Corporate Fee-Based Services
A corporate fee-based services are all those financial services that various financial institutions, bank offer to corporate customers on payment of a fee. These various fee-based services are:
Cash Management Services: Cash management is the effective management of cash in order to minimize transaction costs, exercise greater control and maximize returns.
- Collection: Collection and disbursement of cheques for the clients form an important part of the cash management services. Clients continuously receive payments from their distributers and customers in the form of cheques and demand drafts.
- Payment: Payment services include payments to clients’ vendors and suppliers, dividends to the shareholders payment of interest on commercial bills and debentures payment of salaries to employees, etc.
- Liquidity: Pooling and distributing funds across the client’s multiple accounts with the bank is called liquidity management.
- Merchant Banking: It can be defined as an activity in which a bank deals mostly in international finance, long-term loans for companies and underwriting. They include registrar service, underwriting services and custodial services.
- Foreign Exchange Services: It refers to converting foreign currency into Indian currency and vice-versa.
- Bill Discounting: This product enables corporate to fund their operating cycle right from the stage of procurement to sale. Leasing Lease is contract between the owner of the asset and the user of the asset called the lessee.
- Letter of Credit: Here the banker issues commitment on behalf of its client to the supplier of goods to accept clients’ bills up to the amount stated in the letter of credit.
- Forfeiting is a form of financing of receivables pertaining to international trade. It denotes the purchase of trade bills/Promissory notes by a bank/financial institution without recourse to the seller.