Wholesale banking
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Wholesale banking refers to providing banking services to large corporate clients, multinational firms, and other financial institutions rather than individual consumers. It involves borrowing and lending large sums of money. Services offered include savings and checking accounts, loans, underwriting, market making, and mergers and acquisitions advice. Wholesale banks deal primarily with large businesses, real estate developers, mortgage brokers, and other institutional customers.
Wholesale banking
- 1. • Wholesale banking refers to doing banking business with industrial and business entities mostly corporates and trading houses, including multinationals, domestic business houses and prime public sector • Banks in India have been doing this kind of business traditionally and this segment of business is also called corporate banking or commercial banking • As opposed to retail banking which deals with ‘man in the street’, wholesale banking is the borrowing and lending of funds to other banks, large multinationals and even government agencies. As a general description it will cover various money markets • The concept of wholesale banking is to focus on corporate, i.e. Companies, firms, proprietorship concerns, Public Sector, Institutions, societies, Trusts and clubs 1 What is Wholesale Banking……?
- 2. • They are a mix of domestic and foreign currency business with international business accounting for more than half of all the assets and liabilities of wholesale banks • The size of both deposits and advances is large which were cheap to process • The nature of advances was tailor made to each financing problem with a definite period at a variable interest rate 2 Distinguishing Features of Wholesale Banking
- 3. 3 Retail & Wholesale Banking Retail Bank Wholesale bank 1. It deals with the customer directly 1. It deals with large multinationals firms, corporates, public sectors, FII and proprietorship 2. Takes funds from individual and invest it to small business 2. It takes funds from large business and invest it back to business 3. There is large volume of low transition 3. There is low volume of large transaction 4. Services like accepting deposits, maintain savings, checking account, provide loan to individual and safety deposit facility 4. Services like Saving account, Checking account, loan facility from companies and business 5. ICICI, PNB etc. 5. E.g. Bank of Baroda, HDFC, ING Vysya etc.
- 4. Wholesale banking is the provision of services by banks to organizations such as: • Mortgage Brokers • Large corporate clients • Mid-sized companies • Real estate developers and investors • International trade finance businesses • Institutional customers • Services offered to other banks or other financial institutions. 4 Operations Of Wholesale Banking
- 5. • Wholesale finance means financial services, which are conducted between financial services companies and institutions such as banks, insurers, fund managers, and stockbrokers. • Modern wholesale banks are engaged in: finance wholesaling, underwriting, market making, consultancy, mergers and acquisitions, fund management. 5
- 6. Wholesale Banking by Bank of Baroda (BOB): Under Wholesale Banking, BOB identifies the corporate customers as Large and Mid corporate • Large Corporate: Annual sales turnover of over Rs. 500 crores • Mid Corporate: Annual sales turnover between Rs 100 crores to 500 crores 6 Example of Wholesale Banking
- 7. • Under Wholesale Banking it has been proposed that Large & Mid Corporate customer of the Bank are located at the identified branches for providing them better services. By locating the Corporate at the identified branches, they would have the following advantages. • Single point contact to cater to all the banking requirements of the Corporates. • Expeditious decision making and shorter turnaround time. • Availability of product specialist who can customize existing products as per the Corporate’s specific requirements & can also develop new products. • Existence of Core Banking Solution facilities & World-class infrastructure. 7
- 8. 8 Functions of – Wholesale banking
- 9. The main functions of commercial banks are accepting deposits from the public and advancing them loans. All other functions can be subdivided into: • 1. Accepting deposits • 2. Giving loans • 3. Overdraft • 4. Discounting of Bills of Exchange • 5. Investment of Funds • 6. Agency Functions • 7. Miscellaneous Functions 9 Continued
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