Dena Bank Essay

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B) Interbank Back Office Operations

Similar to merchant back-office operations interbank deals are also settled in the back-office. The deals are first confirmed and authenticated by the confirmation documents by the counterparty. Deals are integrated in the system and once authenticated are further processed for settlement.
What is the 'Interbank Market'?
The interbank market is the financial system of trading currencies among banks and financial institutions, excluding retail investors and smaller trading parties. While some interbank trading is done by banks on behalf of large customers, most interbank trading is proprietary, meaning that it takes place on behalf of the banks' own accounts.

Why it is Important?
1) Dena Bank is an Indian
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FCNR Account can be opened only by NRI’s or by Person of Indian Origin (PIO)
2. FCNR Account can be opened only in the Foreign Currencies specified above and thus the currency fluctuation risk is eliminated
3. Regular interest is paid on the FCNR Account
4. Deposits with a maturity of more than 1 year and less than 5 years can only be opened
5. FCNR account can be opened jointly with other NRI’s as well as with Resident Indians
6. Nomination Facility is available and any NRI/PIO/Indian Resident can be made a nominee
7. Conversion to another designated currency is permitted at a cost to the account holder
8. Recurring Deposits are not accepted under this scheme
9. Loan Facility against FCNR Account can also be availed of. However, the Loans cannot be used for the purpose of re-lending, carrying on agricultural/plantation activities or for investment in Real Estate Business.

Advantage of FCNR Account:

 FCNR accounts are protected against FOREX rate risks as they are maintained in foreign currency.
 Interest earned on FCNR deposits in India is exempt from Income tax.
 IN FCNR accounts, both principal and interest are freely repatriable (Transferable from India to foreign country)

Disadvantage of FCNR
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