The Foreign Exchange department, which is also being called as the International Banking Division, is one of the important departments of the banks operating in international market. In India also all scheduled commercial banks, both in the nationalized or non-nationalized sectors, do have Foreign Exchange departments, both at their principal offices as well as offices, in metropolitan centers. This department functions independently under the overall change of some senior executive or a senior officer well-versed in foreign exchange operations as well as in the rules and regulations in force from time to time pertaining to foreign exchange transactions advised by various government agencies. The principal function of a Foreign exchange department is to handle foreign inward remittances as well as Continue reading
Bank Management Concepts
The Importance of Liquidity for Commercial Banks
Banks are considered to be as safe deposit for customers associated with them for both short and long term basis. It has increased liability over banks to make sure that they are able to fulfill all the demands of the customers. Also several acts passed in many countries has reduced the dependency that commercial banks used to possess over Central Banks to make sure that their needs are sufficed in case some emergency arrives. Thus to maintain certain level of stake in the company, it is mandatory for commercial banks to retain appropriate liquidity ratios such that any ambiguous situation could be avoided. If any disturbance is encountered in these ratios, there is a problem of funding that comes into Continue reading
Credit Management Concepts: Know Your Client
A cardinal rule in banking is the concept of “Know your client”. This means exactly what is says. The banker will do all he can to find out as much as he can about the company and the client. In this no information is too small or too immaterial since they will fit into a larger picture and the fate of the facilities extended may depend upon it. It has to be always remembered that the project may appear sound, the documentation perfect and the financials impeccable. However, if the intent is to cheat, it could cause severe losses to the Bank. Banks are always aware that a dishonest man is also a very clever person. Additionally the dishonest person Continue reading
How do Banks Increase their Liquidity?
Firstly it is necessary to define liquidity and explain the reason that liquidity is so important for banks. Liquidity is essentially immediately spendable funds or the ability to convert assets into spendable funds, quickly and easily without a significant loss. Banks need liquidity because of demands for spendable funds. These demands mainly come from customers wishing to withdraw money from their accounts and from customers with credit requests, either in the form of new loans or drawings upon existing credit lines. However, banks will also have a demand for liquidity for other reasons including paying off liabilities that they have for example loans from other banks, or the central bank, payment of income taxes, and the paying of cash dividends Continue reading
Customer Service Strategies in Banking Sector
Today, banking sector is seen as a catalyst in economic growth of a country and, lot is expected from the banking fraternity. The recognition of banking, as a tool for all inclusive growth by economists, financial planners, reformist etc has made it an important sector in the Government’s planning of economic growth. The banking sector in India is there fore witnessing tremendous changes because of political, social and economic changes that are taking place domestically and internationally. The concept of banking, which was earlier restricted to accepting of deposits from public for the purpose of, has also undergone sea change. Today the banking sector is seen as a vehicle for all inclusive economic growth, social responsibility and equiv-distribution of national Continue reading
Reputation Risk in E-Banking
This is the current and prospective risk to earnings and capital arising from negative public opinion. A bank’s reputation can be damaged by Internet banking services that are poorly executed (e.g., limited availability, buggy software, poor response). Customers are less forgiving of any problems and thus there are more stringent performance expectations from the Internet channel. Hypertext links could link a bank’s site to other sites and may reflect an implicit endorsement of the other sites. Risk of damage to the bank’s reputation goes along with the other risks. It can arise, for example, from operational risk even if customers suffer no actual damage. If a hacker successfully breaks into a bank’s website and makes alterations, the bank concerned can Continue reading