What is Banking Instrument and Why it is Required?

1
What is Banking Instrument and Why it
is Required?
2
(No Transcript)
3

• The banking instrument is a not changeable
  document, because it is different from all the
  other documents and this is issued by the bank to
  the beneficiary. Over the last few years, the
  liberalization programmed in India has resulted
  in dramatic structural changes in several
  industries. The recent banking instrument
  policies of the government of India and the
  Reserve Bank of India have set the stage for a
  similar situation in the banking industry.

4

• Competitive advantage in the Indian banking
  industry has been historically determined by
  factors such as size, branch or distribution
  capability, and artificial barriers to entry
  arising from the archaic credit delivery process.
• This has helped some of the older players in
  maintaining a prominent position in the industry
  despite their relative inefficiencies.
• This however is all set to change as the trend of
  new policies is to fundamentally alter the basis
  of competitive advantage in Indian banking.

5
(No Transcript)
6

• While much has been said and written about the
  merits of several individual policy measures, the
  fundamental conceptual changes that have been set
  in motion appear to be largely ignored. This is
  the promise made by bank on behalf of someone for
  specific amount of money lended. Import and
  export of the transactions is main thing to be
  handling in banking instrument. It is required
  for good business to make all the transaction on
  time always.
•  
• The agreement is required in order to make every
  document secured by the bank. Financing is not
  always easy to start with. Standby letters of
  credit help all the businesses to go through a
  reliable process in their tough situations
  therefore it is preferred by the SBLC.

7

• Banking instrument is a guarantee of payment by
  the bank and the direction of the new policies is
  to establish a level playing field between
  various components of the industry and remove
  barriers to entry and exit.
• The creation of the term money market, the
  changes in the credit delivery mechanism, the
  flexibility in the credit assessment process and
  the diversification of the sources of money
  external commercial borrowings, various local
  debt instruments collectively will change the
  factors that determine survival, growth and
  profitability in this competitive industry.

8
(No Transcript)