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NMIMS Global Access
School for Continuing Education (NGA-SCE)
Course: International Banking & Foreign Exchange Management
Internal Assignment Applicable for June 2024 Examination
Assignment Marks: 30
1 Suppose that your friend Mr. Naresh is expanding his business by starting a new export venture. He has seeked your advice in the matter. Explain to him how the EXIM bank can help him and discuss their programs and services that could be useful for Mr. Naresh. (10 marks)
Answer: Mr. Naresh’s decision to expand his business through a new export venture is a commendable step towards growth and diversification. Exploring the services and programs offered by the Export-Import Bank of India (EXIM Bank) can significantly benefit his venture. Here’s how EXIM Bank can assist Mr. Naresh and an overview of its programs and services:
- Export Finance: EXIM Bank provides various financing options tailored to meet the needs of exporters. These include pre-shipment and post-shipment finance, export credit lines, and buyer’s credit. Such financial assistance can help Mr. Naresh manage working capital requirements, fulfill export orders, and expand his export operations.
- Export Credit Insurance: EXIM Bank offers export credit insurance to protect exporters against non-payment risks arising from commercial and political factors. This insurance coverage can safeguard Mr. Naresh’s export receivables, enabling him to explore new markets with confidence while mitigating credit risks.
- Dr. Swami is part of the management team of MHS bank that is performing very well in the domestic market of its country. Advisors have suggested them to consider expansion in foreign countries as well. What can be the advantages of such an approach? What kind of services can the bank aim to provide by ‘internationalisation’ of the bank? (10 Marks)
Answer: Expanding into foreign markets can offer several advantages for MHS Bank, especially if it’s already performing well in its domestic market. Here are the potential benefits of such an approach:
- Diversification of Revenue Streams: By expanding internationally, MHS Bank can reduce its reliance on any single market or economy. This diversification can help mitigate risks associated with economic downturns or regulatory changes in the domestic market.
- Access to New Customer Base: International expansion provides MHS Bank with access to a larger customer base, allowing it to tap into new sources of revenue. Serving customers in foreign markets can lead to increased profitability and growth opportunities.
- Brand Enhancement and Global Recognition: Establishing a presence in foreign countries can enhance MHS Bank’s brand reputation and visibility on a global scale. This can help attract new customers, partners, and investors, while also reinforcing credibility and trust in the international financial community.
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- a. Over the past few years India has attracted a large amount of Foreign Direct Investment (FDI) in various sectors. Explain what you mean by FDI with an example. (5 marks)
Answer: Foreign Direct Investment (FDI) refers to the investment made by a company or individual from one country into business interests located in another country, with the intent of establishing a lasting interest or control in the foreign business. FDI involves the direct ownership of assets in the foreign country, such as factories, land, buildings, or stakes in local companies.
For example, let’s consider a multinational technology company based in the United States,
- The Euro as a common currency for the European Union’s member states was launched with the aim of greater European Integration. Do you agree that Euro as a single currency has advantages? Discuss. (5 Marks)
Answer: Yes, the Euro as a single currency for the European Union (EU) member states has several advantages, contributing to greater European integration. Here are some key points to consider:
- Facilitation of Trade and Economic Integration: The Euro eliminates currency exchange costs and uncertainties within the Eurozone, making trade and economic transactions smoother and more efficient. Businesses can conduct cross-border trade without worrying about currency fluctuations or exchange rate risks, promoting economic integration and fostering intra-EU trade.
- Price Transparency and Market Efficiency: With a single currency, consumers and businesses benefit from increased price transparency across the Eurozone. Prices of goods and services can be easily compared between countries, leading to greater market efficiency, competition, and consumer welfare. This transparency encourages businesses to offer competitive prices and fosters a more integrated European market.
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or call us at : 08263069601
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