PROMOTION33 - Daily Bytes-24Dec2019

Sr. No Questions
You have received a Swift advice from your East correspondent stating that:( i) it has placed to the credit of your account with your New York correspondent a sum of US$
1 500000/( ii ) and requesting you to credit equivalent value in Rupees to their Rupee account with You. Interbank Rates in Mumbai are 66.60/66.62. What rate would you
apply and what Rupee equivalent would you credit to the account of the Middle East correspondent with you.

Your exporter, an Export Oriented Unit, has presented to you sight documents for US$ 50000/ for negotiation under a letter of credit providing for value date TT
2 reimbursement. The exchange rates are: Interbank UD$ 1= Rs.66.60/62. An exchange margin of 0.15% is required by you. Commission of 0.5% to the Indian agent is
payable. What would be the amount credited to the customer’s account ?

October Spot US$ 1= 66.60/ 66.62, 1 month forward 0.2200/0.2400. What rate will apply for customer if contract booked for November?
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4 October Spot rate US$1= 66.60/62, 3 month forward 0.2400/0.2200. What rate will apply if contract booked for December?

You sold Euro 1 million value spot to your customer at EURO 1=Rs.74.52 and covered yourself in Singapore market on the same day when the exchange rate was: Spot
5 EURO 1= USD1.1.1215/1.1218. Local interbank US$1= Rs.66.60/66.62.( Brokerage paid Rs.2000). Calculate the cover rate nearest to the fourth decimal and ascertain profit
or loss in the transaction to the nearest Rupee.

Rate applied in case of Foreign Bill purchased returned unpaid will be:
6
Rate applied in case of Outward remittance in foreign currency( TT,MT,PO,DD)
7

8 For the purpose of Foreign Exchange business, what is “ Known holiday” ?

9 When overdue interest is recovered from customer in export transaction?

10 In case of dishonour of a bill before crystallisation, what shall bank recover from the customer ?

11 What is normal transit period in case of export transaction?

12 Rate applicable for conversion of foreign currency inward remittance?

13 What is the time limit to pay / send intimation as the case may be, by the ADs to the beneficiary from the date of receipt of credit advice/ Nostro statement?

14 What is compensation for delayed payment in case of question 13 above?

15 What is the time limit for the claim for the delay in receipt of funds by the buyer bank in settlement of foreign currency contract ?
 PROMOTION33 - Daily Bytes-24Dec2019

Answer key
Sr. No
It is a purchase of USD from the Middle East correspondent. The proceeds of Rupees have to be credited to their Rupee account. Since this is an interbank transaction, no
1 separate margin is loaded on the rates and it is assumed that the rates quoted include the profit margin also. The applicable rate for sale of Rupee ( for buying Dollars) is
Rs.66.60. For US$500000@ Rs.66.60, the Rupee equivalent would be Rs.3,33,00000/ (500000x66.60)
This is a purchase transactions . Rate applied would be bill buying rate. i.e.Spot rate US$ 1= 66.6000(Buy low) Less (margin @0.15%= 0.0999)= 66.5001. Rounded of two
decimal 66.50. US$50000/@Rs.66.50= Rs.33,25,000/ Less commission paid to Indian agent on bill amount US$50000/@0.5%=us$250 @Rs.66.50= 16625. Total amount to
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be credited Rs.3308375/

3 1 month forward rate 0.2200/0.2400 indicates that US$ in on premium, so it will be added to Spot US$ rate. Rate for November will be 1US$66.82/66.86

4 2 months forward rate 0.2400/0.2200 indicates that US$ is on discount, so it will be deducted from spot rate. Rate for December will be 1 US$ 66.36/66.40

Our cost of 1 million EURO-Cross Rate 66.62x1.1218=74.7343. 1 Million euro@ 74.7343= Rs.74734300 Add Brokerage Rs.2000=Rs.74736300/. Proceed of sale to customer
5 @Rs.74.52= Rs.74520000/ Loss Rs.74736300- Rs.74520000 =Rs.216300/

TT Selling rate
6
TT Selling rate
7

8 Known holiday is one which is known at least 3 working days before the date.

Overdue interest shall be recovered from customer, if payment is not received within normal transit period in case of demand bills and on/or before notional due date/
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actual due date in case of Usance bills , as per RBI directives.
10 Bank will recover Rupee equivalent amount of the bill and foreign currency charges at TT selling rate plus appropriate interest and rupee denominated charges.

11 Normal transit period comprises of the average period normally involved from the date of negotiation/ purchase/ discount till the receipt of the bill proceeds.

12 TT buying rate.

13 Two working days

14 In case of delay, the bank shall pay the beneficiary interest@2 % over its saving interest rate plus compensation for adverse movement of exchange rate.

15 It should be made within 15 working days from the due date of the contract.