What is offshore bank unit?
Offshore Bank Unit (OBU) is a financial institution that transactions of trade abroad or in another country. It is a shell branch or a bank division set up in an Offshore Financial Center. This setting allows the bank to make cash companies and international stock market transactions. Offshore bank unit is generally exempt from the host country regulations. Some tax authorities are also provided as incentives for the establishment of a profitable banking institution in this country.
The market was the first established bank unit at sea. Followed by Singapore, Hong Kong, Bahrain and then in many other countries. Until 1990, the profits on the sea were huge, but for decades its growth has become a slight pace.
Usually, the commercial bank has a home bank unit and an offshore bank unit. The domestic banking unit often provides banking services to the country's residents where Jije is set up. Offshore bank unit often provides services to residents of another country.
most oFFShore banking units is established in geographically remote areas. Their presence in strategic places often motivates the construction of shopping centers in the area and often brings economic growth. Offshore bank unit also isolated accounts from economic and political sanctions, giving the safety of depositors from the risks of political unrest and threats of frozen assets.
Offshore bank unit generally does not compete to domestic banks that are already established in this area. Instead, there is a healthy competition between financial institutions, giving businesses a suitable service balance. Offshore banking units also work with lower costs due to low overhead costs and government incentives, so they can provide higher interest rates.
Many individuals are involved in offshore banking to keep their money or assets safe while freeing them from paying Daof it. The confidentiality and secrets offered from the coastal bank unit also make it more attractive to many foreign investors. Through this institution, many investors also receive opportunities to enter the global market.
However, there are some disadvantages that they have a bank account at sea. The institution proved to be financially unreliable in difficult times. For example, during the banking crisis in 1988, those who deposited their funds at sea came. Offshore bank units are also often suspected of having connection with organized crimes and underground economy. He was annoyed to help the dubious transactions such as money washing and other illegal operations.