OFFSHORE BANKING SEVICES

Banks are organizations that provide banking services for profit. Banks safeguard money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and cashier’s checks. Banks primary role is accepting deposits and lending funds from these deposits. Some banks issue banknotes as legal tender. Traditionally, a bank generates profits from transaction fees on financial services and from the interest it charges for lending. Many banks offer ancillary financial services to make additional profit, for example, selling insurance products, investment products or stock broking.

In most jurisdictions the banking business is regulated and banks require permission to trade. Authorization to trade is granted by country’s regulatory authorities and it provides rights to conduct the most fundamental banking services, such as accepting deposits and making loans. There are also financial institutions that provide banking services without meeting the legal definition of a bank - banking institutions.

There are several types of banks, which differ in the number of services they provide and the clientele they serve. Although some of the differences between these types of banks have lessened as they begin to expand the range of products and services they offer, there are still key distinguishing traits.

Commercial banks, which dominate the banking industry, offer a full range of services for individuals, businesses, and governments. These banks come in a wide range of sizes, from large global banks to regional and community banks. Global banks are involved in international lending and foreign currency trading, in addition to the more typical banking services. Regional banks have numerous branches and automated teller machine (ATM) locations throughout a multi-state area that provide banking services to individuals. Community banks are based locally and offer more personal attention, which many individuals and small businesses prefer. In recent years, online banks - which provide all services entirely over the Internet - have entered the market, with some success. However, many traditional banks have also expanded to offer online banking, and some formerly Internet-only banks are opting to open branches.

Savings banks and building societies, sometimes called thrift institutions, are the second largest group of depository institutions. They were first established as community-based institutions to finance mortgages for people to buy homes and still cater mostly to the savings and lending needs of individuals.

Credit unions are another kind of depository institution. Most credit unions are formed by people with a common bond, such as those who work for the same company or belong to the same labor union or church. Members pool their savings and, when they need money, they may borrow from the credit union, often at a lower interest rate than that demanded by other financial institutions.

Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their own accounts, make markets, and advise corporations on capital markets activities such as mergers and acquisitions.

Merchant banks were traditionally banks which engaged in trade financing. The modern definition, however, refers to banks which provide capital to firms in the form of shares rather than loans. Unlike Venture capital firms, they tend not to invest in new companies.

Private banks manage the assets of high net worth individuals.

Offshore banks are banks located in jurisdictions with low or zero taxation. Many offshore banks are essentially private banks.

Islamic banks adhere to the concepts of Islamic law. Islamic banking revolves around several well established concepts which are based on Islamic canons. Since the concept of interest is forbidden in Islam, all banking activities must avoid interest. Instead of interest, the bank earns profit (mark-up) and fees on financing facilities that it extends to the customers. Also, deposit makers earn a share of the bank’s profit as opposed to a predetermined interest.

Federal Reserve or Central banks are government agencies that perform many financial services for the governments. Their chief responsibilities are to regulate the banking industry and to help implement nation’s monetary policy, so the economy can run more efficiently by controlling the Nation’s money supply - the total quantity of money in the country, including cash and bank deposits. For example, during slower periods of economic activity, the Central Bank may purchase government securities from commercial banks, giving them more money to lend, thus expanding the economy. Central banks also perform a variety of services for other banks. For example, they may make emergency loans to banks that are short of cash, and clear checks that are drawn and paid out by different banks.

Interest on loans is the principal source of revenue for most banks. The money to lend comes primarily from deposits in checking and savings accounts, certificates of deposit, money market accounts, and other deposit accounts that consumers and businesses set up with the bank. These deposits earn interest for the owner, and accounts that offer checking provide an easy method for making payments without using cash. Deposits in many banks are insured by Government Insurance Agencies, which ensure that depositors will get their money back, up to a stated limit, if a bank should fail.

Technology is having a major impact on the banking industry. For example, many routine bank services that once required a teller, such as making a withdrawal or deposit, are now available through ATMs that allow people to access their accounts 24 hours a day. Also, direct deposit allows companies and governments to electronically transfer payments into various accounts. Further, debit cards, which may also be used as ATM cards, instantaneously deduct money from an account when the card is swiped across a machine at a store’s cash register. Electronic banking by phone or computer allows customers to pay bills and transfer money from one account to another. Through these channels, bank customers can also access information such as account balances and statement history. Some banks have begun offering online account aggregation, which makes available in one place detailed and up-to date information on a customer’s accounts held at various institutions.

Many banks now offer their customers financial planning and asset management services, as well as brokerage and insurance services, often through a subsidiary or third party. Others are beginning to provide investment banking services that help companies and governments raise money through the issuance of stocks and bonds, also usually through a subsidiary. As banks respond to deregulation and as competition in this sector grows, the nature of the banking industry will continue to undergo significant change.

Although the type of services offered by  banks depend upon the type of bank and local legislation, services provided usually include: