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What is the difference between Offshore Banking and Wholesale Banking?

Oct 21, 2015 13:02 IST

    Offshore Banking is defines as the banking associated with the banks located outside the country or we can say abroad. These types of banks offer greater privacy, no taxation, easy access to deposits and protection against financial stability.

    It is generally associated with high degree of financial sophistication. But this is not true, any individual can get their account opened in Offshore Banks with normal formalities quite similar to saving bank account.

    Advantages of offshore Banking

    • It offers admittance to politically and economically stable jurisdictions. This will be an advantage for residents in the areas where there is utmost risk of political disorder who fear their assets may be frozen, seized or disappear
    • Offshore banks can functions with a lower cost base and provide higher interest rates than the legal rate in the home country due to lower overheads and a lack of government intervention.
    • Offshore Banking always help in developing countries source investment and generate growth in their economies, and can help reallocate world finance from the developed to the developing world.
    • Some services offered by Offshore Banks are not available in domestic banks such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities not available elsewhere.

    Wholesale Banking

    Wholesale Banking is defined as the stipulation of services by the banks to various organization including Corporates, Mortgage Brokers, Real Estate Developers, International Trade Finance Businesses, Government agencies and so on.

    Also, wholesale banking provides the services between merchant banks and financial institutions. It provides services to large corporations

    Wholesale Finance means the financial services conducted between financial services companies and institutions such as fund managers, banks, insurers, and stockbrokers

    Functions of Wholesale Banks

    Generally, Wholesale banks are engaged in performing various activities that are as follows:

    • Finance wholesaling
    • Underwriting
    • Market making
    • Consultancy
    • Mergers and acquisitions
    • Fund management

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