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GENERAL GUIDELINES/INSTRUCTIONS 1. The directives issued by the Reserve Bank of India in respect of Interest rates on Export & Import Finance shall be adhered to by the Authorised Dealers. 2. The member banks are totally free to determine their own charges for various types of forex transactions, keeping in view the advice of RBI that such charges are not out of line with the average cost of providing services. 3. Authorised Dealers shall ordinarily not be parties to any guarantees for an unlimited amount and/or an unlimited period. Authorised Dealers shall ensure to include a specific clause in all the guarantees stating the exact period within which claims must be made under the guarantee besides the expiry date for the guarantee. 4. With a view to simplifying and liberalising import, authorised dealers are permitted to open standby letters of credit on behalf of their importer constituents for importing goods into India permissible under Foreign Trade Policy. RBI vide its AP (Dir Series) Circular No. 84 dated 3rd March 2003 advised the authorised dealers to open standby letters of credit subject to adherence to the guidelines issued by FEDAI. The detailed guidelines were issued by FEDAI vide Special Circular No. SPL-16/Standby LC/2003 dated 1st April 2003. 5. Guidelines for calculation of Merchant Rate have been deleted from the Rule Book as the procedure for calculating the rate for Merchant transactions have been left for our member banks to decide. 6. Information regarding various forex related programmes, exchange related rates advised at various times, important circulars issued by FEDAI etc. are available at our website. www.fedai.org.in. e-mail address of FEDAI is firstname.lastname@example.org. RULE 1 HOURS OF BUSINESS 1.A-1 Each Authorised Dealer will establish its business hours for various types of foreign exchange transactions at each centre where its branches undertake forex business. 1.A-2 It is upto the management of each Authorised Dealer to decide whether they would like to have uniform hours of business for all categories or different business hours for different categories of forex business. 1.A-3 Heads of International Divisions/Forex Departments of Authorised Dealers shall advise their designated branches regarding the establishment of business hours for various types of foreign exchange transactions. 1.A-4 In terms of paragraph 7.1 of Reserve Bank of India guidelines for Internal Control over Foreign Exchange Business, Authorised dealers are permitted to undertake forex business on behalf of the bank during extended hours subject to the condition that the Management in each bank lays down the working hours of the dealers. Dealing Hours* “The dealing hours will ordinarily be the recognised working hours of the banks at the respective centres. But if dealers are required to work longer hours it is essential that the Managements lay down the extended working hours” (para 7.1 of ICG). 1.A-5 Authorised Dealers are therefore required to decide on the business hours of their forex branches, dealing rooms etc. particularly in regard to uniform hours of business for all categories of business or different business hours for different categories of forex business. Head offices of member banks should advise all their designated category “A”, “B” and “C” branches their bank’s policy in this regard so that their customers become aware of business hours within which they could place the concerned transactions with their offices. *AR Circular No. 3/05, dated 10-3-2005 RBI Foreign Department have advised that exchange trading hours for inter-bank market would be from 9AM to 4PM. RULE 2 EXPORT TRANSACTIONS 2.A-1 General Authorised Dealers will purchase only Approved Bills and the decision as to what is an approved bill lies solely
ii. the rate of exchange for conversion shall be the ready TT selling rate of the negotiating bank ruling on the date of refund. In addition. This includes bills tendered under forward contracts. Interest shall be recovered on the date of crystallisation for the period from the date of expiry of the normal transit period/notional due date to the date of crystallisation at the appropriate rate of interest as per the guidelines issued by RBI from time to time. The unpaid export bills will be treated as outstanding under the sanctioned limit of the customer with the exchange risk open against him. Interest for the period from the date of crystallisation to the date of realisation of the bill shall be recovered from the customer at the appropriate rate of interest for overdue export bills as permitted by Reserve Bank of India. ii.A-2
Export Bills purchased/discounted/negotiated i. iii.taxmann. The rates of interest applicable for all export transactions shall be as prescribed by Reserve Bank of India from time to time. Application of rates Foreign currency bills will be purchased/negotiated/discounted at the Authorised Dealers’ current bill buying rate or at the contracted rate. Interest at appropriate rate as per the guidelines issued by Reserve Bank of India from time to time. Any difference shall be recovered from/paid to the customer.FEDAI RULES
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with Authorised Dealers. c. letters of guarantee. the Authorised Dealers will adjust the Rupee liability on the bill crystallised as above by applying the TT buying rate of exchange or the contracted rate in case a forward contract has been booked by the customer after crystallisation. b. Concept of Normal Transit Period and Notional Due Date
http://www. Authorised Dealers will have the discretion to handle export bills on purchase/discount/negotiation or collection basis. The Rupee equivalent of the bill arrived at the current ready TT selling rate. Refund of Negotiation Proceeds of unpaid bill In case refund of negotiation proceeds of a foreign currency bill is required to be made to the negotiating bank by the customer.A-3 Application of interest i. as the case may be. Interest for the normal transit period.
1[2. the customer shall be required to pay interest as per the guidelines issued by Reserve Bank of India from time of time.htm
.net/FEMA/FEMA2006/FEDAIRules. letters of credit. For crystallisation into Rupee liability the Authorised Dealer shall apply the ready TT selling rate of exchange ruling on the date of crystallisation. letters of authority. Crystallisation and Recovery Exporters are liable for the repatriation of proceeds of the export bills negotiated/purchased/discounted or sent for collection by the Authorised Dealers. and usance period shall be recovered simultaneously. All foreign currency charges converted at the ruling ready TT selling rate. Such norms devised by the banks in this regard should be transparent and should be advised to their customers well in advance. Export bills payable in countries with externalisation problems shall also be crystallised into rupee liability like any other unpaid export bill notwithstanding receipt of advice of payment in local currency. orders for payment and any other type of document of similar nature. Exchange difference arising out of crystallisation to be recovered from or passed on to the customer.] 2. orders to negotiate. Dishonour of Bills In case of receipt of intimation of dishonour of an export bill before the estimated crystallisation date. the bank shall recover from the customer : a. they are given freedom to decide on the period for crystallisation which may be linked to risk factors like credit perception of different types of exporter clients. Authorised Dealers should take into account the exchange risk inherent in an unpaid export bill negotiated/purchased/discounted and transfer the exchange risk to the exporter by crystallising the foreign currency liability into rupee liability. v. operational aspects etc. iv. Considering that authorised dealers are required to manage various risks. Realisation of Bills after crystallisation After receipt of advice of realisation.
Normal transit period comprises the average period normally involved from the date of negotiation/purchase/discount till the receipt of bill proceeds in the Nostro account of the bank. and on or before the notional due date/actual due date as the case may be in case of usance bills as per RBI directives. Agency to the effect that the exports conform to the guidelines laid down by United Nations the applicable Normal Transit Period shall be for a maximum of 120 days from the date of shipment for which concessional interest shall be recovered as directed by RBI from time to time.e. In case of bills payable ‘at sight’ or ‘on demand’ basis concessional rate of interest as directed by the RBI on export bill is applicable for the normal transit period. no Normal Transit Period shall be applicable. 25 days ii. this additional period shall be added to the five days stipulated above for arriving at NTP for the purpose of recovery of concessive rate of interest. either with the negotiating bank itself or with any of its branches in the same centre.A-6 TT Reimbursement under letter of credit i. The above Rule is not applicable to export transactions on deferred payment basis. In the case of bills drawn under letters of credit where reimbursement is : 3 days provided at the centre of negotiation If reimbursement for negotiation of Rupee bills drawn under a letter of credit is obtained in the centre of negotiation by debit to the non-resident account of the credit opening bank held.. Exports to Iraq In respect of Exports to Iraq under United Nations Guidelines where payment under letters of credit is made on arrival of goods upon issuance of certificate by U. rate of interest as directed by the RBI on export bills is applicable for the normal transit period plus usance period.FEDAI RULES
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Concessional rate of interest on export bills is linked to the concept of normal transit period and notional due date.net/FEMA/FEMA2006/FEDAIRules. the Authorised Dealer shall recover at the time of negotiation Normal Transit Period interest for five days. b. a total number of 85 days. ii.A-7 Overdue Interest Overdue interest in all cases shall be recovered from the customer in case payment is not received on or before the expiry date of Normal Transit Period in case of demand bills.. Normal Transit Period for purposes of bills drawn in Rupees : a. Exports to Russia against letters of credit providing for reimbursement by : 20 days Reserve Bank of India under State Credit arrangements. Normal Transit Period for purposes of all bills in Foreign Currencies .taxmann.A-5 Fixed Due Date In case of export usance bills (foreign currency and rupee bills) where due dates are reckoned from date of shipment or date of bill of exchange etc.htm
.N. interest for the transit period of 3 days as allowed shall not be collected. iii. 2. Normal Transit Period is not to be confused with the time taken for the arrival of the goods at the destination. 2. In case of usance bills. In case such reimbursement instructions stipulate claiming of reimbursement by Cable/SWIFT/Telex or other electronic means after a certain number of days from date of negotiation/despatch of documents. In case of negotiation of export bills where the letter of credit provides for reimbursement claim upon negotiation by Cable/SWIFT/Telex or other electronic means. in case the claim is not paid on or before the expiry date of NTP. In the case of bills drawn under letter of credit where reimbursement is : 7 days provided at a centre in India other than the centre of negotiation c. 2. iii. iii. Overdue interest shall be recovered at appropriate rate as advised by Reserve Bank of India from time to time. since the actual due date is known. Thus an export bill payable for example at 60 days after sight will be eligible for concessional interest rate for 60 days usance plus the normal transit period of 25 days i.. 2.. In the case of bills drawn under letters of credit where reimbursement is provided by banks situated outside India and Bills not under letter of credit : 20 days d..A-4 Normal Transit Period i. 2.A-8 Early realisation
“Bills” shall include all documentary/clean bills received under letter/s of credit. In addition. rupee settlements are made through Reserve Bank of India at present. ii.B-1 Application of rates For disposal of the proceeds of export bills sent for collection or of goods sent on consignment basis the TT buying rate ruling on the date of payment of proceeds to the exporter or the forward contract rate as the case may be shall be applied and the payment will be made in India only after the foreign currency amount is credited to the nostro account of the bank. Interest at the rate not below the prime lending rate of the respective bank on outlay of funds. RULE 3 IMPORT TRANSACTIONS 3. letter/s of authority. It is optional for a bank to accept delivery of bills under a contract made for the purchase of a clean TT. i. Where payment is to be effected at the same centre but to another branch of the 2 same bank or another bank iii. if any. 2. Such a refund shall become payable only on receipt of relative credit advice/statement of account by bank.B-3 Payment of Interest to exporter Authorised Dealers shall also pay interest for delay in payment to the exporters on export bills sent for collection and realised. concessive interest on post-shipment credit shall be charged to the customers in accordance with the directives of the Reserve Bank of India in force at the material time.net/FEMA/FEMA2006/FEDAIRules. On the assumption that the customer has complied with FEMA Guidelines and bank’s own requirements. upto the last date of normal transit period in the case of demand bill and upto the notional due date in case of usance bill. interest shall be charged as prescribed by Reserve Bank of India from time to time for export credit.B-2 Application of interest On all Rupee loans granted against export bills sent on collection. the bank shall also recover/pay swap difference.C Letter of Credit Forwarding letters of credit/amendments by VP Post is prohibited. 2. shall also be recovered from the customer. If a bank accepts such bills. Interest on outlay of funds. order/s to negotiate..A-9 Substitution/Change in Tenor etc. Where payment is to be effected in the same branch 1 ii. 2. 2. and by debit to vostro account in case of a Rupee bill. by credit to nostro account in case of a foreign currency bill. if any. the following are time limits within which the transaction should be completed by an Authorised Dealer or his Authorised Branch after the date of receipt of credit advices/statements : Type of transactions Working day/s Transfer of funds received from abroad against export bills to the exporters’ bank. the swap difference for the relative cover (irrespective of whether an actual swap has been done or not) shall be recovered from/paid to the merchant. In respect of exports to Russia.A-1 General i. standby letter/s of credit. Where payment is to be effected to a branch of the same bank or another bank at 3 outstation centre If transfers are not completed within the above time schedule fixed for execution of the payment orders the compensation shall be payable from the expiry of the period for execution of payment order. The rate of compensation shall be the minimum interest charged by banks on export credit as directed by Reserve Bank of India from time to time.taxmann. order/s for payment and other document/s or
http://www. ii. In case of early realisation of export bill proportionate interest shall be refunded from the date of realisation i.e. In case of early realisation of an export bill Authorised Dealers shall recover or pay swap cost as in case of early deliveries under a forward contract.B Export bills sent for collection 2. letter/s of guarantee. In the case of change in the usance of a bill.htm
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i. for such swaps shall also be recovered from the customer at the rate not below the prime lending rate of the respective bank. 2. Foreign Currency bills i.
3.A-4 Crystallisation of Import Bills under Letters of Credit i. on import bills shall be recovered in full and shall not be set off against interest. If the crystallisation of the Rupee liability of an import bill under the Forward Exchange Contract results in early/late delivery. it is further clarified that any request from the beneficiary of the remittance for subsequent reconversion to foreign currency. Interest remittable on interest bearing bills shall be subject to the directives of Reserve Bank of India. Remittances in excess of equivalent of USD 5000 shall be executed in foreign currency and the beneficiary has the option of presenting the relative instrument for payment within the maximum period prescribed under FEMA.A-2 Outward remittances Outward remittances shall be effected at the TT selling rate of the bank ruling on the date of such remittance or at the forward contract rate. of importer’s liability into Rupees the bills selling rate ruling on the date of such crystallisation or the forward sale contract rate as the case may be shall be applied. payable on any margins which may be held against such bills or the relative letters of credit. the foreign currency amount of the bills shall be converted into Rupees at the exchange rates prescribed by Government of India from time to time. For the purpose of retirement of import bills whether received under letters of credit or otherwise.FEDAI RULES
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undertaking/s of a similar nature or on collection basis covering imports into India. From the date of crystallisation up to the date of retirement the bills shall carry the penal rate of interest as determined by Authorised Dealers from time to time. in the event of non-retirement shall be crystallised into Rupee liability on the 10th day after the date of receipt of documents at the letter of credit opening branch of the bank. if any. iii.A-2 Application of rates i.A-3 Application of interest i.A-4 below. In case the 10th day or the due date falls on a holiday or Saturday.taxmann.net/FEMA/FEMA2006/FEDAIRules. if any. Interest. Payment of foreign inward remittances All foreign currency inward remittances up to an equivalent of USD 5000 shall be immediately converted into Indian Rupees. including request for opening Exchange Earner’s Foreign Currency (EEFC) Accounts shall be done at market rate. Establishment and amendment of all import letters of credit shall be at the discretion of the Authorised Dealers. All foreign currency import bills drawn under letters of credit. RULE 4 CLEAN INSTRUMENTS 4. Bills negotiated under import letters of credit shall carry commercial rate of interest as applicable to banks’ domestic advances from time to time and shall be recovered from the date of debit to the Authorised Dealer’s Nostro account to the date of crystallisation/retirement whichever is earlier.A-1 Encashment of foreign currency travellers cheques and currency notes Foreign currency travellers cheques/currency notes will be encashed at the Authorised Dealer’s option at the travellers cheques/currency note encashment rates ruling on the date of such encashment. ii. the bank shall recover swap cost and interest.A-3
Miscellaneous Instructions i. 4. For the purpose of crystallisation vide para 3. The applicable exchange rate for conversion of the foreign currency inward remittances shall be the one prevailing as on the date of conversion of foreign currency amount into Indian Rupees by the concerned Authorised Dealer. In this connection.htm
. as per Rule. the import bill payable on demand may be crystallised before the said period of 10 days with the specific understanding and written request from the customer. However. ii. the bills selling rate ruling on the date of retirement or the forward sale contract rate as the case may be shall be applied.
http://www. in case of demand bills and on due date in case of usance bills at Bills Selling Rate/contracted rate as the case may be. ii. 3. ii.
1[4. the importer’s liability shall be crystallised into Rupee liability on the next working day. For the purpose of determining stamp duty on import bills. if any. 3. 1999.
the bank may treat it as proper delivery.A-3 Place of delivery All contracts shall be understood to read “to be delivered or paid for at the Bank” and “at the named place”.A-6 Option of usance
http://www. 5. In case of bills/documents negotiated. iii. 5. foreign currency notes etc. 31st January to 28th (29th) February.the date of negotiation/purchase/discount and payment of Rupees to the customer. For Example 18th January to 17th February. iii. 5. Exchange rate of foreign currency travellers cheques and foreign currency notes Authorised Dealers shall put through transactions relating to foreign currency travellers cheques and foreign currency notes at rates of exchange determined by market conditions.A-4 Date of delivery Date of delivery under forward contracts shall be : i. or for a different usance.A-2 Option period of delivery Unless date of delivery is fixed and indicated in the contract. However. No early realisation or late delivery charges shall be recovered in such cases.). the option period may be specified at the discretion of the customer subject to the condition that such option period of delivery shall not extend beyond one month. in case the documents are submitted earlier to. the merchant whether a buyer or a seller will have the option of delivery.htm
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ii. A spot contract shall be deliverable on second succeeding business day following the day when the transaction is closed. A forward contract is a contract deliverable at a future date. Compensation for delayed payment Authorised Dealers shall compensate the beneficiary of an inward remittance by payment of interest @ 2% over the applicable Savings Bank rate of interest in case the proceeds of the inward remittance are not paid within 10 days from the date of receipt of remittance advice from abroad for remittance up to equivalent USD 5000. When a bill contract. or an intimation not sent to the beneficiary within 3 working days (reckoning Saturday as a working day) from the date of receipt of credit advice in respect of remittances exceeding equivalent of USD 5000. Contracts permitting option of delivery must state the first and last dates of delivery. provided there is no change in the expected date of realisation of foreign currency calculated at the time of booking of the contract. ii.the date of retirement/crystallisation of liability whichever is earlier.net/FEMA/FEMA2006/FEDAIRules. or later than the original delivery date. Saturday may continue to be treated as working day except for transactions involving conversion at confirmed exchange rate (other than travel related transactions like issue/encashment of foreign currency travellers’ cheques. duration of the contract being computed from spot value date at the time of transaction.date of payment of Rupees to the customer on realisation of the bills.A-5 Option of delivery In all forward merchant contracts. “Value next day” contract shall be deliverable on the day immediately succeeding the contract date. “Ready” or “Cash” merchant contract shall be deliverable on the same day. purchased or discounted . mentions more than one rate for bills of different deliveries. In case of retirement/crystallisation of import bills/documents . If the fixed date of delivery or the last date of delivery option is a holiday/declared a holiday the delivery shall be effected/delivery option exercised on the preceding working day. 5.] RULE 5 FOREIGN EXCHANGE CONTRACTS 5. In case of export bills/documents sent for collection .taxmann.A-1 Contract amounts Exchange contracts shall be for definite amounts and periods. the contract must state the amount and delivery against each such rate. 5.
Egyptian Pound 6.. Malaysian Ringgit 9. 5. it is optional for a bank to : a. Swiss Franc 18. Saudi Riyal 14. 5. Japanese Yen 3. without paise. b.A-7 Merchant quotations The exchange rate shall be quoted in direct terms i.taxmann.A-9 Common Currencies A list of common currencies and the unit of rate quotations are as detailed below : Currencies to be quoted against one unit of foreign currency : 1. UAE Dirham 20. Singapore Dollar 15. Canadian Dollar 4. Thai Baht 19. Acceptance of delivery of bills/documents drawn for a different tenor will be at the discretion of the bank. Qatar Riyal 13.net/FEMA/FEMA2006/FEDAIRules. Kenyan Schilling RULE 6 EARLY DELIVERY. Hongkong Dollar 7. Norwegian Kroner 11.A-1 General i.e. ii. Danish Kroner 5. Kuwaiti Dinar 8.. Indonesian Rupiahs 2. Sterling Pound 16. unless stated to the contrary in the provisions of FEMA. Euro Currencies to be quoted against 100 units of foreign currencies : 1. Australian Dollar 2.e. Extend the contract. Swedish Kroner 17.FEDAI RULES
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The merchant purchase contract should state the tenor of the bills/documents. Oman Rial 12. At the request of the customer.A-8 Rounding off Rupee equivalent of the foreign currency at the agreed merchant rate Settlement of all merchant transactions shall be effected on the principle of rounding off the Rupee amounts to the nearest whole Rupee i. New Zealand Dollar 10. US Dollar 21. 5. It is the responsibility of the customer to effect delivery or to request the bank for extension/cancellation as the case may be on or before the maturity date of the contract. Accept or give early delivery. 1999.htm
. EXTENSION AND CANCELLATION OF FOREIGN EXCHANGE CONTRACTS 6. so many Rupees and Paise for 1 unit of foreign currency or 100 units of foreign currencies. Bahraini Dinar 3.
if any. Rate at which cancellation is to be effected : a. the contract shall be cancelled on the next succeeding working day. Interest at not below the prime lending rate of the respective Authorised Dealer on outlay of funds by the Authorised Dealer for the purpose of arranging the swap shall be recovered in addition to the swap cost in case of early delivery of purchase or sale contracts. rate shall be applied.net/FEMA/FEMA2006/FEDAIRules. for whatever reason. The amount of funds outlayed shall be arrived at by taking the difference between the original contract rate and the rate at which the swap could be arranged. The recovery/payment of exchange difference on cancellation of forward contracts before the maturity dates may be either upfront or back-ended in the discretion of banks.ii contracts which have matured shall be automatically cancelled on the 15th day after maturity date. In case 15th day falls on a Saturday or holiday. ii. In the absence of any instructions from the customer.FEDAI RULES
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6. In the case of cancellation of a contract at the request of the customer (the request shall be made on or before the maturity date) the Authorised Dealer shall recover/pay.i to iii above. vide para 6. v. If such a swap leads to inflow of funds. however. including Government prohibitory order.taxmann.T. 6. When the contract is cancelled after the due date. RULE 7 BUSINESS THROUGH EXCHANGE BROKERS
http://www. Swap cost. buying rate current on the date of cancellation.4. The difference between the contracted rate and the rate at which the contract is cancelled shall be recovered from/paid to the customer at the time of extension. Such recoveries should be made either back-ended or upfront in the discretion of banks. if any. since the contract is cancelled on account of his default. b. In all cases of early delivery of purchase or sale contracts.A-4 Cancellation i. the customer shall not be entitled to the exchange difference. against him.A-6 Outlay and Inflow of funds i. 6. Purchase contracts shall be cancelled at the contracting Authorised Dealers spot T. ii.T.A. iv.A-5 Swap cost/gain i. c. Sale contracts shall be cancelled at the contracting Authorised Dealers spot T. the appropriate forward T. the difference between the contracted rate and the rate at which the cancellation is effected. c. the bank shall recover/pay swap difference. iii. 100 shall be ignored by the contracting bank.htm
. selling rate current on the date of cancellation. shall be recovered from the customer under advice to him. the amount shall be arrived at as above and interest shall be paid in the discretion of banks to the customer at the appropriate rate applicable for term deposits for the period for which the funds remained with the bank. b. Where the contract is cancelled before maturity. swap cost shall be recovered from customers irrespective of whether an actual swap is made or not. as the case may be.A-3 Extension Foreign exchange contracts either short term or long term contracts where extension is sought by the customers shall be cancelled (at appropriate Selling or Buying Rate as on the date of cancellation) and rebooked simultaneously only at current rate of exchange. Payment of swap gain to the customer will normally be made at the end of the swap period. he shall. Such request for extension shall be made on or before the maturity date of the contract. Notwithstanding the fact that the exchange contract between the customer and the bank becomes impossible of performance. in his favour. if any. ii. the exchange contract shall not be deemed to have become void and the customer shall forthwith apply to the Authorised Dealer for cancellation subject to provisions of paragraphs 6.T. a. Exchange difference not exceeding Rs. 6.A. However the contract may also be cancelled after the maturity date but before the 15th day with specific understanding and written request from the customer. be liable to pay the exchange difference.A-2 Early delivery If a bank accepts or gives early delivery. 6.1.
fall within the ambit of the provisions of this Rule. are permitted in all centres without prescribing minimum lots for such direct deals. All changes in regard to the constitution of the accredited exchange broker including addition/deletion of Partners/Directors shall be with the prior approval of FEDAI. Reconciliation may be treated as a final cross-check and not a primary investigation step. with defaulting counterparty banks who should immediately take up the matter with their correspondents. rules and conditions laid down by this Association. Direct Dealings between banks. This is considered necessary also for toning up the reconciliation system of Authorised Dealers.A-1 Exchange Brokers When Authorised Dealers make contracts through brokers. The requisite monitoring system. such contracts shall only be made through and exchange brokerage be paid only to accredited exchange brokers. No brokerage or other form of remuneration shall be paid by the Authorised Dealers to other bank employees on contracts made in respect of any foreign exchange business. Authorised Dealers should not wait for receipt of statements of ‘nostro’ accounts for reconciliation of such items because in that event corrective action will take a much longer time. Changes in the names of Calling Assistants shall be advised to FEDAI and the Brokers’ Association. and settlements effected. Any accredited broker who knowingly concludes any exchange business contrary to the rules of this Association may have his recognition withdrawn and no Authorised Dealer shall transact business with him thereafter.net/FEMA/FEMA2006/FEDAIRules. iii. It is very necessary that discrepant/default items should be quickly identified and effectively settled between Authorised Dealers within a reasonable time. (See Code of Conduct for Bank Dealers/Brokers). It shall be the duty of each Authorised Dealer and the Brokers’ Association to report to FEDAI. Authorised Dealers should not lose sight of the credit risk aspects emphasised in para 3. A bank must refuse to give delivery to or take delivery from any party other than the declared principal viz. Banks should make proper enquiries into their books before meeting interest claims thereby resulting in the toning up of general efficiency in banks.3. therefore. RULE 8 INTERBANK TT-SETTLEMENT OF INTERBANK TTs AND DESPATCH 8. iv.e.A-1 Preamble i. if funds are not received in time.
http://www. an Authorised Dealer.FEDAI RULES
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.1 of the RBI Confidential booklet “Guidelines for Internal Control over Foreign Exchange Business”. No exchange contract shall be made with a broker as a principal or in a name known to be used by the broker for the purpose of jobbing. 7. applies for not only dealings with overseas banks but also to Authorised Dealers in India whose correspondent banking arrangements are varied. dealing in a foreign currency against another foreign currency between Authorised Dealers in India.taxmann. ii. therefore. SWIFT etc. who are Authorised Dealers in foreign exchange. Notices of non-receipt of funds in the Nostro account must be followed up by cable. It is.A-2 Exchange Brokers’ Contracts All contracts must bear the clause : “Subject to the Rules and Regulations of the Foreign Exchange Dealers’ Association of India”. telex. Dealing in the interbank market is generally for large value items and it is in the interest of the banking system that claims are made promptly. Every care must be taken by member banks to keep their monitoring system for execution of contracts and for watching receipts of countervalue funds in top gear. the name of any broker who suggests or proposes any business which is contrary to the rules of this Association. Accredited exchange brokers are permitted to contract exchange business on behalf of Authorised Dealers in foreign exchange only upon the understanding that they will conform to the rates. absolutely necessary for Authorised Dealers to reconcile all dealing items and other large value items within a period of 24/48 hours by demanding cable/telex/SWIFT confirmation regarding receipt of expected credits in “Nostro” accounts from the correspondents maintaining those accounts but in any event not later than a maximum period of 15 days. All kinds of defaults in the delivery of countervalue currencies in cross currency deals i.
8. Seller-banks have the option of refusing to deal with applications for TT sales or applications for take-up of the forward fixed date sale contracts received after such banking hours.A-5 Timings i. In their own interest Authorised Dealers shall mention in their telexes or cables the “Value-dates” for receipt/delivery of the foreign currency funds in terms of their TT Sale/Purchase contracts. Delivery under a ‘spot’.htm
. as the case may be. In the event of late delivery in London. ii. ii. thereby amounting to ‘deliberate’ non-delivery of funds. Written instructions of buyer-banks. In such cases the contract shall be deliverable on the next working day when all the centres are open for business. cable. In the case the stated delivery date is later declared a holiday at the overseas centre. interest for the overdue period is to be paid by the seller-bank in India
http://www.A-6 Known Holiday/Subsequently declared holiday Known holiday is defined as one which is known at least seven days before the due date. Banks shall take effective steps to avoid ‘Cash’ transactions in their interbank dealings and establish the practice of dealing among themselves on ‘spot’. no interbank TT shall be despatched. 8. In the case of interbank forward contracts which specifically allow option of delivery. the matter shall be referred to the FEDAI for a final decision which shall be binding upon the banks concerned. Authorised Dealer which has received foreign currency funds. On Saturdays.A-4 Use of incorrectly paid funds (undue enrichment) In line with the international practice. The penalty as stated above shall be in addition to the interest claim of the buyer-bank. the buyer-bank shall take up such forward contracts after giving two clear days notice to the seller-bank and shall deliver cheques on the date of take-up as stated in the advance notice to ensure that the Rupee as well as the foreign currency funds get transferred on the same day. regardless of the cause of the delay.net/FEMA/FEMA2006/FEDAIRules. shall be liable to compensate the concerned Authorised Dealer which has been out of funds by returning the funds with proper value provided the remitting bank bears the back valuation charges. If at the time of conclusion of a forward contract. ‘value next day’ or ‘forward’ contract shall be effected on the stated delivery date. shall be payable by the seller-bank as per sub-rules (ii) and (iii) below. Seller-bank shall arrange delivery of the foreign currency funds at the contracted foreign centre by telex. Holidays which are not known at least seven days before the due date are to be treated as subsequently or suddenly declared holidays.taxmann.e. The buyer-bank shall arrange payment of the Rupee equivalent on the settlement day (i. interest for the number of days of the delay. the delivery shall be effected on the next business day. In case claims are not settled within 2 months from the date of lodgement of claim.A-3 Bilateral Settlement Netting between Authorised Dealers Authorised Dealers may in their discretion arrange for Bilateral Settlement Netting of Interbank contracts subject to the prevailing laws and the agreement between the counterparty banks concerned. the contract shall be deliverable on the day immediately preceding the Saturday or the holiday provided that day is open for business at both the centres. *8. ‘value next day’ or ‘forward’ basis.. date of delivery) and the seller bank shall lay down foreign currency funds simultaneously on the same day. iii. Authorised Dealers should ensure smooth settlement of their interbank transactions. In case the seller-bank is unable to substantiate to the buyer-bank that it had intended to effect proper delivery on the settlement day. ii. not intended for its accounts. the fixed date of delivery or the last date of option is a Saturday or a known holiday either at the centre in India where the Rupee funds are to be settled or at the centre where the foreign exchange funds are to be delivered. 8. 8.A-7 Settlement of interest claims on the delayed delivery of Foreign Currency Funds i.A-2 General i.FEDAI RULES
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8. the seller-bank shall pay to the buyer-bank a penalty as decided by the Managing Committee of the FEDAI or any other Sub-Committee specially appointed for the purpose by the Managing Committee. In the event of late delivery of foreign currency amount of an interbank TT at the stated overseas centre. regarding their take-up of interbank TT transactions in the permitted foreign currencies must be in the hands of the seller-banks not later than one hour before the close of the general banking hours of the latter. SWIFT or other expeditious means of communication without any additional cost to the buyer-bank and the buyer-bank shall advise their Head Offices/Branches/Correspondents to receive the concerned amounts on their account on the contracted dates.
the buyer-bank shall pay interest for each day of delay at 2% over the NSE-MIBOR rate ruling on each such day of delay. In the event of late payment of the equivalent Rupee funds by the buyer-bank in respect of interbank contracts. In case of transactions in currencies of countries not mentioned above.7(ii) and (iii) above. the seller-bank shall be entitled to receive interest for the maximum period of 30 days only notwithstanding the fact that the actual delay period might have been much higher than the said 30 days. the seller-bank shall also become subject to the provisions of Rule 8.A. Provided the seller-bank lodges the relative interest claim with the buyer-bank within 15 days from the date the Rupee amount should have been paid to the seller-bank.A-10 Non-delivery of Foreign Currency Funds In the case of non-delivery of foreign currency funds. 8.A-7 (ii) and (iii) above. The seller-bank in such a case shall be liable to pay interest for the full period of delay. interest for the number of days of the delay shall be paid in India at two per cent over the prime rate of the banks specified below at the respective centres.FEDAI RULES
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at 2% over the “Barclays Bank’s Base Rate” ruling on the day the remittance should have been received in London in the buyer-bank’s nostro account provided the buyer-bank lodges the interest claim within 30 days from the day on which the amount should have been received at the overseas centre. In case the buyer-bank lodges the claim after expiry of the said period of 30 days. Such notification shall be sent by the buyer-bank not later than 15 days from the contracted date of delivery.A-12 Period for settlement of interest claims in Rupees
. Citibank N. the seller-bank shall pay interest at 2% over the notional overdraft rate payable to the buyer-bank. a. 8. ruling on the day the delivery should have been made provided the buyer-bank lodges the claim for interest within 30 days from the day the delivery should have been received abroad : Countries Specified Banks U. interest at the applicable rate shall be paid for a maximum period of 60 days only or the actual period. The buyer bank shall have no right to claim interest in India in terms of Rule 8. whichever is less. interest at the applicable rate shall be paid for a maximum period of 60 days only or for the actual overdue period whichever is less. c. iii.A-9 Wrong delivery of Foreign Currency Funds In case the seller bank delivers the foreign currency funds to the Nostro account other than the notified account of the buyer bank. ii. it shall compensate the buyer bank in terms of Rule 8. 8. the seller-bank shall deliver foreign currency funds within 48 hours of the receipt of the notification from the buyer-bank.taxmann.A-2 ii as above. In the event of late delivery at centres other than London. the buyer-bank shall accept such funds on a value dated basis provided that such funds are delivered within two working days abroad from the value date of the contract. In case the buyer-bank lodges the claim for interest after expiry of the aforesaid period of 30 days.A. In case the seller-bank fails to lodge the claim within the said period of 15 days. No interest claims shall be entertained if claims are preferred after 90 days from the date on which the rupee funds should have been received by the seller bank. d. For funds which are delivered to the buyer-bank beyond two working days abroad from value date of the contract. Canada Bank of Nova Scotia Japan Bank of Tokyo-Mitsubishi Ltd. 8.S.A-11 Delay in payment of Rupee equivalent of interbank TTs in foreign currencies i. the buyer-bank may either accept (a) Value dated funds or (b) Claim interest as per Rule 8. Switzerland Swiss Bank Corporation EURO ABN Amro Bank b. No interest claims shall be entertained if claims are preferred after 90 days from the date on which the foreign currency funds should have been received by the buyer bank.net/FEMA/FEMA2006/FEDAIRules. 8. Interest shall be paid for the period from the date the Rupee funds should have been paid by the buyer-bank to the date the amount was actually paid. In case the foreign currency funds are delivered after a delay of 45 days from date of demand.A.A-7.A-8 Acceptance of back valued credits by buyer-bank in the event of late payment In case where the seller-bank has delayed payment and is willing to rectify the situation by offering to deliver funds on a value dated basis.
Chohung Bank 30. Bank of Punjab Limited 17. The DBS Bank Ltd. 26.FEDAI RULES
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When a bank is served with the notice of interest claim. The Bank of Tokyo-Mitsubishi Ltd. Payment of interest claim cannot be withheld for more than 21 days on the plea that enquiries are being made in the matter of the interest claim. Central Bank of India 27. Bank of Baroda 11. Bank Internasional Indonesia 14. Allahabad Bank 4. Bombay Mercantile Co-op. Abu Dhabi Commercial Bank Ltd. 32. Canara Bank 25. 21. Bank of Maharashtra 15. Deutsche Bank AG 35.htm
. Antwerp Diamond Bank NV 8. Andhra Bank 6. it must settle the claim within 21 days of receipt thereof by making proper enquiry into its books and investigating its records. 36. Export-Import Bank of India 39. The Bank of Rajasthan Ltd. 38. 37. Bank of India 13. Bank of Bahrain and Kuwait BSC 10. Bank of Nova Scotia 16. The Dhanalakshmi Bank Ltd. American Express Bank Ltd. BNP Paribas 20. 19. Bank Ltd. Chinatrust Commercial Bank 29. ABN Amro Bank NV 3. 22. City Union Bank Ltd. Bharat Overseas Bank Ltd. 2. The Federal Bank Ltd. 40. Barclays Bank Plc. Bank of America NT & SA 9. The Catholic Syrian Bank Ltd. Corporation Bank 33. The Hongkong and Shanghai Banking Corporation Limited
http://www.taxmann. Centurion Bank Limited 28. 5. 23. Bank of Ceylon 12. Development Credit Bank Ltd. Dena Bank 34. Citibank NA 31. 18. LIST OF AUTHORISED DEALERS IN FOREIGN EXCHANGE (as on 1st September 2004) 1. Arab Bangladesh Bank Limited 7.net/FEMA/FEMA2006/FEDAIRules. Calyon Bank 24.
Oriental Bank of Commerce Punjab National Bank Punjab & Sind Bank The Sangli Bank Ltd. 55. 47. 63.
HDFC Bank Ltd. 77. 83. 81. 71. 44. 78.A. ICICI Bank Ltd. 86. 84.net/FEMA/FEMA2006/FEDAIRules.FEDAI RULES
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41. 80. 61. 46. 58.
http://www. 49. 60. IDBI Bank Ltd. 45. Industrial Development Bank of India Limited Industrial Finance Corporation of India ING Bank ING Vysya Bank Ltd. 56. Kotak Mahindra Bank Ltd. 73. 54. 42. Bank Ltd. Mashreq Bank psc Mizuho Corporate Bank Ltd. 74. 79. 50. 57. 62. 53.htm
.O. 65. 76. The Maharashtra State Co-op. 85. Standard Chartered Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India State Bank of Indore State Bank of Mauritius Ltd. Bank Ltd. SBI Commercial & International Bank Ltd. 68. 70. Thomas Cook (I) Ltd. Oman International Bank S. The Karur Vysya Bank Ltd. 75. 52.G. State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore The Sumitomo Mitsui Banking Corporation Syndicate Bank Tamilnad Mercantile Bank Ltd. 43. 51. 82. 72.taxmann. The Karnataka Bank Ltd. 48. 59. Krung Thai Bank Public Company Ltd. Small Industries Development Bank of India Societe Generale Sonali Bank The South Indian Bank Ltd. 69. The Lakshmi Vilas Bank Ltd. 67. 66. JP Morgan Chase Bank The Jammu & Kashmir Bank Ltd. 64. The Saraswat Co-op. Indian Bank Indian Overseas Bank IndusInd Bank Ltd. Lord Krishna Bank Ltd.
UCO Bank UFJ Bank Ltd. 89.htm
. Vijaya Bank YES Bank Ltd.FEDAI RULES
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87.net/FEMA/FEMA2006/FEDAIRules.taxmann. 91. 94. 88. 92. 90. 93. UTI Bank Ltd. Union Bank of India United Bank of India The United Western Bank Ltd.