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Foreign Exchange/International Banking (Class Room--TKR)----98743 61176

3 Risks in FOREX

1) Transaction Risk----Exchange rate mechanism


2) Translation Risk— Accounting stage (FEDAI)
3) Operating Exposure---Deferred Obligations

For exporter customers, banks always offer Buying rate [in case of inflow of foreign currency]

Bank to customer---Merchant Transaction


Bank to bank---------Inter-bank Transaction

FEDAI quotes a rate called Notional Rate

Over bought position (O/B)---Credit balance in the Nostro Account---Long position


Over sold position (O/S)-------Debit balance in the Nostro Account---Short position

Tools of Derivative Products to hedge (mitigate) the Risk

1) Forward
2) Future
3) Option
4) Swap

1 USD = Rs.45.20 -------Direct Quotation----Buy Low, but sell high


Rs.100 = USD 2.21--------Indirect Quotation----Buy high, sell low.
From 01/07/1993 2 way quotes
Foreign Exchange Market-----From Monday to Friday (5 days), but in Islamic Counties like Soudi
Arabs, Pakistan Friday & Saturday are holidays.

In the case of, 1 USD = INR 45.10/15-------0.05 margin as cushion.

Inflows Outflows
IR (Inward Remittances) OR (Outward Remittances)
Exports Imports
T T Buying Rate T T Selling Rate
Bills Buying Rate Bills Selling Rate
Value Dates
4 types of delivery (INCO Terms----International Commercial Terms)

Date Delivery Transaction Value Date Remarks


18/05/10 Cash/Ready (TOD) T 18/05/10 Provided no holiday
,, TOM (Tomorrow) T +1 19/05/10 or Saturday/Sunday
,, Spot T +2 20/05/10 in between.
,, Forward >T +2 >20/05/10

Generally Spot rate is displayed in the Newspapers.

In case of Selling Rate, Margin is added.


In case of Selling Rate, Margin is subtracted.

USD/INR = Rs.44.25/27
means that banks/Money Exchangers buy/purchase US Dollar 1 as against Rs.44.25, but sells in the
market i.e. we have to buy/purchase from the market at Rs.44.27 [in one market]

GBP/USD = 1.7828/38
means that banks/Money Exchangers buy/purchase GBP 1 as against USD 1.7828, but sells in the
market i.e. we have to buy/purchase from the market at USD 1.7838 [in another market]
So, if we have to purchase GBP by INR, we need to convert by purchasing USD by 1 GBP first i.e.
USD 1.7838 and thereafter INR by USD i.e. Rs.44.27.
Thus, GBP/INR =Rs.44.27 x 1.7838
As per FEDAI (25, 50, 75, 00) are taken into consideration. Multiplication (x)

Nostro Account----My account with you.


Vostro Account----Your account with me

In case, USD/INR = 44.25/27


USD/GBP = 0.7050/70

TT Selling Rate------1 GBP = 44.27/0.7050


TT Buying Rate------1 GBP = 44.25/0.7070, since 1 USD = 44.27 (Purchased) Division (/)

I USD = GBP 0.7050


So, 1 GBP = 1/0.7050

JPY/INR if USD/INR = 44.25/27


JPY/INR = 105.15/25

Buying Rate = 44.25/105.25


Selling Rate = 44.27/105.15

Call Option (Thumb Ball)


Strike Price---Rs.45.00
Spot Rate> Strike Price = In the money
i.e Rs. 45.20>Rs.45, i.e. if we want to buy USD 1000 on 30/06/2010, but enter in a Call Option
today (25/05/10) 1 USD = Rs.45, but on 30/06/2010 Spot rate is Rs.45.20, we have option to buy
from the dealer USD 1000 against payment of Rs.45 x 1000 =Rs.45,000 or from Spot against
Rs.45.20 x 1000 = Rs. 45,200. So, exercising Call Option is more profitable than Spot. So, it is in
the money.

Strike Rate> Spot Rate = Out of money.


Strike Rate = Spot Rate = At the money.

Reversely, in Put Option,


Spot Rate> Strike Price = Out of money
Strike Rate> Spot Rate = In the money.
Strike Rate = Spot Rate = At the money.

====== xxxxxxxxxxxxxxxxxxxxx--------------==============xxxxxxxxxxxxxxxxxx
R Kumar [02/05/2010----9830530956 (10 a.m. to 6 p.m.), rnk_sa2004@yahoo.co.in]

Exchange Rate

1) Buying 2) Selling

1) Buying
a) TT
[1 USD=Rs. 47.50]

b) Bills
[1 USD=Rs. 47.40]

2) Selling

a) TT
[1 USD=Rs. 47.80]

b) Bills
[1 USD=Rs. 47.90]
Nostro Account----Our Account with your bank. An Account with Indian bank maintained with
the bank outside India.

If the Nostro Account is credited at the time of buying Foreign Currency, it is TT Buying,
otherwise it is Bill Buying.

If I handle with any documents, Bill Selling is applicable, otherwise TT Selling.

Bills Selling is advantageous/beneficial to the banks, since documents are to be handled.


TT Buying is advantageous to the customers, since Nostro Account has already been credited.
According to date of contract and date of delivery/settlement, contracts are treated to be as
Cash/Ready, TOM, Spot and Forward.

If nothing is mentioned, it will be presumed that it is a Spot Contract/Rate.


In Forward Contract, delivery/settlement may be a fixed date or a fixed period.
In case of Traveller’s cheque, TT Buying or TT Selling is applicable.

If one rate is mentioned, it is the average of TT Buying & TT Selling rate.


When the rate is more than Spot Rate, then Forward is in Premium.

When an exporter quotes a Buying Rate, he must try to quote a rate as small as possible.

Premium is always added.


Discount is always subtracted.
Margin in case of Selling is added.
Margin in case of Buying is subtracted.

Inter-bank Rate---Rate between the banks.


Merchant Rate----Rate between the exporter and importer

If the 2nd number is higher, it is in Premium i.e. 1 USD = Rs.45.50/60


If the 2nd number is lower, it is in Discount i.e. 1 USD = Rs.45.60/50

Contract Date Delivery Quote


Date/Settlement Date
03/05/10 1 USD = Rs.45.50/60
1 m = 2/4
2 m = 4/5
10/07/10 3 m = 7/9

On 10/07/10, exporter’s rate will be 1 USD = Rs.45.50


+ 4
Rs.45.54 [as low as possible]

On 10/07/10, importer’s rate will be 1 USD = Rs.45.60


+ 9
Rs.45.54 [as high as possible]

Cross Rate (BP—11 & 19)

1 USD = Rs.50.00
USD/GBP = 1.5 i.e. 1 GBP = USD 1.5
So, 1 GBP = Rs.1.5 x 50 = Rs.75
USD/INR = 45.50/60 i.e. 1 USD = Rs.45.50/60
GBP/USD = 1.8340/50 i.e. 1 GBP = USD 1.8340/50
What is 1 GBP?
Buying Rate = 1.8340 x Rs.45.50
Selling Rate = 1.8340 x Rs.45.60

There are 2 parties in Option, one party having the Option is called ‘Buyer’ of the Option and the
other party is ‘Writer’ of the Option.
Call Option---Buying
Put Option—Selling
There are 2 Options ----European Option & American Option.

Arbitrage----Buying in one market and selling in another market.

Future is a Derivative. It is a standardized contract where there will be no Counter party risk.
Regulatory body is present.
Future and Option are exchange-traded contracts.

In case of Forward Contract, there is counter party risk.

There are 4 currencies in NSE/MCE [Multi-Commodity Exchange]

OTC (Over the Counter)


USD/INR USD 1000
EURO EURO 1000
GBP GBP 1000
JPY JPY 10,000

SWAP

Sometimes buying and selling of some amounts of Foreign Currency for different maturities take
place between CBI & PNB.

L/C & Bank Guarantee


Stand-by L.C---serves the purpose of Bank Guarantee.
Red Clause L/C----Pre-shipment/Packing credit to the exporter allowed
Green Clause----To seller as anticipatory credit

UCPDC 500 UCPDC—600


From 1993 Started from 01/07/2007.

Articles—49 Articles—39
Maximum period—7 banking days Maximum period—5 banking days

About +- 10% in quantity or amount.


+- 5 days.
Bill of Entry is a proof issued by Customs Authority that physical goods enter in India.

Banks to furnish Half yearly statement after 6 months to RBI informing the names of Defaulting
importers---------------BEF

Anybody intending to export must submit a Declaration Form before the Customs that the exporters
will get the full realization proceeds within 12 months.

Banks inform about the Defaulting exporters to RBI in a statement called XOX in 30th June and
31st December every year.

Exporters’ Declaration Forms

GR-----Non-computerized/Obsolete/
SDF---Computerized instead of GR
PP---By Post/Parcel
SOFTEX----Software exports

Crystallization: Conversion of Foreign Currency Liability into Indian Currency.


Exports----Maximum 30 days i.e. any day within 30 days.
Imports----Maximum 10 days i.e. any day within 10 days.

Factoring----Buyer’s Credit ---Purchasing of sundry debts or book debts with or without recourse.
Forfaiting----Supplier’s Credit---Purchase of exports Receivable always without recourse.

ADR---Dollar denominated exchange traded in USA


GDR traded in the stock exchange of Europe & USA (Luxemburg)
IDR---Indian Depository Receipt denominated in Indian Rupees
It is Trade Credit where it is for >180 days, but <3 years.
ECB (External Commercial Borrowing) is a credit where borrowing is for more than 3 years (>3
years) and if the payment is made outside India [Capital Account].
Maximum Limit is USD 500 million.

If there is any change of asset or liability of an Indian outside India or of a foreigner in India, it is
known as Capital Account transaction.

Current Account Convertibility

USD 10,000 per financial year for private visit/tour [Current Account]
USD 25,000 for Business trip
USD 1,00,000 for Medical treatment without any documentary evidence, or studying abroad or
employment

No specific limit for gifts and donations


Liberalized Remittance Scheme----Under this Scheme, any Resident Indian can remit USD
2,00,000 without specifying any reason for a financial year [Capital Account Convertibility].

In terms of Tarapore Committee recommendations, RBI accepts partial Capital Account


Convertibility.

Buyer’s Credit & Supplier’s Credit

On execution of exports, exporter demands payment immediately. But importer wants deferred
payment. In that case, buyer’s credit or supplier’s credit occurs. Banks of both ends (importer and
exporter) play an important role on behalf of the importer so that imports are not disturbed and
exporter can get the payment in time.

Importer provides the Bank Guarantee to his (Importer’s) bank and in turn the importer’s bank
provides Bank Guarantee to exporter’s bank. So, exporter’s bank’s provides loan either to buyer or
to supplier. If Buyer’s account is debited, it is Supplier’s Credit (Importer). If supplier’s Account
is debited, it is Buyer’s Credit (Exporter).

NRO, NRE & FCNR (B) Account

For Non Resident Indians (NRI), there are 3 Deposit Schemes namely,
a) NRO ii) NRE & iii) FCNR (B)

Accounts under NRO, NRE can be opened in all/any branch of the banks and any type of account
i.e. Fixed, Savings Bank, Current & Recurring can be opened by an NRI.

FCNR (B) can be opened only in some branches of the banks in 6 denominated Foreign Currencies
i.e. 1) JPY 2) Euro 3) US Dollar 4) GBP 5) Aus Dollar 6) Can Dollar

Fixed Deposits can be opened under 3 Accounts/Deposit Schemes.

NRO -----Joint account with Resident Indian can be opened. It is Non-Repatriable.


Under NRO, the money can be used only in India. Maximum amount of repatration for NRO is
USD 1 million. TDS is applicable.

NRE & FCNR (B) can’t be opened jointly without NRI. They are Repatriable. No Income Tax or
Wealth Tax is to be paid by the Account Holders. Indian Rupees can’t be deposited/credited in
these Accounts.

Repatriable means money/amount can freely go to other country.


26/05/2010 ---Foreign Exchange/International Banking (Class Room--TKR)----98743 61176

FEMA 1999 was enacted and gazette on 31/05/1999 and came into force from 01/06/2000.
Objective of FEMA is to manage Foreign Exchange in India with a uniform and steady growth of
Foreign Exchange.

OTC (Risk Management)---covers Liquidity Risk.

BOT [Balance of Trade] is the difference of Exports & Imports.


BOP [Balance of Payment] is the difference between Total Inflows & Total Outflows of
exchanges. [BP—7]
In BOP, if Inflows is greater than Outflows (Inflows>Outflows), Currency of that country is
stronger and appreciates.
BOP is an indicator of exchange rate of a country.
If interest rate increases, currency appreciates for short term, but in long term depreciates. Because,
FIIs start coming with huge investments, currency of a country will appreciate as a direct result.
But, in long term the Indian businessmen get looser and looser resulting in currency depreciation.

When interest rate decreases, currency depreciates for long term, but in short term currency gets
appreciated.

If Total Inflows>Total Outflows, it is positive BOP.-----Currency Appreciation.


If Total Outflows>Total Inflows, it is negative BOP. ---Currency Depreciation.

If GDP of a country is higher, Currency will be higher.


If GDP of a country is lower, Currency will be lower.

GOI declares the Fiscal policy of the country, whereas RBI, being the Central Bank of the country
declares the Monetary policy time to time to regulate the financial markets.
RBI declares Repo Rate, CRR, SLR, Bank Rate, Selective Credit Control to determine the
Exchange rates of the markets.

Current Account of a country----P/L Account in respect of exports and imports


Capital Account of a country relates to Balance sheet where Assets and Liabilities get affected due
to the inflows and outflows of Foreign Currency.

Tarapore Committee headed by Tarapore erstwhile Dy. Governor of RBI recommended partial
convertibility of Capital Account i.e. up-to certain limits.
An Indian can easily purchase a land or building in India (Capital investment), but can’t purchase
land in any Foreign country, (outflows not allowed for capital investment outside India after the
limits.)
Similarly, a foreigner can’t have capital investment in India beyond the limits or not allowed to
withdraw currency as per their discretion.

But the many foreign countries adopt Capital Account Convertibility, as a result of which Libya,
Zambia, Malaysia get affected in Economic melt-down of 2008.
I USD = INR 45.10/12
Cash/Spot-----02/01
Spot/1st month-----05/06
Spot/2nd month---10/11

Premium
Discount

Ready/Cash Buying Rate (on Discount Rate) Rs.45.10


(-) 0.02
Rs.45.08

Ready/Cash Selling Rate (on Discount Rate) Rs.45.12


(-) 0.01
Rs.45.11
Inter-bank Rate

1 USD = INR 45.10/12


I GBP = USD 1.2802/2830
In Direct Quotes Left x Left-----------Buying Rate
Right x Right-------Selling Rate

If 1 USD = GBP 0.7050/60


Buying Rate = Rs.45.10/0.7060 = Rs.63.18
Selling Rate = Rs.45.12/0.7050 = Rs.63.00
1 GBP = INR 63.18/00
In Direct Quotation for Cross Currency
Buying Rate = Right x Left [ X]
Selling Rate = Left x Right [X]

Dealing Room [BP—18]

Front Office-------------Chief Dealer


Middle/Mid Office----Independent/ALCO
Back Office-------------Accounting

Over Night Limit (ON) is lower than Day Light limit (DL)

Sub-vent to financing banker--------2%

BP—22
AD will crystallize (converts) the exports proceeds if outstanding from Due date on 30th day in case
of exports.
AD will crystallize (converts) the imports proceeds if outstanding from Due date on 10th day in case
of imports, since Nostro Account has already been debited.
Derivative is a product which is derived from underlying assets.
ADR & GDR are underlying assets
Derivatives are of 4 kinds namely 1) Future 2) Swaps 3) Option & 4) Forwards

(BP—26)
8a) TT Buying rate for inward payment of USD 2,50,000, if Interbank rate is 46.00/02, and
margin to be charged at 0.08%

TT Buying Rate------ 1 USD = INR 46.0000


(-) Margin 0.0368 [0.08%]
INR 45.9632 i.e. INR 45.9625

[Customer rates of 3rd & 4th decimal places will be ended with 25,50,75,00
In case of TT Buying Rate (Exports), Margin will be deducted
Pay Less, buy lower in case of imports]

So, TT Buying rate for Inward payment of USD 2,50,000 is


USD 2,50,000 x INR 45.9625 = Rs.1,14,90,625

BP--13
Exports-----Credit received in Nostro Account
It is a purchase of USD from the customer for which USD will have to be sold in the market.
Market buys USD at Rs.46.00 and sells at Rs.46.02. So, we have to quote Buying rate of Rs.46.00
less Margin i.e. T T Buying Rate.

Purchase Transaction/Contract----T T Buying Rate


Sale Transaction/Contract-------T T Selling Rate

In case of cancellation of Forward Contract, Reverse treatment i.e.


Purchase Transaction/Contract----T T Selling Rate
Sale Transaction/Contract-------T T Buying Rate

8b) Bill Selling rates for import bill of USD 1,00,000, if Interbank market is 45.7650/7750, and
margin to be charged at 0.20%

Bill Selling Rate------ 1 USD = INR 45.7750


(+) Margin 0.0915 [0.20%]
INR 45.8665 i.e. INR 45.8675

So, Bill Selling rate for Import bill of USD 1,00,000 is


USD 1,00,000 x INR 45.8675 = Rs.45,86,750
[In case of Bill Selling Rate (Imports), Margin will be added
*** Recover Most, sell higher in case of exports]
8c) TT Buying rates for GBP 50,000 inward payment, if USD/INR is 46.00/01 and GBP/USD
is 1.7875/85. Ignore margins.

TT Buying Rate for 1GBP = INR 46.00 X 1.7875 =Rs.82.2250


So, GBP 50,000 = Rs.82.2250 X 50,000 = Rs.41,11,250/-

8d) TT Selling Rate for issue of draft for JPY 1,00,000 delivery 3rd month (full month) if
USD/INR is 45.9400/9475 and USD/JPY 109.50/55. No margins. Give Rupee amount to be
charged.

USD/INR = 45.9400/9475
USD/JPY = 109.50/55
TT Selling Rate = Rs.45.9475/109.50 i.e. Rs.0.4196
For 100 JPY = Rs.0.4196 x 100 = Rs.41.9600
So, JPY 1,00,000 = Rs.41.9600/100 x 1,00,000 = Rs.41,960/-

Golden Rule for Forward Contract

For a sale contract, premium for the full period up-to end date of the contract shall be closed,
whereas for purchase contract, premium would be passed on only up-to the beginning of the
contract period.
[Exporter----purchase Forward Contract]

8e) Rate for Forward purchase booking of USD 1,00,000 delivery 3rd month (Full month) if
USD/INR Spot is 45.7850/7950 and Premium is 1 month—0.0850/0.0950, 2 months—
0.1600/0.1700 and 3 months---0.2500/0.2550. Ignore Margins

1st month---27/05 to 26/06/10 (Assume)


2nd month---26/06 to 25/07/10 (Assume)
3rd month---25/07 to 24/08/10 (Assume)

Exporter’s Purchase Contract, so T T Buying Rate is Rs.45.7850


(+) Premium (3rd month) 0.1600
Rs.45.9450

So, T T Buying Rate of USD 1,00,000 = Rs.45.9450 X 1,00,000 i.e. Rs.45,94,500/-

***** In case of Exporter, Premium will be given at the beginning of the next month [Added].
In case of Importer, Premium will be given at the end of the last month [Deducted].
2nd Golden Rule

For cancellation of any Forward Contract (Purchase or Sale), opposite T T Rate will be
applied.

8f) Forward Sale Contract USD 5,00,000 delivery 2nd month (Full month). If Spot and
Forward rates are same as given in 8e above and margin 0.15% to be charged.

In Sale Contract [Importer--Outflows], T T Selling Rate---- Rs.45.7950


(+) Premium (2nd month) 0.1700
Rs.46.9650
(+) Margin (0.15%) 0.0704
Rs.47.0354
So, T T Selling Rate of USD 5,00,000 = Rs.47.0354 X 5,00,000 i.e. Rs.2,35,17,700/-

We have to collect maximum Premium and add Margin (+) from the Importer, but give minimum
Premium and deduct Margin (-) from the Exporter.

8g) What rate would a Forward Purchase Contract of USD 1,00,000 due on Spot date be
cancelled if interbank Spot is Rs.45.7500/7550 and exchange margin on T T Purchase is
0.08% and T T Selling is 0.15%.

It is a Purchase contract of USD/INR = Rs.45.7500/7550


But, for cancellation of Forward Purchase Contract, as per 2nd Golden Rule, T T Selling Rate will
be applied.
So, T T Selling Rate----------------- Rs.45.7550
(+) Margin (0.15%) 0.0686
Rs.45.8236
So, T T Selling Rate of USD 1,00,000 = Rs.45.8236 X 1,00,000 i.e. Rs.45,82,360/-

** Otherwise, if it would be a Sale Contract, for cancellation of Forward Sale Contract, as per 2nd
Golden Rule, T T Buying Rate will be applied.
So, T T Buying Rate----------------- Rs.45.7500
(-) Margin (0.08%) 0.0366
Rs.45.7134
So, T T Buying Rate of USD 1,00,000 = Rs.45.7134 X 1,00,000 i.e. Rs.45,71,340/-
8h) Calculate difference to be charged/paid to the customer, in the above question, if the
original contract was booked at Rs.46.00 per USD. [BP—26]

To receive Rs.46,00,000/- (1 USD =Rs.46.00)


To pay Rs.45,82,360/- [for cancellation of Forward Purchase
Contract]
Difference to be paid to the customer Rs. 17,640/-
Customer will get the benefit Rs.17,640/-, original Forward Contract was at higher rate than the
purchase contract.

If the original contract was for USD/INR = Rs.45.80


To receive Rs.45,82,360/- (for cancellation of Forward
Purchase Contract)
To pay Rs.45,80,000/- [1 USD =Rs.45.80]
Difference to be charged from the customer Rs. 2,360/-
Customer will have loss of Rs.17,640/-, original Forward Contract was at lower rate than the
purchase contract.

Letter of Credit (LC)

How long is too long----Maximum of 5 banking days following the day of presentation to
determine if a presentation is complying[Article 14]

UCPDC 500---49 Articles, 7 Banking Days


UCPDC 600---39 Articles, 5 Banking days

BP---36 Case Studies

Article 36 of UCPDC 600


Force Majeur----Acts of Terrorism clause included besides Fire, Flood etc.

IEC Code---10 digits, issued by DGFT, New Delhi H. O.


IEC Code to be submitted by the Exporter to the Customs Authority ---one copy and RBI through
AD---I copy

BP—86

FOB---Free on Board i.e. Importer to bear Insurance, freight etc

CNF/C & F/ CFR-------Cost & Freight will be borne by Exporter

CIF-----Cost, Insurance & Freight borne by Exporter

P/C (Packing Credit) is always given on FOB Value of the contract.


FBP----Foreign Bill Purchased
FUBD---Foreign Ussance Bills Discount
Sight---Purchase Bills
Ussance----Documents

Question No—23 of TKR [BP—105]

USD 50,000 X Rs.44 = Rs.22,00,000


(-) Insurance & Freight (12%) = Rs. 2,64,000
Rs.19,36,000
(-) Profit Margin (10%) on 22,00,000 Rs. 2,20,000
FOB Rs.17,16,000
(-) 25% Margin on FOB Rs .4,29,000
Bank can allow as PCL to the exporter Rs.12,87,000

Question No-24

31/03/2005 Invoice Value USD 45,000 X Rs.43.85 CIF = Rs. 19,73,250


(-) Margin on FBP 10% = Rs. 1,97,325
The post shipment advance allowed to the exporter on FBP = Rs. 17,75,925

01/01/2005 PCL granted/given to the exporter i.e. Rs.12,87,000


The Exporter submitted the export documents on drawn on sight basis for USD 45,000 on
31/03/2005 [Post shipment]
The Exporter refunded on realization of the export proceeds on 30/04/2005

Packing Credits for January ----31 days


February ----28 days
March -------30 days
Total ------89 days

Bank will charge interest @Rs.7% on Rs.12,87,000 for 89 days i.e. Rs.21,967

Entry Fee for 25 days


17,75,925/- x 7% for 25 days
Overdue for (30-25) = 5 days @Rs.10% for Rs.17,75,925/-
Forfeiting and Factoring are financing against Receivables

Factoring is short term financing against Receivables for both domestic and export Receivables,
whereas forfeiting is financing against long term export Receivables only. The forfeiter is EXIM
Bank in India. Factoring is always with or without recourse and forfeiting is always without
recourse

EXIM Bank will arrange a line of credit

EURO Target [ISDA, Swap & Derivatives]

Resident Indian >182 days in India in a financial year

NRI-----I T Act, 1961

NRI means a person who has gone out of India for


1) Taking up of an employment
2) Business
3) Vocation
4) Any other purpose, while his stayal outside India for an indefinite period

PIO[Person of Indian Origin] who possesses


1) Indian Passport at any time
2) Grand Father/Great Grandfather
3) So/Grandson

In case of opening Bank Account in India, both NRI or PIO have same status

1) NRO Account---Non Resident Ordinary maintained in India


TDS ---30%, but in normal domestic account it is 10.2%

2) NRE----Only NRIs/PIOs can open


Fully repatriable
S/B Interest 3.5%
Time Deposits LIBOR +

3) FCNR (B) Account---NRIs & PIOs can open


Only for Time deposits----12 months
Maximum 86 months

NRO/NRE in Rupee Account


FCNR (B) in Foreign Currency
NRO can be opened with NRI or with Resident Indian
Resident Indian Accounts

1) RFC [Returning Indians] Minimum stay as NRI for 1 year


Current, Savings, Time Deposits, Interest payable

2) RFC (D) i.e. Domestic for Resident Indians---No interest payment

3) EEFC Account----Beneficiary & Exchange Earners like Exports, Professionals etc