Offshore Bank

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PROJECT ON

OFFSHORE BANKING

BACHELOR OF COMMERCE

BANKING AND INSURANCE

SEMESTER V

ACADEMIC YEAR

2014-2015

SUBMITTED BY

SURAJ RAJBHAR

ROLL NO.43

__________________________________________________________________

VIDYAVARDHINIS

A.V. COLLEGE OF ARTS,

K.M. COLLEGE OF COMMERCE,

E.S.A. COLLEGE OF SCIENCE,

VASAI ROAD (W), DIST-THANE,MAHARASHTRA-401202


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CERTIFICATE

This is to hereby certified that Suraj Rajbhar of Third Year

Bachelor of Commerce (Banking & Insurance) (Semester V) (2014-

2015) has completed project on merger and acquisition in banking

industries under the guidance of Prof. BHAVANA CHAUHAN

LAD

____________________ ____________________

COURSE CO-ORDINATOR PRINCIPAL

____________________ ______________________

INTERNAL EXAMINER EXTERNAL EXAMINER


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I SURAJ .D. RAJBHAR the student of Third year of B.Com

(BANKING AND INSURANCE) Semester V hereby declare that I have

completed the project on offshore banking.

The information submitted is true and original to the best of my

knowledge.

Signature of student:

Name of student: SURAJ .D. RAJBHAR

Roll no:43

DECLARATION


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Milestones achieved in my journey of life never achieved alone,

and this is one expectation. As I complete enlighting journey I would

acknowledge and thanks to guide and companions who help me put my

best foot forward and made this project successful.

I would like to extend my sincere gratitude to PROF .Mrs

PRATIKSHA KHEDEKAR (CODINATOR OF BBI ) and Mrs.

BHAVANA CHAUHAN LAD who guide me into study of

OFFSHOER BANKING. It has indeed a great experience of working

under this valuable advice and guidance provide throughout the making

the project.

I would also like to thanks the principle DR. OF

VIDHAYAVARDINIS VARTAK COLLAGE.

Finally without forgetting. I would like to thanks the

library staff with the right material whenever I required.

SURAJ .D. RAJBHAR

T.Y BBI (Sem .V)

CKNOWLEDGEMENT


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An offshore banking either located in outside country ofresidency normally in tax havens. The tax havens is the place where notax charge on offshore bank account. An offshore bank is have been setup with providing an internationally competitive and hassle freeenvironment for export production. Offshore banking take shape in Indiaby EXI M policy 2002 by government of India by setting up of a

Especial Economical Zone (SEZ).

Offshore banking has obtain been associated with the undergroundeconomy and originate crime via tax evasion and money laundering. Interm of offshore banking center, the terms of the total deposit s, theglobal market is denominated by two keys jurisdiction: Switzerland

and Cayman Island.

The profile of typical offshore banking account generally depends

upon whether the account holder in an individual client or corporate

client, but both have one thing in common. Offshore banking have many

benefit.

EXECUTIVE SUMMARY


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TABLE OF CONTENTS

SR NO. PARTICULAR PAGE

NO.

1 INTRODUCATION OF OFFSHORE BANKING

2 REGULATION OF OFFSHORE BANKING

3 OFFSHORE BANK ACCOUNT : INDIAN BANKING

4 OFFSHORE BANKING CONSIDERATION

5 ADVANTAGE AND DISADVANTAGE OF OFFSHORE BANKING

6 OFFSHORE BANKING LEGISLATION

7 OFFSHOR BANKING IN REGULATION ACT AND ITS PROVISION

IN INDIA CONTENTS MADE BY RBI

8 BANKING SREVICE

9 OFFSHORE BANK ACCOUNT

10 BIG OFFSHORE BANK V/S SMALL OF SHORE BANKING

11 QUESTIONAIRE ON THE TOPIC OF OFFSHORE BANKING

12 CONCLUSION

13 BIBLIOGRAPHY


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Chapter-1

INTRODUCATION

RESEACH DESIGH

OBJECTIVE

The main objective to select the topic is to know about OFFSHORE BANNKING which is

widely used in todays modern world . Many of the large financial organization

As well as institutions who operates worldwide often hold this account for better management

functions .

Highlights:

Merits and demerits

Regulation of offshore banking

Offshore banking risk etc.

The other purpose to choose this topic is to highlight many aspects which can help to know the

offshore banking , which will certainly prove beneficial.


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HYPOTHESIS

Offshore banking is the processing at a faster rate .there are so many benefits if a person

maintain is offshore banking account .also, there are many standardized rules and regulations for

the offshore bank.

This enable them to operate in customized manner and provide quality service to its client

worldwide In future ,it might became compulsory for all the big organization to have an

offshore account .this is because of globalization. Globalization of an economy permits its

citizen to operates internationally and earn maximum gain .in such a situation it is advantage to

have satisfactory knowledge about OFFSHORE BANKING . it is good and helpful to know

about different topic related to banking sector .

Research will particularly be on the basis of the secondary data i.e internet , books, magazines

,articles in the news paper etc. A visit to the ICICI BANK is done which facilitates OFFSHORE

BANKING which forms a part of the survey so that more information about the topic can

gathered .


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Offshore bank

An offshore bank is a bank located outside the country of residence of the depositor, typically in

a low tax jurisdiction (or tax haven) that provides financial and legal advantages. These

advantages typically include:

greater privacy (see also bank secrecy, a principle born with the 1934 Swiss Banking

Act)

little or no taxation (i.e. tax havens)

easy access to deposits (at least in terms of regulation)

protection against local, political, or financial instability

Offshore banking has often been associated with the underground economy and

organized crime, via tax evasion and money laundering; however, legally, offshore banking does

not prevent assets from being subject to personal income tax on interest. Except for certainpersons who meet fairly complex requirements.September 11, 2001, there have been many calls

for more regulation on international finance, in particular concerning offshore banks, tax havens,

and clearing houses such as Clear stream, based in Luxembourg, being possible crossroads for

major illegal money flows.


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Features of offshore banking

* Offshore banks provide access to politically and economically stable jurisdictions. This may be

an advantage for those resident in areas where there is a risk of political turmoil who fear their

assets may be frozen, seized or disappear.

* Some offshore banks may operate with a lower cost base and can provide higher interest rates

than the legal rate in the home country due to lower overheads and a lack of government

intervention.

* Interest is generally paid by offshore banks without tax deducted. This is an advantage toindividuals who do not pay tax on worldwide income, or who do not pay tax until the tax return

is agreed, or who feel that they can illegally evade tax by hiding the interest income.

* Some offshore banks offer banking services that may not be available from domestic banks

such as anonymous bank accounts, higher or lower rate loans based on risk and investment

opportunities not available elsewhere.

* Offshore banking is often linked to other structures, such as offshore companies, trusts or

foundations, which may have specific tax advantages for some individuals.


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Offshore financial centers

In terms of offshore banking centres, in terms of total deposits, the global market is dominated by

two key jurisdictions: Switzerland and theCayman Islands.A letter by the District Attorney of New

York, Robert M. Morgenthau, published byThe New York Times, states that the Cayman Islands

has 1.9 trillion United States dollars on deposit in 281 banks, including 40 of the worlds top 50

banks although numerous otheroffshore jurisdictions also provide offshore banking to a greater or

lesser degree. In particular,Jersey,Guernsey,and theIsle of Man are known for their well regulated

banking infrastructure.[15]Some offshore jurisdictions have steered their financial sectors away from

offshore banking, as difficult to properly regulate and liable to give rise to financial scandal.

List of offshore financial centers

Antigua and Barbuda

Bahamas Barbados

Belize Bermuda

British Virgin Islands

Cayman Islands Channel Islands Cook Islands

Curaao Cyprus
http://en.wikipedia.org/wiki/Cayman_Islandshttp://en.wikipedia.org/wiki/The_New_York_Timeshttp://en.wikipedia.org/wiki/The_New_York_Timeshttp://en.wikipedia.org/wiki/The_New_York_Timeshttp://en.wikipedia.org/wiki/Offshore_jurisdictionshttp://en.wikipedia.org/wiki/Jerseyhttp://en.wikipedia.org/wiki/Guernseyhttp://en.wikipedia.org/wiki/Isle_of_Manhttp://en.wikipedia.org/wiki/Offshore_bank#cite_note-15http://en.wikipedia.org/wiki/Offshore_bank#cite_note-15http://en.wikipedia.org/wiki/Offshore_bank#cite_note-15http://en.wikipedia.org/wiki/Offshore_bank#cite_note-15http://en.wikipedia.org/wiki/Isle_of_Manhttp://en.wikipedia.org/wiki/Guernseyhttp://en.wikipedia.org/wiki/Jerseyhttp://en.wikipedia.org/wiki/Offshore_jurisdictionshttp://en.wikipedia.org/wiki/The_New_York_Timeshttp://en.wikipedia.org/wiki/Cayman_Islands


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Dominica

Ghana

Isle of Man

Labuan Territory, Malaysia Liechtenstein

Luxembourg

Malta Macau

Mauritius Monaco

Montserrat

Nauru

Panama

Saint Kitts and Nevis

Seychelles

Singapore

Switzerland

Turks and Caicos Islands


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Chapter -2

Regulation of offshore banks

In the 21st century, regulation of offshore banking is allegedly increasing, although critics

maintain it remains largely insufficient. The quality of the regulation is monitored by supra-

national bodies such as the International Monetary Fund(IMF). Banks are generally required to

maintain capital adequacy in accordance with international standards. They must report at least

quarterly to the regulator on the current state of the business.

Since the late 1990s, especially following September 11, 2001, there have been a number of

initiatives to increase the transparency of offshore banking, although critics such as the

Association for the Taxation of Financial Transactions for the Aid of Citizens (ATTAC) non-

governmental organization (NGO) maintain that they have been insufficient. A few examples of

these are:


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The tightening of anti-money laundering regulations in many countries including most

popular offshore banking locations means that bankers are required, by good faith, to report

suspicion of money laundering to the local police authority, regardless of banking secrecy rules.

There is more international co-operation between police authorities.

In the US the Internal Revenue Service (IRS) introduced Qualifying Intermediary

requirements, which mean that the names of the recipients of US-source investment income are

passed to the IRS.


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Chapter -3

Offshore Bank Accounts: Indian Banking

Indian Banking

We have an excellent relationship with all the established Indian Banks in London. We are

happy to introduce you to them to facilitate the establishment of your personal or business bank

accounts. The Banks between them have a host of products and services customized to suit your

financial needs. Benefit from the flexibility in operating the bank accounts or the facilities

offered to Returning Indians and the various deposit schemes available for Non Resident Indians.

All the Indian Banks in the United Kingdom are authorized and regulated by the Financial

Services Authority. They would be members of the Financial Services Compensation Scheme

established under the Financial Services and Markets Act 2000.


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Offshore Banking

If you are non-UK resident or non-UK domicile, we can assist you to open and maintain an

offshore private bank account. If you need access to confidential offshore banking, we can help

you establish an account with a reputable Offshore Banks in Switzerland, Seychelles, Isle of Man

or Dubai.

Opening an Offshore Bank Account

I n I ndia The Advantages Of Opening Bank Accounts Off shore Are:

Strong Privacy

Less Restrictive Legal Regulation

Low Or No Taxation (I.E. Tax Havens)

Easy Access To Deposits (At Least In Terms Of Regulation)

Protection Against Local Political Or Financial Instability


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Scope of offshore banking

Offshore banking constitutes a sizable portion of the international financial system. Experts

believe that as much as half the world's capital flows through offshore centers. Tax havens have

1.2% of the world's population and hold 26% of the world's wealth, including 31% of the net

profits of United States multinationals. An estimated 13-20 trillion is hoarded away in offshore

accounts.

Some $3 trillion is in deposits in tax haven banks and the rest is in securities held by

international business companies(IBCs) and trusts. Among offshore banks, Swiss banks hold an

estimated 35% of the world's private and institutional funds (or 3 trillion Swiss francs), and the

Cayman Islands (1.9 trillion US dollars in deposits) are the fifth largest banking centre globally

in terms of deposits. However, recent data by the Swiss National Bank show that the assets held

by foreign persons in Swiss bank accounts declined by 28.1% between January 2008 and

November 2009.

Scale of potential tax revenue

Assuming even just the lower estimate of 13 trillion on deposit in offshore accounts, if these

assets earned an average 3% a year in income for their owners taxable at 30%, then the offshore

funds would generate 121 billion in tax revenues. However, keep in mind, these statistics

assume that ZERO tax is paid (i.e. NO ONE pays any tax on their holdings), and that 100% of

those deposits is notionally liable to tax which is not being paid, each of which seems a highly

unlikely scenario.


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Ownership

According to Merrill Lynch and Capgemini's World Wealth Report for 2000, one third of the

wealth of the world's high net-worth individualsnearly $6 trillion out of $17.5 trillionmay

now be held offshore. A large portion, 6.3tn, of offshore assets, is owned by only a tiny sliver,

0.001% (around 92,000 super wealthy individuals) of the world's population. In simple terms,

this reflects the inconvenience associated with establishing these accounts, not that these

accounts are only for the wealthy. Most all individuals can take advantage of these accounts.

Money laundering

The IMF has said that between $600 billion and $1.5 trillion of illicit money is laundered

annually, equal to 2% to 5% of global economic output. Today, offshore is where most of the

world's drug money is allegedly laundered, estimated at up to $500 billion a year, more than the

total income of the world's poorest 20%. Add the proceeds of tax evasion and the figure

skyrockets to $1 trillion. Another few hundred billion come from fraud and corruption. "These

offshore centers awash in money are the hub of a colossal, underground network of crime, fraud,

and corruption" commented Lucy Komisar quoting these statist

Offshore customers financial protection

If an offshore jurisdiction does not have effective banking legislation and banking supervision,

the chances that any bank in this particular jurisdiction can go bankrupt and offshore customers

can loose their money are bigger.

Like with due diligence requirements, there are internationally accepted standards on how the

financial supervision of banks should be undertaken. The most popular international document to

refer is Basel Accords, or banking supervision accords Basel I and Basel II issued by the Basel

Committee on Banking Supervision - institution created by the central bank Governors of G10


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countries. In practice, these supervision standards attempt to setup rigorous risk and capital

management requirements in order to ensure that a bank holds capital reserves appropriate to the

risk it exposes itself to through lending and investment practices.

Regarding offshore banking supervision, it is important to learn that the guaranteed or insured

deposit amount the authorities of particular jurisdiction will return (like FDIC protection in the

USA) in case of bank's default as well as to know how strong this offshore jurisdiction is to

fulfill the liabilities. When deciding on financial protection issues, the most important is

selecting the right offshore jurisdiction in accordance with these criteria rather than selecting one

particular bank within an offshore jurisdiction. As an example are Switzerland again.

There's no government deposit insurance in Switzerland (except for Swiss postal where all

deposits are fully guaranteed by the Swiss government). But your deposits are probably safer in

any Swiss bank than in most other offshore banks in the world because:

1) Swiss banks normally do not go bankrupt. They have some of the strongest balance sheets

worldwide. Swiss banks are regulated by the Swiss Federal Banking commission, which is the

federal watchdog enforcing very strict rules. Swiss banks can encounter difficulties,

approximately once in a decade, with small savings and loans that loaned too much money on

too little collateral and, perhaps, this is the only risk. It is also important that such banks are

usually bought out by a larger bank;

2) Swiss banks have a private deposits insurance. They have signed an agreement, according to

which will compensate depositors up to Swiss Franks 30,000 of their deposits in a bank if the

bank goes bankrupt; and, in this case, each bank would pay a share of the total compensation

which is counted based on proportion to their size.


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Chapter-5

Offshore Banking Considerations

The best offshore bank account for you will depend very much on your personal

circumstances and account requirements - for example whether you are looking for a

bank account, tax solution or an asset protection plan. If you need advice make sure you

get independent assistance and always do full due diligence before moving your assets to

an offshore bank's account.

Any banks you consider should be located in a secure offshore jurisdiction where they are

subject to the regulation, supervision and licensing of an independent statutory body. This

is necessary to ensure the security of funds placed in an account;

You should be sure that the particular offshore bank you are interested in has a reputable

parent company, good reputation and history.

There is much difference in account costs and transaction fees, but many people do notlook at fee structures when opening bank account. This information always remains

available to the customers.

Offshore bank accounts usually come with extra account options and features such as the

ability to conduct transactions in more than one currency, etc., and they are often more

expensive than current accounts in local banks. If you do not need so many extra features,

you can obtain the cheaper variant of the offshore bank account excluding extra features

you do not require.


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Chapter-6

Advantages of offshore banking

Offshore banks can sometimes provide access to politically and economically stable

jurisdictions. This will be an advantage for residents in areas where there is risk of political

turmoil, who fear their assets may be frozen, seized or disappear .However it is often argued that

developed countries with regulated banking systems offer the same advantages in terms of

stability.

Some offshore banks may operate with a lower cost base and can provide higher interest

rates than the legal rate in the home country due to lower overheads and a lack of government

intervention. Advocates of offshore banking often characterize government regulation as a form

of tax on domestic banks, reducing interest rates on deposits. However this is scarcely true now;

most offshore countries offer very similar interest rates than those that are offered back home.


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Offshore finance is one of the few industries, along with tourism, in which

geographically remote island nations can competitively engage. It can help developing countries

source investment and create growth in their economies, and can help redistribute world finance

from the developed to the developing world. But equally, well resourced and developed

countries such as New Zealand offer a safe and well administered background for these financial

services.

Interest is generally paid by offshore banks without tax being deducted. This is an

advantage to individuals who do not pay tax on worldwide income, or who do not pay tax until

the tax return is agreed, or who feel that they can illegally evade tax by hiding the interest

income.

Some offshore banks offer banking services that may not be available from domestic

banks such as anonymous bank accounts, higher or lower rate loans based on risk and investment

opportunities not available elsewhere.

Offshore banking is often linked to other structures, such as offshore companies, trusts or

foundations, which may have specific tax advantages for some individuals.

Many advocates of offshore banking also assert that the creation of tax and banking

competition is an advantage of the industry, arguing with Charles Tiebout that tax competition

allows people to choose an appropriate balance of services and taxes.


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Disadvantages of offshore banking

Offshore bank accounts are sometimes less financially secure. In a banking crisis which

swept the world in 2008, some savers lost funds that were not insured by the country in which

they were deposited. Those who had deposited with the same banks onshore received all of their

money back. In 2009 The Isle of Man authorities were keen to point out that 90% of the

claimants were paid, although this only referred to the number of people who had received

money from their depositor compensation scheme and not the amount of money refunded. In

reality, only 40% of depositor funds had been repaid: 24.8% in September 2009 and 15.2% inDecember 2009. Both offshore and onshore banking centres often have depositor compensation

schemes. For example: The Isle of Man compensation scheme guarantees 50,000 of net

deposits per individual depositor, or 20,000 for most other categories of depositor. Potential

depositors should be aware that any deposits over the guaranteed amount are at risk. However,

only offshore centres such as the Isle of Man have refused to compensate depositors 100% of

their funds following Bank collapses. Onshore depositors have been refunded in full, regardless

of what the compensation limit of that country has stated. Thus, banking offshore is historically

riskier than banking onshore.


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Offshore banking has been associated in the past with the underground economy and

organized crime, through money laundering. Following September 11, 2001, offshore banks and

tax havens, along with clearing houses, have been accused of helping various organized crime

gangs, terrorist groups, and other state or non-state actors. However, offshore banking is a

legitimate financial exercise undertaken by many expatriate and international workers.

Offshore jurisdictions are often remote, and therefore costly to visit, so physical access

and access to information can be difficult. This problem has been alleviated to a considerable

extent with the advent and realization of online banking as a practical system.

Offshore private banking is usually more accessible to those on higher incomes, because

of the costs of establishing and maintaining offshore accounts. However, simple savings

accounts can be opened by anyone and maintained with scale fees equivalent to their onshore

counterparts. The tax burden in developed countries thus falls disproportionately on middle-

income groups. Historically, tax cuts have tended to result in a higher proportion of the tax take

being paid by high-income groups, as previously sheltered income is brought back into the

mainstream economy.


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Chapter-7

Offshore banking legislation

There are many things that are very similar notwithstanding in which offshore jurisdiction the bank

operates, and comparing this part of legislation would be quite senseless. At first, this regards

internationally standardized anti-money laundering measures such as:

Due diligence and record-keeping;

Reporting of suspicious transactions.

However, each country has one or several basic laws to carry out the regulation of offshore

banking industry that describe very important principles regarding:


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Offshore banking privacy

Protection of bank customers.

This part of banking legislation is more individual for each jurisdiction and, being directed by a

professional specializing in the legislation of the country of residence and that of some particular

offshore jurisdiction, a potential customer of the offshore bank has to compare the legislations

and choose the jurisdiction that by means of its legislation protects his interests more effectively.Here, for general overview with this vast issue, we will describe some interesting points of one

or another jurisdiction.


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Chapter-8

Offshore banking in regulation act and provisions in India made by

RBI

In exercise of the powers conferred by Section 6, Section 7, Section 8, Section 9 and

Section 47 of the Foreign Exchange Management Act, 1999 (Act 42 of 1999) and all other

powers enabling it in this behalf, the Reserve Bank of India.

PART 1

3. Notwithstanding the status, as an authorized dealer, of the bank setting up the Offshore

Banking Unit, and save as otherwise directed by the Reserve Bank, the Offshore Banking Unit

shall not be regarded as an authorized dealer for the purpose of the Act, rules or regulations made

there under.

4. Save as otherwise provided in these or any other Regulations or directed by the Reserve Bank,

nothing contained in any other Regulations shall apply to an Offshore Banking Unit.

5. Save as otherwise provided in these Regulations or with the permission of the Reserve Bank,

an Offshore Banking Unit shall not conduct any activity or undertake any transaction with

residents in India.


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PART II

Transactions which may be undertaken by an Offshore Banking Unit

6. An Offshore Banking Unit may undertake foreign exchange transactions with any authorized

dealer in India only on principal-to-principal basis.

7. An Offshore Banking Unit may undertake transaction in foreign change with a unit located in

Special Economic Zone to the extent the latter is eligible to enter into or undertake such

transaction, within the ceilings and subject to the conditions specified in the Regulations

governing such transaction.

8. Engagement of an Offshore Banking Unit in any of the forms of business specified in sub-

section (1) of section 6 of the Banking Regulation Act, 1949 shall be only in foreign exchange

and shall be subject to these Regulations and the conditions of license issued under the said Act.


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Chapter -9

Banking services

It is possible to obtain the full spectrum of financial services from offshore banks, including

Corporate administration:

Management in business and organizations is the function that coordinates the efforts of

people to accomplish goals and objectives using available resources efficiently and effectively.

Management comprises planning, organizing, staffing, leading or directing, and controlling an

organization or initiative to accomplish a goal. Resourcing encompasses the deployment and

manipulation of human resources, financial resources, technological resources, and natural resources.

Management is also an academic discipline, a social science whose object of study is the social

organization


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Credit:

Credit the trust which allows one party to provide resources to another party where that

second party does not reimburse the first party immediately (thereby generating a debt), but

instead arranges either to repay or return those resources (or other materials of equal value) at a

later date. The resources provided may be financial (e.g. granting a loan), or they may consist of

goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment.

Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower.

Deposit taking:

A deposit account is a savings account, current account, or other type of bank account, at a

banking institution that allows money to be deposited and withdrawn by the account holder.

These transactions are recorded on the bank's books, and the resulting balance is recorded as a

liability for the bank and represents the amount owed by the bank to the customer. Some banks

may charge a fee for this service, while others may pay the customer interest on the funds

deposited.

.

Foreign exchange:

The foreign exchange market (forex, FX, or currency market) is a global decentralized market

for the trading of currencies. The main participants in this market are the larger international banks.

Financial centers around the world function as anchors of trading between a wide range of multiple

types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange

market determines the relative values of different currencies


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Investment management and investment custody:

Investment management is the professional asset management of various securities (shares,

bonds and other securities) and other assets (e.g., real estate) in order to meet specified investment

goals for the benefit of the investors. Investors may be institutions (insurance companies, pension

funds, corporations, charities, educational establishments etc.) or private investors (both directly via

investment contracts and more commonly via collective investment schemes e.g. mutual funds or

exchange-traded funds).The term asset management is often used to refer to the investment

management of collective investments, while the more generic fund management may refer to all forms

of institutional investment as well as investment management for private investors. Investment

managers who specialize in advisory or discretionary management on behalf of (normally wealthy)

private investors may often refer to their services as money management or portfolio management

often within the context of so-called "private banking".

Letters of credit and trade finance:

A letter of credit is a document issued by a financial institution, or a similar party,

assuring payment to a seller of goods or services provided certain documents have been

presented to the bank. "Letters of Credit" are documents that prove the seller has performed the

duties specified by an underlying contract (e.g., the sale of goods contract) and the

goods/services have been supplied as agreed. In return for these documents, the beneficiary

receives payment from the financial institution that issued the letter. The letter of credit serves as

a guarantee to the seller that it will be paid regardless of whether the buyer ultimately fails to

pay. In this way, the risk that the buyer will fail to pay is transferred from the seller to the letter'sissuer.


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Trustee services:

Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, can refer

to any person who holds property, authority, or a position of trust or responsibility for the benefit of

another. Although the strictest sense of the term is the holder of property on behalf of a beneficiary, the

more expansive sense encompasses persons who serve, for example, on the Board of Trustees for an

institution that operates for the benefit of the general public. Also a person in the local government.

Wire- and electronic funds transfers:

Wire transfer or credit transfer is a method of electronic funds transfer from one person or

institution (entity) to another. A wire transfer can be made from one bank account to another bank

account or through a transfer of cash at a cash office.

Different wire transfer systems and operators provide a variety of options relative to the immediacy

and finality of settlement and the cost, value, and volume of transactions. Central bank wire transfer

systems, such as the Federal Reserve's Fed Wire system in the United States are more likely to be realtime gross settlement (RTGS) systems. RTGS systems provide the quickest availability of funds because

they provide immediate "real-time" and final "irrevocable" settlement by posting the gross (complete)

entry against electronic accounts of the wire transfer system operator.

Not every bank provides each service. Banks tend to polarize between retail services and private

banking services. Retail services tend to be low cost and undifferentiated, whereas private

banking services tend to bring a personalized suite of services to the client.


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Chapter -10

Offshore Bank Account

Opening bank account offshore can provide privacy and asset protection for you and your

business. To start offshore banking, you may need more information about opening an offshore

bank account. There is no sense in opening a bank account offshore if it is of no use for you, so

you need to understand some general advantages of banking offshore.

With the use of an offshore bank account and depending on account holder's individual personal

circumstances, it is possible to reduce tax liability, increase wealth potential and maximise

privacy. Other benefits are flexibility, ease of access; asset protection, estate planning, better

interest rates and the chance to exploit active business interests on the global scale.

The most important thing is that anyone is free to open an offshore bank account, and it is not

that complicated procedure. However, each individual's circumstances are unique, and a person

should seek direct professional advice before being involved into the offshore world. On this site,

we do not provide any advice, but give the general information.


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The main steps/considerations for getting the most appropriate offshore bank account:

selecting offshore Jurisdiction;

selecting offshore Introducer;

Selecting offshore Bank;

selecting offshore Bank Account Type;

Offshore Bank Account opening

Offshore Bank Accounts: Classification

Offshore bank accounts, exactly like onshore, may be classified by different parameters. The first

and the most clear classification principle is personal bank account v/s corporate bank

account. The second principle is by the way how they are utilized, for example, offshoremerchant account, offshore investment account, offshore savings account or offshore

business account. Further we will consider the most popular forms of offshore bank accounts:

Personal offshore bank account- as the name shows this is bank account opened on a physical

person. Normally the client himself is the account holder and beneficial owner of money on the

account. Notwithstanding it is governed by the same banking secrecy laws as other types of

offshore bank accounts, it is the least protected asset protection vehicle. To overcome this

privacy issue without introducing more advanced offshore protection schemes, in some offshore

jurisdictions it is available to open the numbered bank account where bank account title differs

from person's name. Normally it is some combination of numbers and letters, not similar to any

persons name.


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Corporate offshore bank accountnormally is opened on offshore company incorporated in the

same or, more often, in the other offshore jurisdiction. To open corporate bank account, you need

to choose carefully the jurisdiction for opening offshore bank account, as well as the jurisdiction

for offshore company incorporation. Also, it would be important to consider offshore legislation

of both countries and see how it answers the purposes pursued by the establishing of offshore

bank account. The title of such corporate bank account is the name of the company. Normally,

the company name differs from beneficial owner's name thus protecting one's privacy when

sending in and out the money.

Numbered offshore bank account - similar to the way how private offshore bank account is

opened on private person's name, but for numbered offshore account a number or some neutral

word is used instead of person's name in the account title. Numbered accounts are not easy to

open, and there are very few banks providing this kind of service.

Swiss banks are the most known place where to open genuine numbered account. To open

numbered offshore bank account, personal visit to the bank is the must. Customer should

physically go to the bank in Switzerland to go through very serious due diligence procedures,

and be ready to place substantial initial deposit. Also the annual or monthly maintenance costs

are very high. And remember, the numbered offshore bank account is not anonymous since the

bank definitely knows who is the owner of the money on the account.

Other popular types of offshore bank accounts are offshore merchant account providing the

ability to accept credit or debit card payments from customers; offshore savings account,

similar to onshore savings accounts; offshore investment account that provides offshore

investors with wide range of offshore investment opportunities less limited both in terms of risks

and earnings than those for offshore savings account.


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Offshore Merchant Account

An offshore merchant account is an account providing the ability to accept credit or debit card payments

from customers for goods and services. An offshore merchant account establishes a relationship between

credit card processor, the bank and business willing to accept the credit card payments. Unlike with

regular merchant account, funds generated from sales and credit card payments are deposited with

offshore bank.

Offshore merchant bank accounts are very popular in various industries starting from mega online

gambling projects and adult industry sites to small businessmen selling some software or unique products

or ideas to everybody in the world through the Internet. As a rule, offshore merchant accounts are

connected with Internet business. When opening offshore merchant account, the offshore bank assigns

unique merchant ID to business. Such offshore merchant account is associated with offshore business

current or checking account.


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Offshore savings account

Offshore savings account is similar to onshore savings accounts. The main difference is that interest is

generally paid by offshore banks without tax deducted. From one side, it is an advantage to individuals

who do not pay tax on worldwide income, also to expatriates in particular cases, however every client of

offshore bank should get tax advice before receiving benefits from such arrangements. The most recent

example is the European Union Savings Tax Directive where EU countries agreed to exchange the

information about any customers who earn savings income in one EU State being the residents of another

EU state, as such earnings is subject to withholding tax. Moreover, there are offshore bankingjurisdictions that have agreed to exchange information with EU - for example Andorra, Channel Islands,

Isle of Man, Liechtenstein, Monaco, San Marino, Switzerland, Turks and Caicos Islands. To resume all

above said - offshore savings account is a wise way how to reduce tax burden, but it should be used only

if it is allowed by one's country. So, many countries not only allow to open offshore savings account, but

specially in their laws indicate the sum on which the residents are entitled to have an onshore tax free

savings entitlement in each tax year. This money can be placed in a qualifying investment investment

vehicle, for example, offshore savings account.

Taxation is not the only benefit of offshore savings account, some offshore banks operate with lower

costs and can provide higher interest rates than the rates of onshore banks, due to reduced expenses and

less government intervention.


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Offshore investment account

Offshore investment account provides offshore investor with wide range of

offshore investment products to choose from. Unlike offshore savings account, offshore investment

account provides less limited opportunities both in terms of risks and earnings. There are thousands of

offshore investment funds, offshore bonds and other offshore investment vehicles, and most offshore

banks and most offshore banks provide its customers with wide access to them. These offshore

investment instruments are flexible enough to fit around today's changing lifestyles. However with

offshore investment account the customer should be prepared for higher initial investments and less

liquidity of funds placed to such account. Offshore bank will not allow this account to be used as offshore

business account. Too frequent inward and outward transactions may be penalized by additional fees and

penalties. The main difference between offshore and onshore investment accounts is taxation as well as

the fact that offshore banks normally provide wider choice of the investment products. Investor protection

laws are in place in every offshore jurisdiction, and some of them are even more strict than in many

countries not specializing in offshore investment products.

Most people who take advantage of offshore investment & savings accounts are expatriates or those who

live in a tax free country, or those who lead international lifestyle, living, working, and traveling through

multiple locations. For them, saving and investing offshore makes a lot of sense and brings certain

benefits.


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Offshore investment account provides offshore investor with wide range of offshore investment products

to choose from. Unlike offshore savings account, offshore investment account provides less limited

opportunities both in terms of risks and earnings. There are thousands of offshore investment funds,

offshore bonds and other offshore investment vehicles, and most offshore banks and most offshore banks

provide its customers with wide access to them. These offshore investment instruments are flexible

enough to fit around today's changing lifestyles. However with offshore investment account the customer

should be prepared for higher initial investments and less liquidity of funds placed to such account.

Offshore bank will not allow this account to be used as offshore business account. Too frequent inward

and outward transactions may be penalized by additional fees and penalties. The main difference between

offshore and onshore investment accounts is taxation as well as the fact that offshore banks normally

provide wider choice of the investment products. Investor protection laws are in place in every offshore

jurisdiction, and some of them are even more strict than in many countries not specializing in offshore

investment products

Most people who take advantage of offshore investment & savings accounts are expatriates or those who

live in a tax free country, or those who lead international lifestyle, living, working, and traveling through

multiple locations. For them, saving and investing offshore makes a lot of sense and brings certain

benefits.


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Chapter -11

Big offshore bank v/s small offshore bank

This is another criterion that could be used when selecting the offshore bank.

Bigger offshore banksusually have wider network of branches in different countries and, as a

rule, this: can help speed up some financial services enlarges choice of locations where you can

approach the bank and get offshore banking services without intermediaries could give more

confidence in financial stability can, by means of economy of scale and access to more markets

and financial instruments, reduce some expenses and offer better rates makes it is harder for

overseas authorities to have pressure on large financial institutions while


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Smaller offshore banks can:

offer more individual service even if you do not have a multi-million-worth offshore business

react quicker on customers' requests for new or improved services as well as changes in the

offshore banking market sometimes smaller banks offer more banking privacy. Both bigger and

smaller offshore banks have their weaknesses that usually accord with the strong points of the

banks of the opposite size.

To conclude, if a small offshore bank's location is convenient for a customer, if the small

offshore bank is specialising in financial services needed to the customer, and if this bank has

good management and is supported by favorable offshore jurisdictions legislation, in many cases

it is better to bank with the small offshore bank. However, everything depends on customers'

needs that are different as well as on what each offshore bank offers.


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1.

What are the main features of offshore debit card?

An offshore debit card provides a customer with an option of accessing funds held in the

offshore account in mostly the same way as an onshore debit card would. This card does not

provide any credit facilities, but if you have money on your account, you can take it through

appropriate ATM or purchase goods at shops. The most popular offshore debit cards are Maestro

and VISA Electron. It is important to know that some offshore banks require some security

deposit prior issuing debit card. This security deposit is much smaller than the security deposit

needed for the offshore credit card.


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2.What is a difference between secured and unsecured offshore

credit card?

Normally, all offshore credit cards should be secured as far as the offshore bank does not have

access to credit history of all customers located in any country in the world. Credit reports is a

normal method of issuing credit card in your onshore jurisdiction, but it can be very rarely done

in the offshore bank. As the saying goes are You done it get what you done it pay foran normal

practice in the offshore bank is that a customer receives business, gold or even platinum credit

card only upon placing a substantial security deposit at the bank.

3. If I still have to pay taxes why should I bank offshore?

There are many other reasons to bank offshore, apart from minimizing your tax liability. Theyinclude asset protection, estate planning, confidentiality, higher returns, and some others. All

personal data is subject to modern data protection legislation, and there are civil and criminal

penalties for breach of confidentiality and unauthorized disclosure.


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QUESTIONAIRE ON THE TOPIC OF OFFSHORE BANKING

1. Do You Provide Offshore Banking.

Ans : Yes . We Provide Offshore Banking

2. Does Every Branch Of Icici Bank Provide Offshore Banking Servicers

Ans ;; No , Icici Branches Which Are Registered Under The Class A And Class B

Categories Of The Bank Provide Offshore Banking Facility .

3. From How Many Branches In The World Do You Carry On Offshore Banking Business

Ans : They Are United Kingdom , United State Of America, Dubai And Gulf Countries .

4. What Service Do You Provide .

Ans: Forex Service And Cash Remittances And Also Other Services Elated To Offshore

Banking .

5. .What Are The Types Of Client Who Open The This Account .

Ans;It Is Mostly The High Worth Individual And Non Resident Indian (Nri).

6. Can Common People Open Offshore Bank Account .

Ans : Yes , But Normally They Dont Because Of The High Amount Involved In

Starting An Offshore Account.

7. Is The Lack Of Awareness One Of The Reason Why People Are Not Going For

Offshore Account.

Ans: Yes , It Can Be Said That Common People Are Not Well Educated About Offshore

Banking .

8. Is It Convenient To Use Offshore Account

Ans: Yes .It Is Very Convenient .

9. What Amount Is Transacted Ina Week.

Ans : On An Average Rs. 2 Lakhs -3 Lakhs Is The Amount Transacted In A Week In

Our Branch.


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CHAPTER-12

An offshore banking is the part of international financial systemas half of the capital flow through the offshore banking. Peoplegenerally operates their offshore account during vacation as they spendtheir holiday an abroad .so they would required foreign currency , whichoffshore bank provide .Also a lots of advantages is provided apart fromthose like commercial bank privacy .

However it influences crime as full confidentiality about theaccount is maintained. Any person can full filling certain criteria canopen an offshore account.

From the project I would like to infer that a wide spectrum ofoffshore banking is known .offshore bank make avail of tax exemptionand higher interest in foreign currency .this helps to earn foreigncurrency .it became mandatory for businessman and the organizationthat have global business

Thus study of offshore banking will help to acquire moreknowledge and certainly have a positive effect in future.

CONCLUSION


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Documents

Offshore Bank