Wholesale banking involves providing banking services to other commercial banks, mortgage brokers, large corporate, mid-size companies, real estate developers, international trading businesses, institutional customers or other corporations.
What is Wholesale Banking?
The services which come under the net of wholesale banking involves wholesaling, underwriting, market making, consultancy, mergers and acquisitions, joint ventures, fund management etc. The focus is on high-level clients and high-value transactions.
India presents a strong case for the growth of wholesale banking due to continued globalisation of Indian companies, India being seen as a favourable investment destination, increase in infrastructure spending, stable government, robust markets, stable currency, low deficits, etc.
Wholesale banking thus comprises a major share of the banking revenues due to the above factors and also due to an increased inclination of government towards mid-segment companies which have increasing banking requirements.
Wholesale clientele for banks are highly significant for banks to drive business. Banks provide various forms of banking solutions like project finance, leasing finance, working capital finance, merchant banking, syndication services etc.
The major advantage in wholesale banking is that a client can have easy and one-place access to all its finances and their details. This makes internal stock transfers, fund transfers, allocations and distributions simpler.
It however, it increases the risk it poses to the clients as all their funds are parked in one institution and the businesses depend on the financial health of the bank for smooth run. In cases of economic downturns, if the banks crash, all the dependent businesses come to a standstill instantly.
Thus, businesses usually diversify into several financial institutions to remain afloat during any crisis. Topics: Types of Banking. What is Wholesale Banking?
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