Loan Syndication - Introduction 

is a loan extended by a group banks to a corporate borrower

Collaboration among lenders to share in loan which is too big to handle for any one of them 

called participated loans or syndicated loans

Roles in syndicate loans y Lead managers Participating bank Underwriting bank Facility Manager / Agent y y y .

Loan syndication .Process Phase 1: Pre Mandate phase Phase 2: Placing the loan Phase 3: Post closure phase .

.Benefits of loan syndication Benefits to borrowers: y Deals with single bank y Quicker and simpler Benefits to Lead bank: y Enhancement of bank·s relationship with the client Benefits to participating banks: y Access to lending opportunities with low opportuni cost y Participating banks have equal treatment in case borrow runs into difficulty.

prompting other banks to improve in their services y y y .Advantages of syndicated loans y Sharing of credit risk between various financial institutions Facilitates huge investments Borrowers to access from a diverse group of financial institutions Syndicated loan facilities can increase competition for the business.

y y . which takes additional time.Disadvantages of Loan Syndication y Need for each bank to understand the business activities Negotiating documents with 4 to 5 banks is a time consuming process Inter creditor agreement required between banks.

Applications Export financing y Mergers & Acquisitions y Project Finance y Capital goods financing y .Loan syndication .

Loan amount: Rs 42 Billion Efforts to increase import of crude oil.Examples of loan syndication y 2005: Reliance port & terminal raised loan for expanding its port facilities. y y y . 20 banks syndicated the loan.

.ANZ. DBS Bank of Tokyo Mitsubishi UFJ Sumitomo Mitsui Banking Corp.Loan Syndication of Bharti-Zain Deal BhartiStandard Chartered Barclays S.B.I.BNP Bank of America Merrill Lynch Credit Agricole CIB HSBC.


Introduction A bank located outside the country of residence of the depositor y Foreign branches of banks located out of India y Overseas banking units (OBU) y The OBUs would operate & maintain balance sheet only in foreign currency y .Off shore Banking .

Off shore Banking .Introduction Provides financial & legal advantages y Low taxes y Rates of interest linked to LIBOR of corresponding y Operations of OBUs in rupees would be minimum y Such operations in domestic areas would be through Authorized Dealers (subject to exchange regulations) y .

Off shore banking .Advantages Greater privacy y Low or no taxation y Easy access to deposits y Protection against local political or financial instability y OBUs will be exempted from CRR & SLR y .

notice money market.Off shore banking ² Disadvantages y Less financially secured Underground economy & organized crimes through money laundering These OBUs would be prohibited to participate in domestic call. y y .

Offshore banking ² Services offered Deposit taking y Credit y Wire and electronic fund transfer y LCs and trade finance y Investment management y Multi currency deposits accepted y Multi currency borrowing options y .

Regulations y y y y y Regulations monitored by IMF Tightened anti-money laundering regulations Internal revenue services USA Patriot act Control centers .Offshore Banking .

Facts y As much as half the world's capital flows through offshore centers Tax havens have 1.2% of the world's population y y Tax heavens hold 26% of the world's wealth. including 31% of the net profits of United States· multinationals .

B. New York. London. Has branches in all the major trading centers of the world.S. Frankfurt. 131 offshore branches across 32 countries. y . Shanghai etc.I Offshore Banking y y y Largest Offshore bank of India. Los Angeles. Singapore. Tokyo.

I OBU·s y Raise funds in convertible foreign currency as deposits and borrowings from Non Residents sources. y y .FUNCTIONS OF S. Open foreign currency accounts abroad as well as with other OBUs in India. Transact in foreign exchange with residents and banks in India according to FEMA.B. 1999.

B. Provide customised loan and liability products for the benefit of clients.I OBU·s y Maintain Special Rupee account with an Authorised Dealer in India out of the convertible foreign exchange resources for meeting local expenses.FUNCTIONS OF S. y y . Buy Rupees from an Authorised Dealer in India to fund the Special Rupee Account.


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