Main Banking functions Retail banking Corporate banking Trade Finance Correspondent Banking Treasury Government business Rural development Banking Banking needs of Small scale sector

Retail banking

Corporate banking

Trade Finance

Correspondent Banking

Treasury

Government business

Rural development Banking

Banking needs of Small scale sector

Retail Banking Deposits Savings Current Fixed Recurring Loans Retail lending products - Personal loans Car Loans Housing Loans Property loans Loans against security of shares Medical loans Loans for Traders Loans for Professionals Education loans Ancillary services Safe deposit lockers Safe custody services Remittance services Demand drafts Travelers cheques Electronic payment system / Funds transfer

Deposits

Savings

Current

Fixed

Recurring

Loans

Retail lending products - Personal loans

Car Loans

Housing Loans

Property loans

Loans against security of shares

Medical loans

Loans for Traders

Loans for Professionals

Education loans

Ancillary services

Safe deposit lockers

Safe custody services

Remittance services

Demand drafts

Travelers cheques

Electronic payment system / Funds transfer

Retail Banking contd. NRI services NRI accounts NRE NRO FCNR Accounts for returning Indians Accounts for foreigners Clearing operations Other services offered Portfolio management service Demat service Tele banking / internet banking Card services Consultancy services Tax assistance Executor and trustee services Estate and will services Banker appointed as trustee Insurance Latest innovations due to technology ATMs Anywhere banking

NRI services

NRI accounts

NRE

NRO

FCNR

Accounts for returning Indians

Accounts for foreigners

Clearing operations

Other services offered

Portfolio management service

Demat service

Tele banking / internet banking

Card services

Consultancy services

Tax assistance

Executor and trustee services

Estate and will services

Banker appointed as trustee

Insurance

Latest innovations due to technology

ATMs

Anywhere banking

Corporate Banking Corporate Banking provides services to : Industrial Sector Trade and services Sector Services to the Industrial sector Working Capital Finance Banks offer working capital finance to meet the entire range of short-term fund requirements that arise within a corporate’s day-to-day operational cycle. Working capital loans help companies to : Finance inventories Manage internal cash flows Support supply chains Fund production and marketing operations Provide cash support to business expansion Carry current assets. Working finance products comprise a spectrum of funded and non-funded facilities ranging from cash credit to structured loans, to meet the different demands from all segments of industry, trade and the services sector. Funded facilities include Cash credit Demand loan Bill discounting. Non-funded instruments comprise Letters of credit (inland and overseas) Bank guarantees (performance and financial) to cover advance payments Bid bonds etc.

Corporate Banking provides services to :

Industrial Sector

Trade and services Sector

Services to the Industrial sector

Working Capital Finance

Banks offer working capital finance to meet the entire range of short-term fund requirements that arise within a corporate’s day-to-day operational cycle. Working capital loans help companies to :

Finance inventories

Manage internal cash flows

Support supply chains

Fund production and marketing operations

Provide cash support to business expansion

Carry current assets.

Working finance products comprise a spectrum of funded and non-funded facilities ranging from cash credit to structured loans, to meet the different demands from all segments of industry, trade and the services sector.

Funded facilities include

Cash credit

Demand loan

Bill discounting.

Non-funded instruments comprise

Letters of credit (inland and overseas)

Bank guarantees (performance and financial) to cover advance payments

Bid bonds etc.

Project Finance Under Project Finance, Banks assess credit proposals from and extend term loans for large industrial and infrastructure projects. Apart from this, project term loans for medium sized projects and smaller clients are also delivered. In general, project finance covers Greenfield industrial projects Capacity expansion at existing manufacturing units Construction ventures Other infrastructure projects. Capital intensive business expansion and diversification as well as replacement of equipment may be financed through the project term loans . Project finance is quite often channeled through special purpose vehicles and arranged against the future cash streams to emerge from the project. The loans are approved on the basis of strong in-house appraisal of the cost and viability of the ventures as well as the credit standing of promoters. Project finance can be structured as either foreign currency or rupee loans with option of conversion from one type to the other at the end of interest periods. This will help companies to take advantage of forex fluctuations and global interest rate trends vis-à-vis domestic rates to minimize their debt cost. Project finance is typically structured as long term loans, with tenors generally from 5 to 10 years. Maturity periods and repayment modes are structured in line with the specific aspects of each project and industry, factoring in a timeframe for the venture to generate a stable revenue stream.

Under Project Finance, Banks assess credit proposals from and extend term loans for large industrial and infrastructure projects. Apart from this, project term loans for medium sized projects and smaller clients are also delivered. In general, project finance covers

Greenfield industrial projects

Capacity expansion at existing manufacturing units

Construction ventures

Other infrastructure projects.

Capital intensive business expansion and diversification as well as replacement of equipment may be financed through the project term loans .

Project finance is quite often channeled through special purpose vehicles and arranged against the future cash streams to emerge from the project. The loans are approved on the basis of strong in-house appraisal of the cost and viability of the ventures as well as the credit standing of promoters.

Project finance can be structured as either foreign currency or rupee loans with option of conversion from one type to the other at the end of interest periods. This will help companies to take advantage of forex fluctuations and global interest rate trends vis-à-vis domestic rates to minimize their debt cost. Project finance is typically structured as long term loans, with tenors generally from 5 to 10 years. Maturity periods and repayment modes are structured in line with the specific aspects of each project and industry, factoring in a timeframe for the venture to generate a stable revenue stream.

Corporate Term Loans Deferred payment guarantee Banks also extend deferred payment guarantees to industrial projects for obtaining imported equipment. The DPG is a standby credit guaranteeing deferred payments, usually for payments for capital goods, turnkey contracts etc. Corporate Term Loans corporate term loans can support companies to Fund ongoing business expansion Repay high cost debt Technology upgradation R&D expenditure Leverage specific cash streams that accrue Implement early retirement schemes Supplement working capital. Corporate term loans can be structured under the FCNR (B) scheme as well, with the option of switching the currency denomination at the end of interest periods. This will help companies to take advantage of global interest rate trends vis-à-vis domestic rates to minimize their debt cost. The corporate term loans are generally available for tenors from three to five years, synchronized with the company’s specific needs. Structured Finance Structured finance involves assembling unique credit configurations to meet the complex fund requirements of large industrial and infrastructure projects. Structured finance can be a combination of funded and non-funded facilities as well as other credit enhancement tools, lease contracts for instance, to fit the multi-layer financial requirements of large and long-gestation projects.

Deferred payment guarantee Banks also extend deferred payment guarantees to industrial projects for obtaining imported equipment. The DPG is a standby credit guaranteeing deferred payments, usually for payments for capital goods, turnkey contracts etc.

Corporate Term Loans

corporate term loans can support companies to

Fund ongoing business expansion

Repay high cost debt

Technology upgradation

R&D expenditure

Leverage specific cash streams that accrue

Implement early retirement schemes

Supplement working capital.

Corporate term loans can be structured under the FCNR (B) scheme as well, with the option of switching the currency denomination at the end of interest periods. This will help companies to take advantage of global interest rate trends vis-à-vis domestic rates to minimize their debt cost. The corporate term loans are generally available for tenors from three to five years, synchronized with the company’s specific needs.

Structured Finance Structured finance involves assembling unique credit configurations to meet the complex fund requirements of large industrial and infrastructure projects. Structured finance can be a combination of funded and non-funded facilities as well as other credit enhancement tools, lease contracts for instance, to fit the multi-layer financial requirements of large and long-gestation projects.

Other forms of Corporate financing Dealer Financing B anks extend financial support to the corporate distribution networks, by providing both working capital finance and term loans to select dealers of identified companies. This gives dealers to leverage their business relationship with major corporates to avail low cost credit. Also, this type of financial solutions allows the corporate negotiate a better price with dealers. Dealer financing may be extended in the bill discounting form or simply as cash credit . Channel Financing Channel financing is an innovative finance mechanism by which the bank meets the various fund necessities along borrower’s supply chain at the supplier’s end itself, thus helping them sustain a seamless business flow along the arteries of the enterprise. Channel finance ensures the immediate realization of sales proceeds for the client’s supplier, making it practically a cash sale. On the other hand, the corporate gets credit for a duration equaling the tenor of the loan, enabling smoother liquidity management. Loan Syndication Banks leverage their vast network of relationships to arrange syndicated credit products for corporate clients and industrial projects. The banks syndication desk assemble large loan packages involving a ring of reputed financial entities, domestic and international, that match the large credit requirements of infrastructure projects.

Dealer Financing

B anks extend financial support to the corporate distribution networks, by providing both working capital finance and term loans to select dealers of identified companies. This gives dealers to leverage their business relationship with major corporates to avail low cost credit. Also, this type of financial solutions allows the corporate negotiate a better price with dealers. Dealer financing may be extended in the bill discounting form or simply as cash credit .

Channel Financing Channel financing is an innovative finance mechanism by which the bank meets the various fund necessities along borrower’s supply chain at the supplier’s end itself, thus helping them sustain a seamless business flow along the arteries of the enterprise.

Channel finance ensures the immediate realization of sales proceeds for the client’s supplier, making it practically a cash sale. On the other hand, the corporate gets credit for a duration equaling the tenor of the loan, enabling smoother liquidity management.

Loan Syndication Banks leverage their vast network of relationships to arrange syndicated credit products for corporate clients and industrial projects. The banks syndication desk assemble large loan packages involving a ring of reputed financial entities, domestic and international, that match the large credit requirements of infrastructure projects.

Other forms of Corporate financing contd. Equipment Leasing Banks arrange lease contracts for procuring expensive equipment for borrower’s project or plant. Lease agreements are arranged as stand alone contracts or as part of a structured package. P arameters of lease finance The bank typically undertakes leasing contracts worth a minimum of Rs 5 crore. However, it is generally restricted to 50 per cent of the total net worth of the lessee. Usually, lease assistance is considered for Greenfield projects promoted by reputed industrial groups. Tenors Lease contracts are usually structured for a tenor of 5 to 7 years. However, longer periods are considered in select cases. Cost structure of lease contracts The lease finance charge is usually a variable rate linked to the bank’s medium term lending rate, and is charged on the funds disbursed before the delivery of the asset to the lessee. The lease management fee is normally one per cent of the lease amount sanctioned and is payable at the time of execution of documents. Lease rentals are payable after the delivery of the asset for the lease period.

Equipment Leasing Banks arrange lease contracts for procuring expensive equipment for borrower’s project or plant. Lease agreements are arranged as stand alone contracts or as part of a structured package. P arameters of lease finance The bank typically undertakes leasing contracts worth a minimum of Rs 5 crore. However, it is generally restricted to 50 per cent of the total net worth of the lessee. Usually, lease assistance is considered for Greenfield projects promoted by reputed industrial groups. Tenors

Lease contracts are usually structured for a tenor of 5 to 7 years. However, longer periods are considered in select cases. Cost structure of lease contracts

The lease finance charge is usually a variable rate linked to the bank’s medium term lending rate, and is charged on the funds disbursed before the delivery of the asset to the lessee. The lease management fee is normally one per cent of the lease amount sanctioned and is payable at the time of execution of documents. Lease rentals are payable after the delivery of the asset for the lease period.

Corporate Banking assistance to Trade and Services Sector Bill Finance The bank’s bill finance product helps borrowers to bridge the fund gap between the date of sale of products to the receipt of payments. The bank purchases the bill of exchange received by the company against a product sale, at a discount, thus doing away with the delay in realizing the receivables. The extent of discounting would amount to the interest calculated till the payments for the original sale are realized, and will be determined on the basis of market interest rates as well as the credit rating of the borrower. Cash Credit for Traders Cash credit is in the form of a running account, similar to an overdraft secured by a charge on current assets, that meets the frequent cash requirements of borrower’s trading cycle. Term Loan for Asset Acquisition This is a specialized product that has been designed to help borrower purchase plant, machinery, land or other physical assets required during the growth and expansion of the their company.

Bill Finance The bank’s bill finance product helps borrowers to bridge the fund gap between the date of sale of products to the receipt of payments. The bank purchases the bill of exchange received by the company against a product sale, at a discount, thus doing away with the delay in realizing the receivables. The extent of discounting would amount to the interest calculated till the payments for the original sale are realized, and will be determined on the basis of market interest rates as well as the credit rating of the borrower. Cash Credit for Traders Cash credit is in the form of a running account, similar to an overdraft secured by a charge on current assets, that meets the frequent cash requirements of borrower’s trading cycle. Term Loan for Asset Acquisition This is a specialized product that has been designed to help borrower purchase plant, machinery, land or other physical assets required during the growth and expansion of the their company.

Trade Finance Letters of Credit Banks offer Letters of Credit to facilitate purchases of goods in trading operations, both domestic and international. Borrowers are able to build better trust in trade and forge business relationships faster. The bank’s vast network of branches and correspondent banks enables enterprise to sustain a seamless flow of business on a wide platform. Further, the bank’s informed trade finance crew provide borrower with sophisticated credit and trade information and market knowledge, helping you extract more value from business. Bank Guarantees Banks guarantee the creditworthiness or the business capacity of their clients through issue of financial and performance guarantees.

Letters of Credit Banks offer Letters of Credit to facilitate purchases of goods in trading operations, both domestic and international. Borrowers are able to build better trust in trade and forge business relationships faster. The bank’s vast network of branches and correspondent banks enables enterprise to sustain a seamless flow of business on a wide platform. Further, the bank’s informed trade finance crew provide borrower with sophisticated credit and trade information and market knowledge, helping you extract more value from business. Bank Guarantees Banks guarantee the creditworthiness or the business capacity of their clients through issue of financial and performance guarantees.

Trade Finance contd. RUPEE EXPORT CREDIT (PRE-SHIPMENT AND POST-SHIPMENT) Banks offer both pre-shipment and post-shipment credit to exporters in rupee-denominated terms. Exporters having firm export orders or confirmed letters of credit are eligible for export loans, provided they satisfy other credit norms. Rupee export credit will be available for a maximum period of 180 days from the date of first disbursement. Moreover a corporate can also book forward contracts in respect of future export credit drawals. PRESHIPMENT CREDIT IN FOREIGN CURRENCY (PCFC) Banks offer pre-shipment credit in foreign currency to exporters to enable them to meet their manufacturing, processing and packing fund requirements at international interest rates, covering the cost of both domestic as well as imported inputs of exported goods. In most banks, PCFC can be availed in US Dollar, Pound Sterling, Euro and the Japanese Yen. Exporters with a good track record are allowed a running account facility for PCFC. The specified eligibility factor is that the export's overdues should not exceed 5 per cent of the average annual export realizations during the preceding three calendar years. In cases where a running account facility has been extended, a letter of credit or a firm export order has to be produced within a reasonable amount of time.

RUPEE EXPORT CREDIT (PRE-SHIPMENT AND POST-SHIPMENT) Banks offer both pre-shipment and post-shipment credit to exporters in rupee-denominated terms. Exporters having firm export orders or confirmed letters of credit are eligible for export loans, provided they satisfy other credit norms. Rupee export credit will be available for a maximum period of 180 days from the date of first disbursement. Moreover a corporate can also book forward contracts in respect of future export credit drawals.

PRESHIPMENT CREDIT IN FOREIGN CURRENCY (PCFC) Banks offer pre-shipment credit in foreign currency to exporters to enable them to meet their manufacturing, processing and packing fund requirements at international interest rates, covering the cost of both domestic as well as imported inputs of exported goods.

In most banks, PCFC can be availed in US Dollar, Pound Sterling, Euro and the Japanese Yen. Exporters with a good track record are allowed a running account facility for PCFC. The specified eligibility factor is that the export's overdues should not exceed 5 per cent of the average annual export realizations during the preceding three calendar years. In cases where a running account facility has been extended, a letter of credit or a firm export order has to be produced within a reasonable amount of time.

Trade Finance contd. Banks provides pre-shipment credit in foreign currency by way of a cash credit account. The PCFC scheme permits the facility of first in and first out method in liquidation of pre-shipment credit to exporters with a proven track record. Pre-shipment credit in foreign currency is available for a maximum period of 180 days from the date of first disbursement, as in the case of rupee credit facility. For existing clients, there is no need for a separate sub-limit for PCFC. The PCFC can be made available within the export packing credit available to them provided the outstanding amounts under both rupee and foreign currency facilities do not exceed the sanctioned limits. PCFC drawals in cross currencies are allowed, subject to the exporter bearing the risk in currency fluctuations. However, cross currency drawals are restricted to the US Dollar. PCFC is to be repaid only with the proceeds of the export bill tendered, under the export bill rediscounting scheme, and not with foreign exchange acquired from any other source. In case of cancellation of export order, the PCFC line may be closed by selling equivalent amount of foreign exchange at TT selling rate prevalent on the date of liquidation. EXPORT BILL REDISCOUNTING Banks offer export bill rediscounting (EBR) to provide post shipment finance to exporters at international rates of interest. The scheme is available in four currencies: US Dollar, Pound Sterling, Euro and the Japanese Yen. All export bills, demand and usance, are eligible for EBR scheme. All exporters are eligible to cover their bills drawn under letters of credit, non-credit bills under sanctioned limits in the bill rediscounting scheme. The banks offer export bill rediscounting for a maximum period of 180 days, inclusive of grace and transit periods. No withholding tax is payable on the PCFC, if the interest on the foreign currency line is remitted to the bank’s foreign offices. Since banks dispense lines of credit only from their foreign offices, exporters need not pay withholding tax.

Banks provides pre-shipment credit in foreign currency by way of a cash credit account. The PCFC scheme permits the facility of first in and first out method in liquidation of pre-shipment credit to exporters with a proven track record. Pre-shipment credit in foreign currency is available for a maximum period of 180 days from the date of first disbursement, as in the case of rupee credit facility.

For existing clients, there is no need for a separate sub-limit for PCFC. The PCFC can be made available within the export packing credit available to them provided the outstanding amounts under both rupee and foreign currency facilities do not exceed the sanctioned limits.

PCFC drawals in cross currencies are allowed, subject to the exporter bearing the risk in currency fluctuations. However, cross currency drawals are restricted to the US Dollar.

PCFC is to be repaid only with the proceeds of the export bill tendered, under the export bill rediscounting scheme, and not with foreign exchange acquired from any other source. In case of cancellation of export order, the PCFC line may be closed by selling equivalent amount of foreign exchange at TT selling rate prevalent on the date of liquidation.

EXPORT BILL REDISCOUNTING Banks offer export bill rediscounting (EBR) to provide post shipment finance to exporters at international rates of interest. The scheme is available in four currencies: US Dollar, Pound Sterling, Euro and the Japanese Yen. All export bills, demand and usance, are eligible for EBR scheme. All exporters are eligible to cover their bills drawn under letters of credit, non-credit bills under sanctioned limits in the bill rediscounting scheme. The banks offer export bill rediscounting for a maximum period of 180 days, inclusive of grace and transit periods.

No withholding tax is payable on the PCFC, if the interest on the foreign currency line is remitted to the bank’s foreign offices. Since banks dispense lines of credit only from their foreign offices, exporters need not pay withholding tax.

Cash Management Most banks offer a totally technology-driven cash management product, based on the satellite-linked platforms that connect different centers spread across the country. Cash collections can be pooled at these centers at competitive rates. Cash Management is An innovative service specifically tailored to meet the requirements of Corporates/Business houses/Partnership firms Speedy collection of outstation cheques and other instruments Pooling of funds at designated centers More importantly, providing funds to the Corporates as per their need Customised MIS reports BENEFITS TO THE CORPORATES: Funds available as per need on day zero, day one, day two, day three etc. Corporates can plan their cash flows Bank interest saved as instruments are collected faster Affordable and competitive rates MIS reports customised to meet individual Corporate's requirement Single point enquiry for all queries Pooling of funds at desired locations

Most banks offer a totally technology-driven cash management product, based on the satellite-linked platforms that connect different centers spread across the country. Cash collections can be pooled at these centers at competitive rates.

Cash Management is

An innovative service specifically tailored to meet the requirements of Corporates/Business houses/Partnership firms

Speedy collection of outstation cheques and other instruments

Pooling of funds at designated centers

More importantly, providing funds to the Corporates as per their need

Customised MIS reports

BENEFITS TO THE CORPORATES:

Funds available as per need on day zero, day one, day two, day three etc.

Corporates can plan their cash flows

Bank interest saved as instruments are collected faster

Affordable and competitive rates

MIS reports customised to meet individual Corporate's requirement

Single point enquiry for all queries

Pooling of funds at desired locations

Forfaiting FORFAITING Forfaiting is a risk-free finance option for exporters, in which the forfaiting agency purchases at a discount medium and long-term receivables of an exporter on a without-recourse basis. Under this scheme, the exporter surrenders his right to the export receivables, in return for immediate payment. This enables the exporter to receive payments without risk, at the cost of the discount. Using their global relationships, banks bring together the exporter and the overseas forfaiting agency, but do not extend finance on their own since Indian entities are disallowed to take fund exposure in forfeiting by the Reserve Bank of India. While the forfaiting agency would be a foreign bank or a non-banking finance company from abroad, bank’s liaison and experience help exporters get the most competitive quotes. The bank facilitates forfaiting against export receivables spanning 1 to 10 years. The debt instruments involved in forfeiting can be either Bill of Exchange or Promissory Note.

FORFAITING Forfaiting is a risk-free finance option for exporters, in which the forfaiting agency purchases at a discount medium and long-term receivables of an exporter on a without-recourse basis. Under this scheme, the exporter surrenders his right to the export receivables, in return for immediate payment. This enables the exporter to receive payments without risk, at the cost of the discount. Using their global relationships, banks bring together the exporter and the overseas forfaiting agency, but do not extend finance on their own since Indian entities are disallowed to take fund exposure in forfeiting by the Reserve Bank of India. While the forfaiting agency would be a foreign bank or a non-banking finance company from abroad, bank’s liaison and experience help exporters get the most competitive quotes. The bank facilitates forfaiting against export receivables spanning 1 to 10 years. The debt instruments involved in forfeiting can be either Bill of Exchange or Promissory Note.

Advantages of Forfaiting Forfaiting offers a number of advantages to the exporter like ensuring improved liquidity and minimizing risk. The following are the main benefits to exporters from forfaiting: The exporter can convert his credit sales into cash sales. He can avail finance up to 100 per cent of the contract value. He gets finance at a fixed interest rate, thus interest rate risk is absent. Forfaiting is done without recourse. Thus the exporter is free from credit risk. Once he receives finance from the forfaiter, i.e. the bank, the transaction is complete for him. Forfaiting does not require export insurance and hence saves on insurance cost. The exporter's credit limits to the bank does not get affected. The exporter is free from political and transfer risks. It helps the exporter diversify his business across many countries because the forfaiter is willing to take on the country risks, even when the exporter's bank is unwilling to do so.

Forfaiting offers a number of advantages to the exporter like ensuring improved liquidity and minimizing risk.

The following are the main benefits to exporters from forfaiting:

The exporter can convert his credit sales into cash sales.

He can avail finance up to 100 per cent of the contract value.

He gets finance at a fixed interest rate, thus interest rate risk is absent.

Forfaiting is done without recourse. Thus the exporter is free from credit risk. Once he receives finance from the forfaiter, i.e. the bank, the transaction is complete for him.

Forfaiting does not require export insurance and hence saves on insurance cost.

The exporter's credit limits to the bank does not get affected.

The exporter is free from political and transfer risks.

It helps the exporter diversify his business across many countries because the forfaiter is willing to take on the country risks, even when the exporter's bank is unwilling to do so.

Forfaiting contd. Pre-requirements for forfaiting Banks facilitates forfaiting on two basic pre-requisites: 1) The export receivables should be staged in a series so that the bank can, if it chooses, sell the forfaited amount in parts in the secondary market. 2) The repayment of the debt should be 'avalised' or unconditionally guaranteed by the importer's bank or any other bank acceptable to the forfaiting agency on the debt instrument involved. How is forfaiting arranged? Once the exporter approaches the bank for forfaiting, the Bank obtains quotes from fofaiting agencies abroad and passes the same to the exporter. The exporter can then factor the forfaiting cost into his pricing and continue negotiations with his foreign counter-party. Once the exporter enters the advance stage of negotiations, he approaches the bank again for a 'firm' quote, which the bank arranges for, from the forfaiting agency. The firm quote, once accepted, becomes binding on the exporter who would then have to enter into a trade agreement with the importer and a contract with the foreign forfaiting agency. After the shipping of goods, the importer's bank would deliver the shipping contract against the counter delivery of the instrument involved, eg. the bill of exchange. The importer's bank would then avalise (unconditional and irrevocable obligation to pay) the debt instrument and deliver it back to the bank. The bank subsequently passes it to the exporter for endorsing it with the 'without recourse' clause. Next, the instrument is forwarded to the forfaiting agency, which then effects the payment in the nostro account of SBI. The bank makes the payment to the exporter on receipt of credit advice.

Pre-requirements for forfaiting

Banks facilitates forfaiting on two basic pre-requisites: 1) The export receivables should be staged in a series so that the bank can, if it chooses, sell the forfaited amount in parts in the secondary market. 2) The repayment of the debt should be 'avalised' or unconditionally guaranteed by the importer's bank or any other bank acceptable to the forfaiting agency on the debt instrument involved. How is forfaiting arranged? Once the exporter approaches the bank for forfaiting, the Bank obtains quotes from fofaiting agencies abroad and passes the same to the exporter. The exporter can then factor the forfaiting cost into his pricing and continue negotiations with his foreign counter-party. Once the exporter enters the advance stage of negotiations, he approaches the bank again for a 'firm' quote, which the bank arranges for, from the forfaiting agency. The firm quote, once accepted, becomes binding on the exporter who would then have to enter into a trade agreement with the importer and a contract with the foreign forfaiting agency.

After the shipping of goods, the importer's bank would deliver the shipping contract against the counter delivery of the instrument involved, eg. the bill of exchange. The importer's bank would then avalise (unconditional and irrevocable obligation to pay) the debt instrument and deliver it back to the bank. The bank subsequently passes it to the exporter for endorsing it with the 'without recourse' clause. Next, the instrument is forwarded to the forfaiting agency, which then effects the payment in the nostro account of SBI. The bank makes the payment to the exporter on receipt of credit advice.

Loan Securitization How & why did loan securitization start? Innovation of the 1970s Role of interest rates Advantages Government-Sponsored Enterprises (GSEs) Government National Mortgage Association Federal Home Loan Mortgage Corporation Federal National Mortgage Association Private Sector Securitization (1977) Certificate of Automobile Receivables Certificate of Amortizing Revolving Debts etc. Structure of a Securitization Sellers Buyers Components Securities pool Certain conditions Sometimes insurance Recourse vs. non-recourse

How & why did loan securitization start?

Innovation of the 1970s

Role of interest rates

Advantages

Government-Sponsored Enterprises (GSEs)

Government National Mortgage Association

Federal Home Loan Mortgage Corporation

Federal National Mortgage Association

Private Sector Securitization (1977)

Certificate of Automobile Receivables

Certificate of Amortizing Revolving Debts etc.

Structure of a Securitization

Sellers

Buyers

Components

Securities pool

Certain conditions

Sometimes insurance

Recourse vs. non-recourse

Structured Finance Transactions Special Purpose Entity (SPE) or Special Purpose Vehicle (SPV) Established separately from originating company Asset-Backed Commercial Paper Used as an vehicle for off-balance-sheet lending Structured Project Finance Securitization Used for large public or capital intensive projects Catastrophe-Linked Securities CAT bonds The Supporting Role of Banks in Business-to-Business E-Commerce Traditional Bank Facilitation of Business Cash Management EDI System Automated Clearinghouse System Financial EDI Internet Opportunities Strategic Choices for Banks in Using the Internet as a Delivery Channel The Performance of Pure Play Internet Banks Advantages and Disadvantages to Customer of Pure Internet Banks

Special Purpose Entity (SPE) or

Special Purpose Vehicle (SPV)

Established separately from originating company

Asset-Backed Commercial Paper

Used as an vehicle for off-balance-sheet lending

Structured Project Finance Securitization

Used for large public or capital intensive projects

Catastrophe-Linked Securities

CAT bonds

The Supporting Role of Banks in Business-to-Business E-Commerce

Traditional Bank Facilitation of Business Cash Management

EDI System

Automated Clearinghouse System

Financial EDI

Internet Opportunities

Strategic Choices for Banks in Using the Internet as a Delivery Channel

The Performance of Pure Play Internet Banks

Advantages and Disadvantages to Customer of Pure Internet Banks

Internet Banks and Other Financial Institutions How Widespread Are Internet Banks and Other Financial Institutions? 50 in 1995 14,000 in 2004 Online Banking Household in the U.S. 300,000 in 1995 28 million in 2002 Internet Financial Services Used by Financial Professionals Cash management 86 percent Investments 52 percent Foreign exchange 45 percent Bank loans 39 percent Letters of credit 32 percent Insurance 31 percent Bonds and commercial paper issuance 29 percent Derivatives/hedging 21 percent

How Widespread Are Internet Banks and Other Financial Institutions?

50 in 1995

14,000 in 2004

Online Banking Household in the U.S.

300,000 in 1995

28 million in 2002

Internet Financial Services Used by Financial Professionals

Banks’ Emerging Role in E-Commerce Internet Portals or “Supersites” Identify Verification Assistance for Small Business Entering into E-Commerce Facilitating Business-to-Business E-commerce Issuing Electronic Money and Checks The Integration of the ATM and Internet Networks ATM and Debit and Changes in the Payments System Rapid Rise of ATM and Debit Use Growth in Recent Years ATM - Annual growth rate of 15.5 percent from 1996 to 2002 Debit Card Use increase 42 Percent a year since 1995 Federal Regulator Concerns Ownership and operations of Non-banks Pricing and Charges Recent Trends in Technology for Financial Service Firms Increasing IT Spending E-commerce Wireless Banking and Brokerage Services

Internet Portals or “Supersites”

Identify Verification

Assistance for Small Business Entering into E-Commerce

Facilitating Business-to-Business E-commerce

Issuing Electronic Money and Checks

The Integration of the ATM and Internet Networks

ATM and Debit and Changes in the Payments System

Rapid Rise of ATM and Debit Use Growth in Recent Years

ATM - Annual growth rate of 15.5 percent from 1996 to 2002

Debit Card Use increase 42 Percent a year since 1995

Federal Regulator Concerns

Ownership and operations of Non-banks

Pricing and Charges

Recent Trends in Technology for Financial Service

Firms Increasing IT Spending

E-commerce

Wireless Banking and Brokerage Services