Sei sulla pagina 1di 58

CORPORATE BANKING

Group-3
Amit Agarwal
Hitesh Taparia
Meera Mohan
Aswin Swaminathan
Shashank Jain
Balasubrahmanyam Nukala

1
What is Corporate Banking
Defined as,
“ the wide range of banking and financial
services provided to domestic & international
operations of large local corporates and local
operations of multinational corporations”

“ a wide array of commercial, transactional and


electronic banking products provided to
corporates”

2
What they offer?
 Access to commercial banking products
 Working capital facilities such as domestic

and international trade operations and


funding
 Channel financing
 Overdrafts
 INR term loans (including external

commercial borrowings in foreign currency)


 Letters of guarantee

3
Method of distribution
All major banks in India like HSBC, ICICI, HDFC,
StanChart, SBI, Central Bank, Bank of Baroda,
etc offer these services

Corporate banking products are distributed


mainly through
 Bank branches
 Direct sales force
 Phone banking
 Internet banking
 Relationship officers

4
Banking: Retail vs Corporate
Retail Banking Corporate Banking

 Banking services to  Services by banks to the


individuals for personal like of large corporate
use and consumption clients, mid-sized
companies, real estate
developers and investors,
international trade finance
businesses, institutional
 Involves low value customers
transactions  Involves high value
transactions

5
HDFC Bank – Corporate Banking

They offer a full range of client-focused corporate


banking services

Product offerings are suitably structured taking into


account a client's risk profile and specific needs

6
Major offerings from HDFC
Funded Non - funded Internet
Value added services
services services Banking

• Working • Letter of • Syndication services • Supply chain


Capital credit • RTGS Management
Finance • Cash Management
• Short term • Collection of services • Payment
finance documents • Channel financing Gateway
• Structured • Corporate salary services
finance • Bank accounts
• Export Credit guarantees • Forex desk • Corporate
• Term Lending • Money market & Internet
• Bill derivatives desk Banking
Discounting • Tax Collection
• Employees’ trusts
• Bankers to right issue

7
Funded Corporate Services

 Working Capital Finance

 Project Finance

 EXIM Finance

 Short Term Corporate Finance

8
1. Working Capital Finance
Providing funds required for purchase of raw materials, stores,for payment of labor,
power charges & for financing the sales by way of sundry debtors receivables.

 KEY BENEFITS:

Funded facilities, i.e. the bank provides funding and assistance to actually purchase
business assets or to meet business expenses.

Non-Funded facilities, i.e. the bank can issue letters of credit or can give a guarantee
on behalf of the customer to the suppliers, Government Departments for the
procurement of goods and services on credit.

 RBI GUIDELINES ON LOAN FOR WORKING CAPITAL PURPOSE:

Credit to be extended in the form of fixed loan (working capital Demand loan) and cash
credit (running account) in the ratio of 60:40 to borrowers enjoying aggregate working
capital limits of Rs.10 crore and above from the Banking system.

 LIMITATIONS OF WORKING CAPITAL FINANCE:

The working capital limits would require such security and personal/ third party
guarantees as applicable to general lending norms of the bank
9
2. Project Finance
 Project finance is the financing of long-term infrastructure and industrial projects
based upon a complex financial structure where project debt and equity are used to
finance the project

 The financing is typically secured by all of the project assets, including the revenue-
producing contracts

 Project lenders are given a lien on all of these assets, and are able to assume
control of a project if the project company has difficulties complying with the loan
terms.

 The rate of interest on such credit facilities would be determined based on the
borrower gradation and the interest rate policy of the bank from time to time.

 The working capital limits require security and personal/ third party guarantees as
applicable to general lending norms of the bank and risk perception in respect of
individual borrowal account.

10
3. EXIM Finance
KEY BENEFITS:

 Efficient service to the importer/exporter clients.

 Connectivitywith the Customs Department to facilitate payment of custom duty


and receipt of duty draw back electronically.

EXCHANGE EARNERS FOREIGN CURRENCY (EEFC) DEPOSITS SCHEME:

Started
by RBI in the year 1992 with the introduction of Liberalized Exchange Rate
Management System.

Under this scheme, the recipient of inward remittances, exporters and other eligible
bodies are allowed to keep a portion of their inward remittances / export proceeds in
foreign currency with the banks in India which can later be utilized for permissible
purposes.

11
EXIM Finance contd.

SERVICES OFFERED TO EXPORTERS :

 Post-shipment finance in foreign currency and Indian rupees.


 Handling export bills on collection basis.

 Outward remittances for purposes as permitted under Exchange

Control guidelines.
 Inward remittances including advance payments.

 Quoting of competitive rates for transactions.

 Maintenance of Exchange Earners Foreign Currency (EEFC) accounts.

 Assistance in obtaining credit reports on overseas parties.

 Forfeiting for medium term export receivables.

Pre-shipment finance in foreign currency and Indian rupees.

12
EXIM Finance contd.
SERVICES OFFERED TO IMPORTERS

 Establishment of Import Letters of Credit covering import into


India and handling of bills under Letter of Credit.

 Handling of import bills on collection basis.

 Remittance of advance payment against imports.

 Offering utilization of PCFC ( pre-shipment credit in foreign


currency) for imports.

 Credit reports on overseas suppliers

13
Non Funded Corporate Services

 Letters of credit

 Bank guarantees

 Collection of Documents

14
1. Letters of credit
 Derived from french word “accreditation”- a power to do
something, which in turn is derivative of the Latin word
“accreditivus” -meaning trust

 Document used primarily in trade finance

 Usually provides an irrevocable payment undertaking

 All the charges for issuance of Letter of Credit, negotiation of


documents, reimbursements and other charges like courier
are to the account of applicant

15
Letters of credit contd.
 Parties
◦ Beneficiary
◦ Issuing bank
◦ Advisory bank

 Documents requested in a Letter of Credit are the following:


◦ Commercial invoice
◦ Transport document such as a Bill of lading or Airway bill,
◦ Insurance document
◦ Inspection Certificate
◦ Certificate of Origin

16
How LoC works?

17
2. Bank guarantees
 A type of guarantee in which a bank or lending organization
promises to repay the liabilities of a debtor in the event that
he is unable to

 Types of guarantees offered


◦ Performance
◦ Payment
◦ Bid bond
◦ Warranty obligations

18
Types of guarantee
 Payment:
◦ To secure any claims by the seller on the buyer for
payment of the contract price by the agreed date.

 Bid bond/Tender bond:


◦ To secure any claims by the party inviting the
tender on the tenderer in the event of withdrawal of
the bid before its expiry date or if the bid is
modified unilaterally
◦ Or if the tenderer, upon being awarded the
contract, refuses to sign the contract or provide
further guarantees on request.
19
Types of guarantee (Contd)
 Performance:
◦ To secure any claims by the buyer on the seller
arising from default in delivery or performance of
the terms of the contract (e.g. construction,
assembly, execution)

 Warranty obligations:
◦ To secure any claims by the buyer on the seller due
to possible defects appearing after delivery.

20
LoC vs Bank Guarantee

Letter of Credit Bank Guarantee

 Ensures that a transaction  Reduces the loss if the


proceeds as planned transaction doesn't go as
planned
  Once terms & services are  The sum is only paid if the
completed and confirmed, the
opposing party does not fulfil
bank will transfer the funds
the stipulated obligations
under the contract

 This letter would substitute the  The bank guarantee acts as a


bank's credit for that of safety measure for the
its client, ensuring correct opposing party in the
and timely payment transaction
21
3. Collection of Documents

 Documentary collections is a form of payment


processing that is used in international trade,
normally in connection with a goods
transaction

 Banks send and follow up on your LC-backed


as well as clean bills sent for collection as
regards imports, exports, etc
◦ Local bills
◦ International bills

22
Value Added Corporate Services
 Cash Management Services
 Syndication Services
 Money Market Desk
 Issue Management Services
 Tax Collection Services
 RTGS
 Channel Financing
 Corporate Salary Accounts
 FOREX Desk

23
24
• Eliminating idle cash balances
cash?
• Monitoring exposure and reducing risks
• Ensuring timely deposit of collections
manage
• Properly timing the disbursements Why
• Optimization of liquidity through an improved flow of funds
Objective
• Proper use of an entity’s cash resources
it?
• The means to keep an organisation functioning by making the best use of cash
or liquid resources of the organisation
What is
1. Cash management
Cash management services
 Disbursement services
 Information and control services
 Services related to Electronic data

interchange (EDI)
 Commercial web banking services
 Sweep services
 Fraud detection solutions
 Global trade solutions
 Investment solutions

25
Electronic payments in cash
management
Benefits:

• Speed and security of transaction processing chain


• Reduces cost of labor, materials & accounting services otherwise required
• Technology facilitates firm-wide computing & payment
• Provides control over incoming funds & limit access

Challenges to banks:

 No customization in electronic banking service


 Need to work as a team with the clients
 Providing other advisory services
 Work with technology vendors

26
2. Syndication Services
 Assists companies raise resources from the
Institutional market

 Project Finance & Term Loans


◦ INR Loans
◦ Foreign Currency Loans
◦ External Commercial Borrowings (ECBs)
◦ FCNR (b) Loans 

 Fixed Income Products


◦  Primary Issuance Syndication & Underwriting
◦ Sourcing secondary market transactions from the market

27
Syndication Services contd.
 Securitisation
◦ Residential Mortgaged Backed Securitisation (RMBS)
& Commercial Mortgaged Backed Securities.
◦ Asset Backed Securitisation
◦ Collateralised Debt Obligations (CDOs)

 Short Term Loans (plain vanilla loans and


MIBOR linked Loans)
◦ Working Capital Loans  
◦ Medium Term Loans

28
3. Money Market Desk
Money Market Desk services include:

 Management of statutory reserves viz. Cash Reserve Ratio (CRR) and Statutory
Liquidity Ratio (SLR)

 Daily Funds Management for the Bank

 Balance Sheet Management services which include Earnings management,


Capital management, Liquidity management, Interest rate risk management.

 Trading of the following Debt Securities


 Government of India Securities
 Treasury Bills
 Commercial Papers
29
4. Issue Management Services
 Managing Initial Public Offerings and Follow-on Public
offerings and Offers-for-Sale
 Managing Rights Offering, be it the traditional or the
structured formats
 Qualified Institutional Placements
 Open offers, Buyback and Delisting of securities
 Offerings of convertible securities
 Public offering of Corporate structured bonds
 Private placement of bonds

30
5. Tax Collection Services
 Some Corporate banks will be authorized by the Central
Board of Direct Taxes (CBDT) as well as Reserve Bank of
India(RBI) for the collection of Direct Taxes
 E.g. HDFC Bank was the first private sector bank to be
authorised for collection of direct tax, from April 01, 2001

 Some Corporate banks will be authorized by the Central


Board of Excise and Customs(CBEC) as well as Reserve Bank of
India(RBI) for the collection of Central Excise Duty and
Service Tax
 E.g. HDFC Bank is authorized to collect the same at Mumbai,
Delhi, Bangalore, Kolkata
31
6. RTGS
 Real Time Gross Settlement

 Funds Transfer system where transfer of money takes place on “Real Time”
and on ‘Gross Basis”.

 The payment network is maintained by RBI.

 Both Remitting and Receiving bank must have Core Banking in place to enter
into RTGS transactions.

 Minimum value of Transactions should be Rs. 1,00,000.

 Customers can access the RTGS facility between 9AM to 4:30 PM on weekdays
and 9AM to 12 Noon on Saturday.

 Settlements are Irrevocable.

32
7. Channel Financing
 Innovative products to extend working
capital finance .
 Greater efficiencies in Receivables and Cash

Management Process for corporates.


 Steady and cheaper source of Working Capital

Financing.
 Firms can concentrate more on their core

competence area .
 Suppliers and Dealers get payments promptly

33
Channel Financing – Benefits for Bank

 Increased Customer Base

 Better Credit discipline

 Risk diversification through finance to


Supplier, Manufacturer and Distributor

 Credit exposure norms are better observed

34
8. Corporate Salary Accounts
 Efficient Salary disbursals.

- Web Upload: Transfer salaries/Reimbursements


directly from Current Account to Employees Account.

- Single Instruction Salary Credit: Same day salary


credits.

 Dedicated Relationship Manager for each corporate .

 Dedicated Service Manager for all service related issues.

35
Benefits to Employees
 Simple Account opening Procedures with minimum
documentation
 Unparalleled Access
- Free Cash withdrawals at any ATM
- Multi City Banking, Phone Banking, Online
Banking
 Personalized At-Par Cheque Book
 Zero Balance Account
 Free Demand Drafts
 Attractive interest rates on loans

36
9. FOREX Desk

 Caters to needs of Customers in Foreign Exchange.

 Manage earnings volatility, Transaction Risks for


Indian Companies having currency exposure and
Foreign investors investing in India.

 Customized Hedging and Trading solutions to


Clients.

37
Internet Banking Services

 Supply Chain Mgmt Services

 Payment Gateway Services

 Corporate Internet Banking

38
1. Supply Chain Mgmt Services

 Corporate Banks provide end to end e-commerce solutions for


collections from dealers and payment to suppliers.

 The features include:

 Automation of supply chain payments resulting in


operational efficiency
 Seamless transfer of funds
 Faster delivery of goods/services leading to significant
decrease in working capital cycle
 Reduction in order processing costs
 Real-time information

39
2. Payment Gateway Services
• A payment gateway is an e-commerce application service provider that authorizes
payments for e-businesses, online retailers

• Equivalent of a physical point of sale terminal located in most retail outlets

• Broadly classified into 2 types –


a) Business-to-Business
b) Direct Pay Mode of Payment

Business to Business

• For Industries and Companies whose targets are suppliers, dealers etc who in turn reach the
masses
• Involves huge sum of monies
• Successfully implemented by portals, such as VSNL, Sifymall, Fabmart, etc. 
• The entire operation takes place through a secure channel. The security features include: 

Firewalls 
128 - bit encryption 
SET certification for digital signature

40
Payment Gateway Services cotnd.
Direct Pay Mode of Payment –

• For Retail companies whose end target is the consumer. 

• The money is not in huge volumes

• Since the customer is an existing account holder, chances of frauds


are nil and Bank takes all the responsibility of verifying his identity. 

• Purchases are debited directly to customer's account and credited to


the account of the establishment 

• Most banks provide both the Direct Pay and Net Banking facilities
FREE of cost to account holders

41
3. Corporate Internet Banking
• A fully secured Internet based online channel providing convenient
and secure access to banking information over the Internet

• Allows multi-branch connectivity providing seamless access points


for clients

• Facilities Available-

a) Account Information –

 Statements of Account and Balances


 Consolidated Balances across multiple currency accounts.
 Drill down facilities for transactions and historical balances.

42
Corporate Internet Banking contd.

 b) Payments- Allows the client to make payments using one of the following
payment options:

Single Payment
Multiple Payments
Bulk Payments

c) Salary Payment Uploads – Enables corporates to upload salary payment


instructions for their employee stationed countrywide

d) Foreign Exchange Transactions - keeps track of foreign currency


transactions, positions of forward bookings and rates.

43
Additional Services
 Investment Banking Services

 FI & Capital Market Services

44
Investment Banking
 Investment bankers function as intermediaries in financial transactions for corporates.

 They are experienced in carrying out projects that, for most companies, take place
very rarely, but are critically important.

 Major services include –


 Raising capital -
 Advising in Mergers and Acquisitions
 Executing securities sales and trading
 Performing general advisory services

1. Raising capital

 Assist a firm in raising funds to achieve a variety of objectives, such reduce its debt
load, expand existing operations or acquire another company.
 Capital can include some combination of debt, common equity or preferred equity.
  Work with the client to structure the transaction to meet specific objectives while
being attractive to investors.

45
Investment Banking contd.
2. Mergers & Acquisitions Advisory

 Investment banks often represent firms in mergers, acquisitions, and divestitures.


 Include the acquisition of a specific firm, the sale of a company or a subsidiary of the company.
 Provide a thorough analysis of the entity bought or sold, as well as a valuation range and
recommended structure

3. Sales and Trading

 Primarily relevant only to publicly traded firms, or firms which plan to go public in the near
future.
 Specific functions include making a market in a stock, placing new offerings, and publishing
research reports.

4. General Advisory Services

 Include assignments such as strategic planning, business valuations, assisting in financial


restructurings, and providing an an opinion as to the fairness of a proposed transaction.

46
FI & Capital Markets Services
1. Financial Institution Services

• Services the financial sector for the entire set of banking requirements
• Banks cater exclusively to the needs of -

Mutual Funds
Insurance Companies
Fund Accounting
Domestic Financial Institutions

• Services provided include –

 Loan Syndication
 Sell Down
 Buyouts

47
FI & Capital Markets Services contd.
2. Capital Markets Services –

• Primary Markets

Collecting Bankers
Escrow and Paying Bankers

• Secondary Markets

Clearing and Settlement Bankers


Bank Guarantees
Secured Overdraft
Intra-day Funding

48
Corporate Banking Statistics Of Major Banks

Bank Revenue(Cr.) PBT(Cr.)

SBI 261963 47553

ICICI Bank 192541 36451

HDFC Bank 81620 19786

AXIS Bank 79141 23902

YES Bank 20192 6112

49
SBI – Corporate Banking

Corporate
Banking Retail
30% Banking Corporate
Retail Banking Banking Retail Banking
43%
Treasury 27% Retail Banking Treasury
Others 36% Others
Others
Treasury
1% Corporate Banking Corporate Banking
26%

Others
11% Treasury
26%

Revenue Decomposition PBT Decomposition

50
ICICI Bank – Corporate Banking
Others
Others General Retail
7% Other
4% Banking
Insurance
14% Banking Ops
Corporate 3%
8%
Banking Retail Others Others
Banking General Insurance Life Other Banking Ops
21% Treasury
20% Insurance
Retail Banking 28% Corporate Life Insurance
Other 3%
Treasury Other Banking Ops Banking General Insurance
28% Banking Ops General
38%
4% Venture Fund Mgmt Insurance Corporate Banking
Life Insurance
Venture Fund 2% Venture Fund Mgmt
Venture Fund
Mgmt Treasury Treasury
Mgmt
0% Corporate Banking Retail Banking
1%
Life
Insurance
21%

Revenue Decomposition PBT Decomposition

51
HDFC Bank – Corporate Banking
Treasury
15%
Treasury
Other 12%
Retail
Retail Other
Banking Ops Banking
Banking Banking
Corporate 8% 30%
51% Treasury Ops Treasury
Banking 11% Other Banking Ops
Other Banking Ops
27%
Corporate Banking Others Others
10% Corporate Banking
Retail Banking
Corporate Retail Banking
Banking
37%

Revenue Decomposition PBT Decomposition

52
AXIS Bank – Corporate Banking

Other Banking Other Banking


Ops Ops
Corporate 0% 0%
Banking Retail Banking Retail Banking
23% 23% 27%
Other Banking Ops Other Banking Ops
Corporate
Retail Banking Retail Banking
Banking
Treasury 62% Treasury
Treasury Corporate Banking
Corporate Banking
11%
Treasury
54%

Revenue Decomposition PBT Decomposition

53
YES Bank – Corporate Banking

Retail Banking
5%
Retail Banking Other Banking
7% Ops
0%
Treasury
32%
Corporate Corporate Banking Corporate
Other Banking Ops
Banking Other Banking Banking
Treasury Corporate Banking
63% Operations 48%
45% Treasury
Treasury
Other Banking Retail Banking
Retail Banking
Operations
1%

Revenue Decomposition PBT Decomposition

54
Some recent changes
 Focus on personalized banking services

 Focus on cash management services & short-


medium term deposit strategies

 More usage of transaction banking products

 Base Rate Regime

55
New Base Rate Regime
Bank Base Rate
SBI 7.5%
ICICI Bank 7.5%
AXIS Bank 7.5%
HDFC Bank 7.25%
Dhanalaxmi Bank 7%
YES Bank 7%
Bank of India 8%
IOB 8.25%
IDBI Bank 8%
Karnataka Bank 8.75%
Andhra Bank 8.25% 56
New Base Rate Regime - Implications

 Banks should not lend below their base rates from July 1st
 Base rates ranges from 6.75% to as high as 8.75%
 The interest rate for CPs would be roughly 6.5-7.25 per cent.
 The number of corporations looking to raise money through
CPs has increased three-four times post the implementation of
the Base Rate
 Used to a healthy dose of short-term funding for tenures of up
to one year at below benchmark prime lending rates, bluechip
corporations are now faced with a new reality where banks
will lend only above their base rate
 Hence  CP offers them a suitable alternative to the erstwhile
sub-BPLR lending
57
THANKS

58

Potrebbero piacerti anche