Wholesale Banking

 

WHOLESALE BANKING: 

• Banks which provide banking services to larger customers like Mortgage banks, Commercial Banks, Large Corporations, Mid-sized Companies, Real Estate Developers and Investors, Institutional Customers and Government agencies. 
• It is in contrast to Retail banking as it does not deal with individual clients and small business entities.

Wholesale Long Term finance banks (WLTF):

• RBI is contemplating to bring Wholesale Long Term finance banks (WLTF) to fund the large infrastructure projects.
• These banks will focus on lending to the corporate sector, small and medium businesses, and the infrastructure sector. 
• They may also offer services in the area of Foreign Exchange and Trade Finance. 
• Further, they can act as market makers in instruments like corporate bonds and credit derivatives. 
• WLTF banks can raise funds through issuance of debt and equity. 

Relevance of Wholesale Long Term finance banks (WLTF):

• Companies struggle to get long-term financing because of the underdeveloped corporate bond market. WLTF banks will promote Bond market.
• Being specialized institutions, they will be in a much better position compared with commercial banks in evaluating and funding long-term projects.  
• Arrival of WLTF banks will reduce NPA risks for the Commercial Banks. 
• Establishment of WLTF banks will also enhance competition, which will lead to more efficient allocation of financial resources.