Economic Development Through the Initiatives of Banking and Financial Institutions

The vitality of sound financial systems to economic vicinity has become even more prominent in recent years. Financial systems are driven by the banking and investment institutions and they craft policies for industrial sectors for all round development. Their policies, financial products and flexible banking operations are the forces that encourage business owners to act more vibrantly. In fact, these forces act as premises for the business sectors to exhibit their capabilities and serve people. Today, banking and financial institutions are successfully bridging the gaps and vacuum developed over the last decades. They are also taking center stage due to slowing economic marathon.

Banking and financial institutions are thoroughly undertaking and advocating hyperactive initiatives that directionally aim to provide business leaders and policy-makers with a strong framework for identifying and bringing them forth the key factors in the development of industrial market. They are also encouraging business houses to focus their bottlenecks so that they can highlight them in their policies and bring sure shot resolutions for them. It will help banks to create new opportunities and reduce as much bottlenecks as possible for unmatched growth and trouble-free operations.

These fiscal bodies and investment firms are continuously measuring the performances of the industries on the benchmarks and revolutionizing their resources so that businesses with lower capitals & innovative sustainable ideas can get advantages offered by the financial institutions.

Banks are also revolutionizing banking technology for bringing more advancement in the system. Their advanced technologies are bringing fundamental shift in their overall functioning. It has strengthened their internal functioning & operation and enabled them to better serve their customers. With the adoption of empirical technologies, banks are adding worthy business propositions.

In addition to that, banks are also restructuring insurance sector and its associated technology. They are educating, luring and persuading communities to cover themselves with proper insurance programs and policies. They are even penetrating at the deeper levels to get maximum results. They are innovating new products with insurance agencies to place their insurance products in the proper segment for immense growth. They are subsequently encouraging them to develop more pliable and worth investing products.

Banking and financial agencies are also gathering support from the top economists, fiscal activists and taking their views and perspectives in global meets and conferences. They are regularly arranging banking technology conferences, insurance technology conferences, capital market meets and monetary fund meets for better business environment, better economic development and sparkling tomorrow.

Report of Foreign Bank and Financial Accounts (FBAR) Questions Answered

The Bank Secrecy Act demands that anyone with a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, reports to the IRS by filling Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).

Why File FBAR?

Some people use foreign financial accounts to get around United States law, and the FBARs areused to identify such persons for the reason that foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. FBARs are used by investigators to help discover any income maintained or generated abroad that isn’t reported.

The FBAR was amended and final regulations published on February 24, 2011 by the Treasury Department and they came into effect a month later, on March 28, 2011. The regulations apply to FBARs that were required to be filed with respect to not only foreign financial accounts maintained in 2010 calendar year but also in respect to all subsequent years. The FBAR form and instruction has since been amended to reflect the revisions made by the final regulations

To help provide administrative reprieve for specific individuals with signature authority over but no financial interest in foreign financial accounts, the Financial Crimes Enforcement Network (FinCEN) issued a notice on May 31, 2011 that was later revised on June 6, 2011.

Who Should File FBAR?

Employees or officers of entities under 31 CFR § 1010.350(f)(2)(i)-(v) who had signature or other authority over and no financial interest in foreign financial accounts of controlled persons of that entity. Also, employees or officer of controlled individuals of entities under 31 CFR § 1010.350(f)(2)(i)-(v) who have signatures or other form of authority over and without financial concern in foreign financial accounts of the entities, the controlled persons, or other controlled persons of the entities, had The deadline of reporting signature authority extended to June 30, 2012. A controlled person is a United States or foreign entity more than 50 percent owned (directly or indirectly) by an entity under 31 CFR § 1010.350(f)(2)(i)-(v).

The deadline of filing the FBAR for individuals with signature authority but without financial interest whose filing requirements were properly deferred under Notice 2009-62 or Notice 2010-23, were notified on June 16, 2011 that their deadline for filing the FBAR had been extended to November 1, 2011. The extension was only applicable to the 2009 and earlier calendar years.

Another notice was issued by FinCEN on June 17, 2011 to June 30, 2012. This was aimed to facilitate more precise conformity with FBAR filing requirements. The June notice was aimed at providing administrative relief for certain officers or employees of venture advisors registered with the Securities and Exchange Commission with no financial interest in certain foreign financial accounts but with signatures or other form of authority.

To file an FBAR, one must be a United States Person with a financial interest in or signature authority over at least one financial account situated outside the U.S. Also, the cumulative value of all foreign financial accounts ought to surpass $10,000 at any time for the period of the calendar year.

In this case, a U.S. person can be U.S. citizens, populace, body, including but not limited to joint venture, corporations, or limited liability companies created or organized in the United States or under the laws of the United States.

Are There Any Exemptions?

There are some filing exceptions to the FBAR reporting, they are available in the FBAR instructions. The following persons in the United State or foreign accounts are exempted from filing the FBAR. The FBAR instructions contain information on the eligibility for an exception as well as exception requirements.

  • A joint FBAR that include United States persons.
  • International financial institution that own foreign financial accounts
  • Beneficiaries and owners of the IRA
  • Nostro or Correspondent accounts
  • Certain foreign financial accounts that are jointly owned by spouses
  • Foreign financial accounts maintained on a United States military banking facility.
  • Some individuals without financial interest in a foreign account but have signature authority
  • Tax-qualified retirement plans beneficiaries and participants
  • Government-entity owned financial accounts
  • Trust beneficiaries.

Even though foreign accounts may not produce taxable income, persons with such accounts may still have a reporting obligation. An account holder’s obligation can be confirmed by checking the appropriate block on FBAR- linked federal tax return or information return questions like the one indicated on Schedule B of Form 1040, the “Other Information” section of Form 1041, Schedule B of Form 1065, and Schedule N of Form 1120) and filing the FBAR.

Are There Any Differences Between Filing FBAR and Federal Returns?

The FBAR is filed separately from the filer’s federal income tax return. The IRS may grant an extension to file federal income tax returns but that doesn’t affect the due date of filing an FBAR. The filing of the FBAR is not extendable as it must be received by June 30, of the year following the calendar year being reported. One can file by mailing it to either the United States Department of the Treasury or by express mailing to the IRS Enterprise Computing Center located on 985 Michigan Avenue

Civil penalties, criminal penalties, or both may be subjected to account holders who fail to conform to the FBAR reporting requirements.

Can FBAR Forms Be Filed Electronically?

E-filing is a quicker and efficient way to file FBAR. An electronic filing system that accepts the FBAR forms was announced by FinCEN on July 18, 2011. Online filers are supposed to receive acknowledgement from the system after each submission.

How Do I Access FBAR Customer Service?

More information and help on the filing of the FBAR can be accessed from the IRS website or any of the 400 IRS centers. The FBAR form is also available to download from the Financial Crimes Enforcement website.

High Street Banks and Financial Intermediation

What is financial intermediation? It’s a very important part of how financial institutions operate and perform their day to day functions. Financial organizations need to bring together individuals and organizations who have the same needs either to lend money or borrow money.

The businesses and individuals can be segmented into three categories according their financial position.

1. The surplus sector
The savers, the people with a positive cash flow – they have more money then they need and they wish lend their surplus funds to someone to make extra income.
2. The deficit sector
The exact opposite to the ‘surplus sector’ these people do not cover their outgoings and need to borrow to fund the deficit.
3. The balanced sector

The people in the balanced sector meet their outgoings with an equal income – they cover their bills and do not need to borrow, however they do not have surplus income to lend.

As cash flow fluctuates most people and business are never in the ‘balanced sector’ – most will be in the surplus (cash rich) or deficit sector (cash poor). It is more common to move from one position to the other on a regular basis.

The difficulty for the surplus and the deficit sector is finding each other and reaching a suitable agreement on how to lend. This problem is the basis of what banks and other financial intermediaries do – they bring the cash rich lenders to the cash poor borrowers.

The banks and financial institutions link the surplus sector to the deficit sector, they can however borrow money in their own name and lend it direct to the deficit sector and make a margin on the interest rate at which it borrows.

When the bank borrows in its own name it acts as the principal. The amount it borrows is a debit and becomes part of the banks liabilities. The bank makes its margin by the spread between the rate of interest it borrowed the money and the rate of interest it lent the money.

The risk to the bank is the debtor on the surplus sector may renege on the deal and not pay the money bank.

The customers in the surplus and deficit sector can be categorised as Individuals, business, companies, government and public sector bodies and other banks.