Offshore Banking
- Offshore banking originates from the Channel Islands being "offshore" from the United Kingdom.
- An offshore banking is one which is located in a different jurisdiction from its investors or depositors reside.
- An offshore banking has a history and reputation in the home country.
- An account in offshore banking is known as an offshore account.
- A company or an individual maintain the offshore account for tax benefits and many other legal benefits.
- In Offshore banking, one can open a multi-currency account which accepts deposit and withdrawals in different currencies.
- One can also open a multi-currency account with several account numbers, each named in a different currency.
- An offshore banking is licensed by offshore banking legislation in the foreign domain that gives financial and legal advantages like privacy, low taxation, and security against the political and financial environment.
- An offshore banking accepts deposits and investments from non-resident individuals and companies.
Types of Offshore Banking
1) Private banking institutions
Private banking institutions mainly focus on the high-level investors.
It designs the exclusive investments services and products for the targeted customer.
2) Retail and commercial banks
Retail and commercial banks focus on the medium and small level investors.
In this, the services are not specifically designed but are for the mass.
Onshore Banking
- Onshore Banking is the banking activity which is undertaken within the jurisdiction and territories of a nation or a sovereign state.
- An onshore banking is nothing else but your typical branch of the bank in which you maintain saving or a current account.
- An onshore banking operates under the rules and regulations governing all banking institutions in this country.
Difference Between Offshore Banking and Onshore Banking
Meaning
- An offshore banking is one which is located in a different jurisdiction from its investors or depositors reside.
- Onshore Banking is the banking activities which are undertaken within the jurisdiction and territories of a nation or a sovereign state.
Privacy and Secrecy
- In offshore banking, Authorities, regulators and even governments cannot access information except few exceptions.
- In Onshore banking, there is a standard privacy and security policy.
Stability
- In offshore banking, the stability remains neutral in any situation like wars, economic up-down, rules and regulations and political changes. All this are not going to affect the account.
- In onshore banking, all type of adverse conditions affects the account.
Initial Deposits
- In offshore banking, the initial deposit is in large amount.
- In onshore banking, the initial amount is much lesser than the offshore banking account.
Flexibility
- Offshore banking is highly flexible because it serves the specific services as per their need. It has a high level of personalization.
- Onshore banking is not flexible but it provides services up to a certain extent of personalization.
Reputation of Client
- Offshore banking has a high level of goodwill because of high net worth customers who deal in international trade.
- Onshore banking has a normal level of reputation in the market because the customers are from the national boundary.
Eligibility of Customer
- Only non-resident individual can open an account in the offshore banking.
- In onshore banking, the standard eligibility requirement is followed.
Tax benefits
- An offshore bank account has no tax or a negligible tax.
- An onshore bank account has standard tax rules.
Rules and Regulation
- Offshore banking has minimum rules and regulation.
- Onshore banking has to follow standard rules and regulations of many authorities like tax department, central bank and government.
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