this is about how corporate finance is done by the foreign banks

1. How Corporate Finance is done by
Foreign Banks
PRESENTED BY-TEK
CHAND MEENA
CORPORATE FINANCE, LAW, POLICY &
PRACTICE
BANKING & FINANCE LL.M I ST SEM.
NATIONAL LAW UNIVERSITY JODHPUR

2. What is Corporate Finance
 It means study of running financial activities of a
corporation i.e. Banks, Banking companies etc.
 The primary goal of corporate finance is to figure out
how to maximize a company's value by making good
decisions about investment, financing and dividends.
 The typical role of an investment bank is to evaluate
the company's financial needs and raise the
appropriate type of capital that best fits those needs.

3. Contd….
 This is, generally, related to financial structure of a
corporate and investment policies of that corporate
or company and affects it’s long-term financial
projects.
 This is also a part of financial budgeting of the
corporates and companies which deals with
management of limited resources of the company in
the financial activities.

4. Foreign Banks in India
 Foreign Banks are banks of other nations which are
set up in other nation and conducted and regulated
by the both host and native nation’s policies and
regulations.
 In India, foreign banks, if eligible, are allowed by the
Reserve Bank of India (RBI) to set up business in
India through a single mode of presence i.e. either
branch mode or a wholly owned subsidiary (WOS) .

5. Contd…
 RBI issues a ‘Scheme for Setting up of Wholly Owned
Subsidiaries (WOS) by foreign banks in India’ under the
section 35A read with Section 44A of the Banking
Regulation Act, 1949, in the public interest and in the
interest of banking policy.
 Foreign banks operate in India as the branch of their
main bank of their land.

6. Eligibility for setting up a wholly owned subsidiary
 Setting up of WOS by a foreign bank in India should
have the approval of the home country
regulator/supervisor.
 A foreign bank applying for setting up a WOS in India
must satisfy RBI that it is subject to adequate prudential
supervision as per internationally accepted standards,
which includes consolidated supervision in its home
country.

7. National treatment
 In 2005, RBI presented a paper named as ‘Roadmap for
the presence of foreign banks in India’ in which focus
was on gradual development of foreign banks in
banking system.
 In 2011, a discussion paper was made out by the RBI in
which emphasis was on WOS system and branch system
equally.

8. Foreign banks
 AB Bank Ltd.
 ABN-AMRO Bank N.V.
 Abu Dhabi Commercial Bank Ltd.
 American Express Banking Corp.
 Antwerp Diamond Bank NV
 BNP Paribas
 Bank of America N.T. & S.A.
 Bank of Bahrain & Kuwait B.S.C.
 Bank of Ceylon
 Bank of Nova Scotia

9. Contd….
 Barclays Bank PLC
 Calyon Bank
 Chinatrust Commercial Bank
 Citibank N.A.
 Deutsche Bank (Asia)
 DBS Bank Ltd.
 HSBC Ltd.
 JPMorgan Chase Bank
 JSC VTB Bank
 Krung Thai Bank Public Co. Ltd.
 Mashreqbank PSC
 Mizuho Corporate Bank Ltd.
 Oman International Bank S.A.O.G.

10. Contd…
 Shinhan Bank
 Societe Generale
 Sonali Bank
 Standard Chartered Bank
 State Bank of Mauritius Ltd.
 The Bank of Tokyo-Mitsubishi UFJ, Ltd.
 UBS AG

11. Priority sector lending requirements for
WOS
 40 percent of Adjusted Net Bank Credit (ANBC) or credit
equivalent amount of Off-Balance Sheet Exposure, whichever
is higher.
 18 percent of ANBC or credit equivalent amount of Off-
Balance Sheet Exposure, whichever is higher( In agriculture)
 40 percent of total advances to micro and small enterprises
sector should go to Micro (manufacturing) enterprises having
investment in plant and machinery up to Rupees 1 million and
micro (service) enterprises having investment in equipment up
to Rupees 0.4 million.

12. Contd…
 Advances to micro and small enterprises sector will be
reckoned in computing achievement under the overall priority
sector target of 40 percent of ANBC or credit equivalent
amount of Off-Balance Sheet Exposure, whichever is higher.
 20 percent of total advances to micro and small enterprises
sector should go to Micro (manufacturing) enterprises with
investment in plant and machinery above Rupees 1 million and
up to Rupees 2.5 million, and micro (service) enterprises with
investment in equipment above Rupees 0.4 million and up to
Rupees 1 million.

13. Contd…
 Export section and loans to weaker section is also done.
 Application, in Form III prescribed vide Rule 11(a) of the
Banking Regulation (Companies) Rules, 1949 is done.
 A foreign bank operating under branch mode of presence in
India would be considered to be systematically important once
its assets in Indian books (on balance sheet and credit
equivalent of off-balance sheet items) become 0.25% of the
total assets (inclusive of credit equivalent of off-balance sheet
items) of all scheduled commercial banks in India

14. Methods of Corporate Finance
 Many of foreign banks do the practice of corporate
finance by using some methods like priority sector
lending, (which have been explained earlier),
 NRI business investment
 Financial planning services
 Corporate banking in which domestic banks are supported
 Institutional banking etc.

15. Contd…
 Asset management by providing cline based services
 Insurance service in which investors are insured by the
foreign banks
These are some methods by which corporate
finance is done by the foreign banks.

16. Control over Foreign Banks in India
 Foreign Banks are regulated by the Department of
Banking operation and Development which is
responsible for the regulation of commercial banks.
 This is a part of Monetary Policy Department which is
interdisciplinary part of Reserve Bank of India.
 The Department of Banking Supervision is the
supervisory authority over foreign banks of India.

17. India needs foreign banks. WHY?
 Domestic banks dominated banking services
 Need for subsidiaries
 Financial inclusion
 To Fuel growth and better infrastructure
 Better investment
 Inclusion of foreign technology
 Taxation

18. END OF THE PAPER
THANK YOU