what is traditional foreign banking?

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Expert Solution

Traditional foreign banking involves transactions with non-residents in domestic currency to allow trade finance and other international transactions i.e

1) Simply speaking, international banking is facilitating of financial service by a residential bank of one country to the residents of another country. Mostly multinational companies and individuals use this banking facility for transacting.

2) Suppose Oracle Corporation is anAmerican based company having a branch at UK. It is in need of funds to meet its working capital requirements. In such scenario, Oracle Corporation can avail the banking services in form of loans, overdraft or any other financial service through banks in London. Here, the residential bank of London shall be giving its services to an American company. Therefore, the transaction between them can be said to be part of foreign traditional banking facility.

3) Globalization and a lot of potential in new markets has urged companies to set up stall abroad and foreign banking facilitates this very need for expansion smoothly and thus its need is growing for the corporates.

Rahul Sunny answered 1 year ago

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