Falcon Invoice Discounting: Empowering Your Business Growth
Foriegn banks
1. OUR VISION
OUR VISION IS TO EVOLVE INTO A STRONG,
SOUND AND GLOBALLY COMPETITIVE
FINANCIAL SYSTEM, PROVIDING
INTEGRATED SERVICES TO CUSTOMERS
FROM ALL SEGMENTS, LEVERAGING ON
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ADOPTING THE BEST ACCOUNTING AND
ETHICAL PRACTICES AND FULFILLING
CORPORATE AND SOCIAL RESPONSIBILITIES
TOWARDS ALL STAKEHOLDERS.
Role of Banks in Managing foreign Customers:
Banking section plays important role in internalation business. Today almost all
major banks have offices in major cities around the world. Many banks have formed
colloboration with banks in other countries to better serve their international
business community. Banks form a bond of trust between buying and selling
transactions in international market. For individual banks offer services like foreign
exchange, traveler’s check, electronics transfer. For businesses bank plays ar ole of
trusty agent by offering servics like ‘Documentary Collection’ and ‘Letter of Credit’.
One of the problem international businesses encountering doing business
internationally is lack of trust. With the help financial devices commercial banks are
able for a bond of trust between internalional buyers and sellers. In commercial
methods like ‘Commercial Collection’ and ‘Letter of Credit’ banks act as agents to
2. handle payments as well as relevant documents. Letter of Credit is most wide
acceptable and used methog of doing international transactions. Some banks and
government agencies offer export credit insurance to businesses. In some cases,
exporter has to forgo a letter of credit, in such cases banks offer export credit
insurance.
Foreign exchange market is another area where international commercial
banks play vital role. Foreign exchange market serves two main functions,
convert the currency of one country into the currency of another and provide some
insurance against foreign exchange risk. Multinational corporations constantly need
various currencies for their operations and to hedge against foreign exchange risk.
International banks provide foreign exchange services to their commercial business
clients to complete their business transactions. These banks act as a broker between
commercial customer and foreign exchanges around the world. International
businesses receive payments in foreign currencies for their export, the income it
receives from foreign investments and income received from licensing agreements
with foreign firms. Internations business use foreign exchange market to pay foreign
firms for its products and services and when it makes direct investment in foreign
country. International banks play major roles in these transactions
Foreign exchange market is another area where international commercial banks play
vital role. Foreign exchange market serves two main functions, convert the
currency of one country into the currency of another and provide some insurance
against foreign exchange risk. Multinational corporations constantly need various
currencies for their operations and to hedge against foreign exchange risk.
International banks provide foreign exchange services to their commercial business
clients to complete their business transactions. These banks act as a broker between
commercial customer and foreign exchanges around the world. International
businesses receive payments in foreign currencies for their export, the income it
receives from foreign investments and income received from licensing agreements
with foreign firms. Internations business use foreign exchange market to pay foreign
firms for its products and services and when it makes direct investment in foreign
country. International banks play major roles in these transactions.
Many commercial banks offers short as well as long term loan finaning to
internaltional businesses. Many countries have form banks backed by government
fundings to provide fundings for exporters and importers. In United States, Export-
Import bank, an independent agency of the US government, provides financial aid to
faciliate export and import of goods. Eximbank also guarantees repayment of loans
US commercial banks make to foreign borrowers for purchasing US exports.
3. Banking sector plays vital role of catalysts in international market. Due to
technology advances in banking sector, communciation gap and delays in
international business have really narrow down a lot.
Commercial banks do not create money--they are simply the intermediaries that move money
from the capital markets to businesses and institutions. Banks get their money through
business checking or deposit accounts, service fees and by issuing certificates of deposit (CD)
and banker's acceptances--money market instruments that are collateralized by letters of
credit (LOC) used in trade finance--and commercial paper. Commercial banks offer services
such as trade finance, project finance, payroll, foreign exchange transactions and trading, lock
boxes for collecting payments and general corporate finance.
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Significance
Without commercial banks, the international finance and import-export industry would not
exist. Commercial banks make possible the reliable transfer of funds and translation of
business practices between different countries and different customs all over the world. The
global nature of commercial banking also makes possible the distribution of valuable
economic and business information among customers and the capital markets of all countries.
Commercial banking also serves as a worldwide barometer of economic health and business
trends.
Foreign Branch Banking
Some small commercial banks limit their reach to the local business community; but as
business has gone global, so have commercial banks. Large banks such as Citigroup, Bank of
America and Chase are retail (consumer) banks that also maintain full commercial banking
activities in the United States with branches in many countries. These larger banks may act as
affiliates of smaller banks that do not have branch presences in other countries. Through
foreign branch banking, U.S. based multinational companies can consolidate their financial
business at a single bank that handles their trade finance, currency transactions, project loans,
payroll, cash management investments and deposit accounts throughout the world.
Commercial banks also arrange deals between their customers globally, including strategic
partnerships and project fulfillment agreements.
Trade Finance
Commercial banks doing international business are also called merchant banks because they
finance trade between companies and customers located in different countries. This is done
by issuing LOCs that indicate the customer has deposited the full amount due on an order
with a company located in a different country. The seller company can then feel assured of
being paid if it ships goods to its offshore customer. The LOC may also be used by the
company to guarantee a manufacturer's loan, allowing it to finance the manufacture of the
goods to be delivered. Without LOCs, companies would face considerable expense in
investigating their foreign customers to make sure they are legitimate and creditworthy, and
complying with laws and regulations of the different countries in which they do business.
Foreign Exchange
4. In order to facilitate international trade and development, commercial banks convert and
trade foreign currencies. When a company is doing business in another country it may be paid
in the currency of that country. While some of these revenues will be used to pay workers in
that country and for administrative expense such as office rent, utilities and supplies, the
company may need to purchase goods from a neighboring country in that country's currency,
or convert cash to its native currency for return to the home office.
Corporate Finance
Companies always need to borrow money to cover purchases of raw materials, machinery
parts, inventory and/or payroll. Banks with overseas branches or affiliates can simplify the
process of corporate finance throughout a company's organization by consolidating the
transaction procedures, reporting and record keeping. It is much easier for a company
manager to do business in her own language with a banker located nearby who handles her
global business finance needs than it would be for her to develop banking relationships in
every country where she does business. Her international commercial bank can also provide
referrals to professional service firms in other countries, as well as arrange introductions to
other companies appropriate as customers or for strategic partnerships.
Miscellaneous Banking Services
Corporate checking accounts, currency specific credit cards and lock boxes are also offered
by commercial banking to help make foreign trade possible for a company. Lock boxes are
particularly helpful for collecting payments from overseas customers and reporting receipts
daily for cash management purposes. Currency-specific credit cards are also important in
eliminating the cost of cross currency purchasing, which normally is done at expensive
valuation levels.