HỌC TỐT TIẾNG ANH 11 THEO CHƯƠNG TRÌNH GLOBAL SUCCESS ĐÁP ÁN CHI TIẾT - CẢ NĂ...
Off shore banking in bangladesh
1. OFFSHORE BANKING IN BANGLADESH
SUBMITTED BY: Shah Meraz Rizvi
INTERNATIONAL ISLAMIC UNIVERSITY CHITTAGONG
Department Of Economics & Banking
2. S
U
B
J
E
C
T
TOPIC: OFFSHORE BANKING
1. Introduction.
2. Objective of the study & Research Methodology.
3. Benefits of OFFShore Banking.
4. Criticisms of OFFShore Banking.
5. OFFShore Banking centres in Bangladesh.
6. Evolution of OFFShore Banking.
7. The Banks Involved In OFFShore Banking.
8. Salient Features Of OFFShore Banking Unit IN Bangladesh.
9. Current Status of Offshore Banking in Bangladesh.
10.Findings.
11.Conclusion.
SUBJECT
3. 1. INTRODUCTION
Offshore Banking is a banking system that deals
with the international currency market, that
foreign exchange funds originate from foreign
sources in the banking system, and managed by
different law enforcement and accounting outside
local law, is known as offshore banking.
4. 2. Objective of the study:
• To identify and analyze the factors that
contribute to the growth of offshore banking
• To devise the strategy for sustainable development of
SEZ through offshore banking
The data collected is from secondary source.
Data related to different factors are collected
from sources like reports, research papers,
thesis, journals, news articles and books. In
depth study of each factor is done to analyze
its role in the growth of Offshore Banking.
Research Methodology:
5. 3. Benefits of OFFShore Banking
01
Securing and
protecting
your capital
02
Enjoying the
highest
service
levels
03Having
convenient and
accessible
access to funds
05So you can
access
international
investment
opportunities
06
To benefit
from foreign
exchange
services
04To potentially
save tax on
deposits
savings and
investments
07
For superior
lending and
credit
facilities.
6. 4. Criticsms of OFFShore Banking
1 No interest is earned on the account
2
3
4
Difficult to set up
It is often associated with organized crime
Its helps the economy in foreign nations
7. 5. OFFShore Banking Centres In Bangladesh:
Recently Bangladesh has gone off shore for banking and the Bangladesh Bank has declared an open door policy in
respect. Govt. of Bangladesh intends to introduce off-shore banking in order to activate financing business and industrial
activities in the newly created Export processing zones (EPZ).
Exported would get benefit in terms of finer margins on loans and better foreign exchange rates available via
an offshore banking unit.
The benefits of multi-currency operations which, to an extent, minimize currency fluctuation risk.
Salaries would paid by offshore banks and local expenditure incurred by them contribute to the economy's
welfare.
Bangladesh may earn revenue in the form of license fees, profit taxes imposed on the banks operating in the
area.
Benefit of banks' funds in the form of capital & liquidity requirements.
The country can gain improved access to the international capital markets.
Setting up offshore banking centres would trigger enforced development of more advanced communication
facilities
The offshore banking centres will provide opportunities to train the local staff which will, in turn, contribute
to faster economic growth.
The offshore banking units would help channelize nonresident Bangladesh investments.
The domestic financial system may become more efficient through increased competition and exposure of
the domestic banks to the practices of offshore banks.
8. 6.Evolution of OFFShore Banking In Bangladesh:
Presently,
• 22 local banks
• 07 foreign banks
Licentiate for doing
off- shore banking in
Bangladesh.
To activate financing
business and industrial
activities in the Export
Processing Zones (EPZ).
• Deposit collection
• Investment/credit
deployment
• Fund collection/borrowing
• UPAS
• All FC related transactions
for its clients.
Primary objective The Banks Involved Operations for
OBU in Bangladesh
The clients
• Non-resident (Individual and or
Industry)
• Bangladeshi National working
abroad
• Type-A Unit (100% foreign
owned) operating in EPZ &
outside EPZ ,Type-B,Type-C.
• Industrial units outside the EPZ
(only for term loan)
• AD Branch under UPAS facilities
(for Bill discounting).
In Bangladesh offshore banking was started in 1985.
Bangladesh Bank declared its policy in this respect vide
BRPD circular No. BCD(P) 744(27) on 17th December, 1985.
9. 7. The Banks Involved In OFFShore Banking:
Foreign investors do not have the opportunity of availing credit facilities from the Different
Financial Institutions (DFI) of Bangladesh. In order to cater to the need of financial support,
off-shore banking facilities are being provided to the foreign owned/join venture units in
the EPZs of Bangladesh. According to Bangladesh Export Processing Zones Authority’s
(BEPZA) publication on May 14, 2014, presently, 07 foreign banks operating in Bangladesh
have been licentiated for doing off-shore banking. Apart from that, 22 local banks of
Bangladesh also provide off-shore banking. According to the Bangladesh Bank (BB), more
local banks are in the pipe- line to have off-shore banking license from them.
10. The list of the Local and Foreign Banks in Bangladesh licentiate for doing offshore banking is given below:
LOCAL BANK :
1. Prime Bank Ltd.
2. Dhaka Bank Ltd..
3. South-East Bank Ltd.
4. National Bank Ltd.
5. Estern Bank Ltd. (EBL).
6. Bank Asia Ltd.
7. Shahjalal Bank Ltd.
8. The City Bank Ltd.
9. The Premier Bank Ltd.
10. IFIC Bank Limited.
11. BRAC Bank Ltd.
12. AB Bank Limited.
13. Mutual Trust Bank Ltd.
14. Jamuna Bank Ltd.
15. One Bank Ltd.
16. Pubali Bank Ltd.
17. Standard Bank Ltd.
18. United Commercial Bank Ltd .
19. Islami Bank Bangladesh Ltd.
20. Trust Bank Limited.
21. Mercantile Bank Ltd .
22. National Credit and Commerce Bank Ltd.
FOREIGN BANK:
1. Standard Charter Bank Ltd.
2. HSBC Ltd.
3. Woori Bank Ltd.
4. Citi N.A. Bank Ltd.
5. Commercial Bank of Ceylon.
6. Dutch-Bangla Bank Ltd.
7. State Bank of India.
11. 8. Salient Features Of OFFShore Banking Unit IN Bangladesh:
01
BOI approval for lending to local corporate:
The borrowing company needs to request for
approval to BOI in prescribed format. The BOI
approval process may take some time. BOI
needs to be satisfied regarding commercial
viability of the project, the ability of the
project to repay foreign currency loans,
suitability of the borrowing with the existing
financial structure of the project and the
credit worthiness of the project.
Features of Loans:
As the foreign currency borrowing of local
companies is subject to a long approval
process, probably only comparatively large
volume term loans is eligible for financing
by OBU. Typically term has range from 1-5
years. The loans interest is fixed or
floating.
Asset Liability Management of Offshore Unit:
Unlike the domestic unit where all the
deposits and loans are of fixed interest rates,
the offshore banking unit has both fixed and
floating rate assets and liabilities. Therefore, in
addition to maturity matching, the floating
rate assets have to be matched with floating
rate liabilities and fixed rate assets have to be
matched with fixed rate liabilities. Interest rate
swap is necessary in cases where floating rate
lending is financed by fixed rate deposits or
vice versa.
12. 9.Current Status of Offshore Banking in Bangladesh:
Because of low interest, the bankers of the bank's offshore unit are facing risk. As a result, during the
first six months of the current year (January-June), the distribution of the loan was 74,544 crores. In this,
the loan status of the offshore unit of the bank sector has stood at Tk 46,874 crore.
The default loan was Tk 420 crore in the offshore unit till June. Of these, 313 crores of money trafficked through AB
Bank's offshore unit has been defunct.
There is no policy for offshore banking operations in Bangladesh so far. As a result, the banks are expanding the
business. Currently, interest rates on offshore banking are below 6 percent.
In December last year(2016),
the amount of offshore banking loan was Tk 393 billion.
By the end of June(2017), it has increased to 46,874 crore taka.
As a result, the loan growth in six months has increased to around 7 billion taka.
At the end of June last year(2016), the loan amount was 3,887 crores.
After calculating that, the loan amount increased by one year to 8 thousand 787
crore.
So far, the bank has disbursed 51 bank offshore banks, but 35 banks have disbursed the loan.
The central bank's control over offshore banking units is very less.
Bangladesh Bank sources (08 September 2017)
13. 04
The bank should have a policy for
maintaining separate books of
accounts showing all assets,
liabilities, income and
expenditure for OBU
05
The bank should have a
policy for maintaining a
Taka account to meet up
the daily expenses for OBU
06
The bank should have a
policy to collect fund for
OBU
10.FINDINGS
01
Bank should have an
approved OBU operational
manual
02
The bank should have a
policy for separate
working strength
03
The bank should have a
policy to maintain separate
Nostro account for OBU
14. 10
EPZ customer can use the BEPZA
IP as a license. So, there is
actually no implementation of
letter of credit authorization
11
BB can keep an close eye
on the strength of foreign
asset while issuing license
for OBU to the local bank
12
BB can monitor the fund
flow of OBU
FINDINGS
07
The bank should have a
policy for the uses of fund
for OBU
08
The bank should have a
policy for credit appraisal
09
The bank should have a
policy regarding LC
reconfirmation
15. 11. CONCLUSION
Today, offshore banking is extremely advanced, offering
numerous services such as online banking, credit and debit
card services and mobile banking. To the fact that banking
regulations vary from nation to nation, it is possible the
country in which your funds are located does not offer the
same protections as other nations.