Published Paper Details:

Due to a limited number of offshore financial centres and the volume of transactions, offshore banking is a pervasive activity. Offshore banking has a wide impact on the financial system surveillance. The offshore banks are more vulnerable to solvency and foreign exchange risk then onshore banks due to the favourable regulatory frameworks in OFC. The regulatory framework for the onshore could be transmitted to the offshore banks in order to ensure the soundness of the same. Emerging economies which are more vulnerable to a reversal in capital flows, spontaneous accumulation of short-term external debt, and has exposure to currency fluctuations and selective capital account liberalization becomes a qualitative issue for offshore banking in these areas.A combined and focused effort is necessary to assist the emerging economies, to avoid financial crisis by disseminating internationally accepted regulatory standards which shall be adequate and appropriate for optional banking the standards will act supplementary to Basil Committees Core Principle and shall include the Basel�s Committees Minimum Standards along with their other related initiatives of the International Supervisory Community. Third, the Fund�s work on promoting good governance also takes a negative blood owing to these offshore banking. It is an obvious fact that offshore banking are not as transparent as normal cross-border transactions for the reasons such as of complex ownership structure and relationships among The jurisdictions that are involved in the transaction. This paper intends to throw some light on offshore banking with regards to the aforementioned considerations. The focus of this paper shall be offshore banking as it constitutes the major portion of offshore activities, keeping in mind that nonbanks, corporations etc also play a vital role in offshore markets.