolio management and a number ofaggregated financial services.
These include the following:
Portfolio Management Services.
Portfolio Advisory.
Trading in Equity, Currency, Interest Rate Futures.
Fixed Income Products.
Structured Products.
Financial Planning.
Private Equity Funds.
Mutual Funds & IPOs.
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Miscellaneous Services
The Banks are authorized for collection of Income orother Direct taxes
The banks are authorized for disbursement ofvarious Pensions like Central Civil Pension, DefencePension etc
The banks offer payment facilities towards bills likephone, electricity, data services
ECS system facilitates paperless credit/debitfacilities transaction directly linked to ones account
ECS caters to Utility bills, Mutual Fund, Insurance
Premium, Loan Installments, credit card bills
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Foreign Exchange Services The foreign exchange market (FOREX OR currency
market) is a global, worldwide decentralized financialmarket for trading currencies. The primary purpose ofthe foreign exchange is to assist international trade andinvestment, by allowing businesses to convert onecurrency to another currency.
These services include:
Travellers cheques.
Forex plus cards.
Foreign currency drafts. Remittances.
Trade services.
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Merchant Banking A bank that deals mostly in (but is not limited to)
international finance, long-term loans for companies andunderwriting. Merchant banks do not provide regularbanking services to the general public.
Traditional merchant banks primarily perform
international financing activities such as foreigncorporate investing, foreign real estate investment, tradefinance and international transaction facilitation. Someof the activities that a pure merchant bank is involved inmay include issuing letters of credit, transferring funds
internationally, trade consulting and co-investment inprojects involving trade of one form or other.
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Underwriting
The process by which investment bankers raiseinvestment capital from investors on behalf ofcorporations and governments that are issuingsecurities (both equity and debt).
The procedure by which an underwriter brings anew security issue to the investing public in anoffering. In such a case, the underwriter willguarantee a certain price for a certain number ofsecurities to the party that is issuing the security
(in exchange for a fee). Thus, the issuer is securethat they will raise a certain minimum from theissue, while the underwriter bears the risk of theisssue.
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Project Counseling
Study and analysis of project viability
Effective and efficient implementation
Project Counseling Activities:
General Review Technical feasibility
Market Survey
Capital Structuring Obtaining licenses, permissions,
registrations
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Supply Chain Management
Integrated commercial and financial solutionsto the supply and distribution channels of acorporate
Channel financing products that extend
working capital finance to dealers or vendorshaving relationships with large corporates: Dealer Financing Receivables Factoring Purchase Invoice Financing Warehouse Financing Trade Cards Rent Receivable Financing
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Mergers and Amalgamations
Expertise in exclusive sales, divestitures,acquisitions, merger advisory, tender offers,joint ventures, strategic alliances, takeoverdefense and special committee representation,
recapitalizations and restructurings Key focus on clients throughout the
transaction process from identifying potentialpartners, preparing the marketing materials, to
contacting potential partners, positioning,structuring, negotiating and closing of a dealby leveraging the industry knowledge andcapital markets and restructuring expertise
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Mergers and Amalgamations
Services Provided Strategic alternatives "Going private" transaction Special committee advisory Share repurchase strategies Strategic alliances and joint ventures Corporate defensive activities Sell-side advisory Buy-side advisory Leveraged recapitalization Management buyout Acquisition financing alternatives Fairness opinion
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THANK YOU
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