Gist of Important FEDAI Rules

Gist of Important FEDAI Rules

Rule 1: Hours of Business

1.1 The exchange trading hours for Inter-bank forex market in India would be from

9.00 a.m. to 5.00 p.m. No customer transaction should be undertaken by the

Authorised Dealers after 4.30 p.m. on any working day. 1.2 Cut-off time limit of 05.00 p.m. is not applicable for cross- currency transactions.

In terms of paragraph 7.1 of Internal Control Guidelines over Foreign Exchange

Business of Reserve Bank of India (February 2011), Authorised Dealers are

permitted to undertake cross-currency transactions during extended hours, provided

the Managements lay down the extended dealing hours. 1.3 For the purpose of Foreign Exchange business, Saturday will not be treated as

a working day. 1.4 “Known holiday” is one which is known at least 4 working days before the date. A holiday that is not a “known holiday” is defined as a “suddenly declared holiday”. Rule 2: Export Transactions

2.1. Post-shipment Credit in Rupees

(c) Application of exchange rate: Foreign Currency bills will be

purchased/discounted/ negotiated at the Authorised Dealer’s current bill buying rate

or contracted rate. Interest for the normal transit period and/or usance period shall

be recovered upfront simultaneously. (d) Crystallization and Recovery:

(ii) Authorized Dealers should formulate own policy for crystallization of foreign

currency liability into rupee liability, in case of non-payment of bills on the due

date. (iii) The policy in this regard should be transparently available to the customers. (iv) For crystallization into Rupee liability, the Authorised Dealer shall apply its TT

selling rate of exchange. The amount recoverable, thereafter, shall be the

crystallized Rupee amount along with interest and charges, if any.



(v) Interest shall be recovered on the date of crystallization for the overdue period

at the appropriate rate; and thereafter till the date of recovery of the

crystallized amount. (vi) Export bills payable in countries with externalization issues shall also be

crystallized as per the policy of the authorised dealer, notwithstanding receipt

of advice of payment in local currency. (d) Realization of Bills after crystallization: After receipt of advice of realization,

the authorised dealer will apply TT buying rate or contracted rate (if any) to convert

foreign currency proceeds. (e) Dishonor of bills: In case of dishonor of a bill before crystallization, the bank

shall recover:

(ii) Rupee equivalent amount of the bill and foreign currency charges at TT selling rate. (iii) Appropriate interest and rupee denominated charges. 2.2. Application of Interest

(c) Rate of interest applicable to all export transactions shall be as per the

guidelines of Reserve Bank of India from time to time. (d) Overdue interest shall be recovered from the customer, if payment is not

received within normal transit period in case of demand bills and on/or before

notional due date/actual due date in case of usance bills, as per RBI directive. (e) Early Realization: In case of early realization, interest for the unexpired period

shall be refunded to the customer. The bank shall also pay or recover notional swap

cost as in the case of early delivery under a forward contract. 2.3. Normal Transit Period:

Concepts of normal transit period and notional due date are linked to concessional

interest rate on export bills. Normal transit period comprises the average period

normally reckoned from the date of negotiation/purchase/discount till the receipt of

bill proceeds.

It is not to be confused with the time taken for the arrival of the goods at the destination. Normal transit period for different categories of export business are laid down as below:

(c) Fixed Due Date: In the case of export usance bills, where due dates are fixed, or are reckoned from date of shipment or date of bill of exchange etc, the actual due

date is known. Therefore, in such cases, normal transit period is not applicable. (d) Bills in Foreign Currencies – 25 days

(e) Exports to Iraq under United Nations Guidelines – Max. 120 days

(g) Bills drawn in Rupees under Letters of Credit (L/C)

(i) Reimbursement provided at centre of negotiation - 3 days

(ii) Reimbursement provided in India at centre different from centre of

negotiation - 7 days

(iii) Reimbursement provided by banks outside India - 20 days

(iv) Exports to Russia under L/C where reimbursement is provided by RBI - 20 days. (h) Bills in Rupees not under Letter of Credit - 20 days

(i) TT reimbursement under Letters of Credit (L/C)

(i) Where L/C provides for reimbursement by electronic means - 5 days

(ii) Where L/C provides reimbursement claim after certain number of days

from the date of negotiation - 5 days + this additional period. 2.4. Substitution/Change in Tenor:

(o) In case of change in the usance of a bill, interest on post-shipment credit shall

be charged to the customer, as per RBI guidelines. In addition, the bank shall

charge or pay notional swap difference. Interest on outlay of funds for such

swaps shall also be recovered from the customer at rate not below base rate

of the bank concerned. (p) It is optional for banks to accept delivery of bills under a contract made for

purchase of a clean TT. In such cases, the bank shall recover/pay notional

swap difference for the relative cover. Interest at the rate not below base rate

of the bank would be charged on the outlay of funds. 2.5. Export Bills sent for collection:

(a) Application of exchange rates: The conversion of foreign currency proceeds of

export bills sent for collection or of goods sent on consignment basis shall be

done at prevailing TT buying rate or the forward contract rate, as the case

may be. The conversion to Rupee equivalent shall be made only after the

foreign currency amount is credited to the nostro account of the bank. (b) On receipt of credit advice/statement of nostro account and compliances of

guidelines, requirements of the Bank and FEMA, the Bank shall transfer funds

for the credit of exporter’s account within two working days. (c) If the above stipulated time limit is not observed, the Bank shall pay

compensation for the delayed period at the minimum interest rate charged on

export credit. Compensation for adverse movement of exchange rate, if any, shall also be paid as per the compensation policy of the bank.



Rule 3: Import Transactions

3.1 Application of exchange rate:

(a) Retirement of import bills - Exchange rate as per forward sale contract, if

forward contract is in place. Prevailing Bills selling rate, in case there is no

forward contract. (b) Crystallization of Import - same as above bill (vide para 3.3 below)

(c) For determination of stamp - As per exchange rate provided by the duty on

import bills authority concerned. 3.2. Application of Interest:

(a) Bills negotiated under import letters of credit shall carry commercial rate of

interest as applicable to banks’ domestic advances from time to time. (b) Interest remittable on interest bearing bills shall be subject to the directive of

Reserve Bank of India in this regard. 3.3. Crystallization of Import Bill under Letters of Credit. Unpaid foreign currency import bills drawn under letters of credit shall be

crystallized as per the stated policy of the bank in this respect. Rule 4 Clean Instruments:

4.1. Outward Remittance: Outward remittance shall be effected at TT selling rate of

the bank ruling on that date or at the forward contract rate. 4.2. Encashment of foreign currency notes and instruments, Foreign currency

travelers’ cheques, currency notes, foreign currency in prepaid card, debit/credit

card will be encashed at Authorised Dealer’s option at the appropriate buying rate

ruling on the date of encashment. 4. 3. Payment of foreign inward remittance, Foreign currency remittance up to an

equivalent of USD 10,000/- shall be immediately converted into Indian Rupees. Remittance in excess of equivalent of USD 10,000 shall be executed in foreign

currency. The beneficiary has the option of presenting the related instrument for

payment to the executing bank within the period prescribed under FEMA. 4.4. The applicable exchange rate for conversion of the foreign currency inward

remittance shall be TT buying rate or the contracted rate as the case may be. 4.5. Compensation for delayed payment: Authorised Dealers shall pay or send

intimation, as the case may be, to the beneficiary in two working days from the date

of receipt of credit advice / nostro statement. In case of delay, the bank shall pay

the beneficiary interest @ 2 % over its savings bank interest rate. The bank shall

also pay compensation for adverse movement of exchange rate, if any, as per its

compensation policy



Rule 5 Foreign Exchange Contracts:

5.1. Contract amounts: Exchange contracts shall be for definite amounts and

periods. When a bill contract mentions more than one rate for bills of different

deliveries, the contract must state the amount and delivery against each such rate. 5.2. Option period of delivery: Unless the date of delivery is fixed and indicated in

the contract, 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. If the fixed date of delivery or the last date of delivery option is a known

holiday, the last date for delivery shall be the preceding working day. In case of

suddenly declared holidays, the contract shall be deliverable on the next working

day. Contracts permitting option of delivery must state the first and last dates of

delivery. For Example: 18th January to 17th February, 31st January to 29th Feb. 2012. “Ready” or “Cash” merchant contract shall be deliverable on the same day. “Value next day” contract shall be deliverable on the working day immediately

succeeding the contract date. A spot contract shall be deliverable on second

succeeding working day following the contract date. A forward contract is a contract

deliverable at a future date, duration of the contract being computed from spot value

date at the time of transaction”. 5. 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”. 5.4. Date of delivery: Date of delivery under forward contracts shall be:

(i) In case of bills/documents negotiated, purchased or discounted - the date of

negotiation/purchase/ discount and payment of Rupees to the customer. However, in case the documents are submitted earlier than, or later than the

original delivery date, or for a different usance, the bank may treat it as proper

delivery, provided there is no change in the expected date of realization of

foreign currency calculated at the time of booking of the contract. No early

realization or late delivery charges shall be recovered in such cases. (ii) In case of export bills/documents sent for collection - Date of payment of

Rupees to the customer on realization of the bills. (iii) In case of retirement/crystallization of import bills/documents - the date of

retirement/ crystallization of liability, whichever is earlier?

5.5. Option of delivery: In all forward merchant contracts, the merchant, whether a

buyer or a seller will have the option of delivery. 5.6. Option of usance: The merchant purchase contract should state the tenor of

the bills/documents. Acceptance of delivery of bills/documents drawn for a different

tenor will be at the discretion of the bank



5.7. Merchant quotations: The exchange rate shall be quoted in direct terms i.e. so many Rupees and Paise for 1 unit or 100 units of foreign currency. 5.8. Rounding off: Rupee equivalent of the foreign currency Settlement of all

merchant transactions shall be effected on the principle of rounding off the Rupee

amounts to the nearest whole Rupee i.e. without paise. RULE 6 Early Delivery, Extension and Cancellation of Foreign Exchange

Contracts

6.1. General

(i) At the request of a customer, unless stated to the contrary in the provisions of

FEMA, 1999, it is optional for a bank to: (a). Accept or give early delivery; or

(b). Extend the contract. (ii) It is the responsibility of a customer to effect delivery or request the bank for

extension / cancellation as the case may be, on or before the maturity date of

the contract. 6.2. Early delivery: If a bank accepts or gives early delivery, the bank shall

recover/pay swap difference, if any. 6.3. Extension: Foreign exchange contracts where extension is sought by the

customers shall be cancelled (at an appropriate selling or buying rate as on the date

of cancellation) and rebooked simultaneously only at the current rate of exchange. 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 request for extension shall be made on or before the maturity date of the

contract. 6.4. Cancellation

(i) In case of cancellation of a contract at the request of a customer, (the request

shall be made on or before the maturity date) the Authorised Dealer shall

recover/ pay, as the case may be, the difference between the contracted rate

and the rate at which the cancellation is effected. The recovery/payment of

exchange difference on cancellation of forward contracts before the maturity

date may be either upfront or back-ended at the discretion of banks. (ii) Rate at which cancellation is to be effected:

(a) Purchase contracts shall be cancelled at T.T. selling rate of the

contracting Authorised Dealer

(b) Sale contracts shall be cancelled at T.T. buying rate of the contracting

Authorised Dealer



(c) Where the contract is cancelled before maturity, the appropriate forward

T.T. rate shall be applied. (bi) Notwithstanding the fact that the exchange contract between the customer

and the bank becomes impossible of performance, for whatever reason,

including Government prohibitory orders, the exchange contract shall not be

deemed to have become void and the customer shall forthwith apply to the

Authorised Dealer for cancellation, as per the provisions of paragraph 6.4.(i)

and (ii) above. (iv)

(d) In the absence of any instructions from the customer, vide para 6.1(ii), a

contract which has matured shall be cancelled by the bank on the 7th working

day after the maturity date. (e) Swap cost, if any, shall be recovered from the customer under advice to him. © When a contract is cancelled after the maturity date, the customer shall not be entitled

to the exchange difference, if any, in his favour, since the contract is cancelled on

account of his default. He shall, however, be liable to pay the exchange difference

against him. 6.5. Swap cost/gain:

(ii) In all cases of early delivery of a contract, swap cost shall be recovered from

the customer, irrespective of whether an actual swap is made or not. Such

recoveries should be made either back-ended or upfront at discretion of the

bank. (iii) Payment of swap gain to a customer shall be made at the end of the swap period. 6.6. Outlay and Inflow of funds:

Authorised Dealer shall recover interest on outlay of funds for the purpose of

arranging the swap, in addition to the swap cost in case of early delivery of a

contract.

If such a swap leads to inflow of funds, interest shall be paid to the customer. Funds

outlay / inflow shall be arrived at by taking the difference between the original

contract rate and the rate at which the swap could be arranged. The rate of interest

to be recovered / paid should be determined by banks as per their policy in this

regard.

Types of letter of credit

TYPES OF LETTERS OF CREDITS



Documents against

Payment LC or Si ght

LC

DP LCs or Sight LCs are those where the payment is made against documents on presentation.

(DA = Documents against payment, DP=Documents against acceptance)

Documents against

acceptance or

us ance



DA LCs or Acceptance LCs are those, where the payment is to be made on the maturity date in terms

of the credit. The documents of title to goods are delivered to applicant merely on acceptance of

documents for payment. (DA = Documents against payment, DP=Documents against acceptance)

Deferred Payment LC It is similar to Usance LC but there is no bill of exchange or draft. It is payable on a future date if

documents as per LC are submitted.



Irrevocable and

revocable credits

The issuing bank can amend or cancel the undertaking if the beneficiary consents.

A revocable credit is one that can be cancelled or amended at any time without the prior knowledge

of the seller. If the negotiating bank makes a payment to the seller prior to receiving notice of

cancellation or amendment, the issuing bank must honour the liability.

With or without recourse

Where the beneficiary holds himself liable to the holder of the bill if dishonoured, is

considered to be with-recourse. Where he does not hold Himself liable, the credit is said to be

without-recourse. As per RBI directive dated Jan 23, 2003, banks should not open LCs and purchase /

discount / negotiate bills bearing the 'without recourse' clause.

Restricted LCs A restricted LC is one wherein a specified bank is designated to pay, accept or negotiate.

Confirmed Credits A credit to which the advising or other hank at the request of the issuing bank adds confirmation that

payment will be made. By such additions, the confirming bank steps into the shoes of the issuing

bank and thus the confirming bank negotiates documents if tendered by the beneficiary.

Transferable Credits The beneficiary is entitled to request the paying, accepting or negotiating bank to make available in

whole or part, the credit Cu one or more other parties (Article 48 of UCPDC). For partial transfer to

one or more second beneficiary/ies the credit must provide for partial shipment.



Back to back

credits

A back to back credit is one where an exporter received a documentary credit opened by a buyer in

his favour. He tenders the same to the bank in his country as a cover for opening another LC in

favour of his local suppliers. The terms of such credit would be identical except that the price may

be lower and validity earlier.

Red Clause

Credits

A red clause credit also referred to a packing or anticipatory credit has a clause permitting the

correspondent bank in the exporter's country to grant advance to beneficiary at issuing bank's

responsibility. These advances are adjusted from proceeds of the bills negotiated.



Green Clause

Credits

A green clause LC permits the advances for storage of goods in a warehouse in addition to preshipment

advance

.

Stand-by

Credits

Standby credits is similar to performance bond or guarantee, but issued in the form of LC. The

beneficiary can submit his claim by means of a draft accompanied by the requisite documentary

evidence of performance, as stipulated in the credit.



Documentary or clean

credits

When LC specifies that the bills drawn under LC must accompany documents of title to goods such as

RRs or MTRs or Bills of lading etc. it is termed as Documentary Credit. If any such documents are not

called, the credit is said to be Clean Credit.



Revolving Credits These provide that the amount of drawings made thereunder would be reinstated and made

available to the beneficiary again and again for further drawings during the currency of credit.

Instahnent credit It is a letter of credit for the full value of goods but requires shipments of specific quantities of

goods within nominated period and allows for part-shipment. In case any instalment of shipment is

missed, credit will not be available for that and subsequent instalment unless of LC permits the

Negative lien and set off

Negative lien and set off



There is no legal definition of 'negative lien'. Lien is the right to retain goods of a borrower or pledgor for the debt. Negative Lien is used in banking parlance for a borrower to undertake not to create any charge on his property without the consent

of the lender. The borrower may sometime be having non-encumbered assets which are not charged to the bank as security. The borrower is thus free to deal with these assets

and may even sell them if he so desires. To restrict this right of the borrower, bank may sometimes request him to give an undertaking to the effect that he will neither create any encumbrance on these assets nor sell them without the previous permission of the bank so long as the advance continues......



Negative Lien: When goods and securities are in possession of borrowers creditor

obtains an undertaking from the borrower that he will not create any charge on those

securities without the prior permission of the creditor this kind of lien is called as

negative lien.

The borrower may sometime be having non-encumbered assets which are not charged

to the bank as security. The borrower is thus free to deal with these assets and may

even sell them if he so desires. To restrict this right of the borrower, bank may

sometimes request him to give an undertaking to the effect that he will neither create

any encumbrance on these assets nor sell them without the previous permission of the

bank so long as the advance continues.

Set Off: The set-off refers to ―combining of two or more account for final settlement of

accounts‖

In other words set off is a process where the bank recovers its due loan, to the debit of

deposit account of the burrower

The essential condition is that one of such accounts must show a debit balance and the 

other, a credit balance

Different Branches are one unit

For exercising the right to set off all branches of a bank are treated as a single unit,

which means a loan from branch-A can be adjusted by the funds in branch-B

TT Rates and Bill rates

TT Rates and Bill Rates

Following 4 types of buying and selling rates are important:

1. TT Buying rate

2. Bill Buying rate

3. TT Selling rate

4. Bill Selling rate

In Interbank market, exchange rate is quoted up to 4 decimals in multiples of 0.0025. e.g.

1USD=53.5625/5650

For customers the exchange rate is quoted in two decimal places i.e. Rupees and paisa. e.g. 1

USD =Rs. 55.54.

Amount being paid or received will be rounded off to nearest Rupee.

TT Buying Rate

It is required to calculate when our Nostro account is already credited or

being credited without delay e.g. Receipt of DD, MT, TT or collection of

Foreign bills. This rate is used for cancellation of Forward Sales Contract.

Calculation

Spot Rate – Exchange Margin

Bill Buying Rate Bill Buying rate is applied when bank gives INR to the customer before

receipt of Foreign Exchange in the Nostro account i.e. Nostro account is

credited after the purchase transaction. In such cases.

Examples are:

 Export Bills Purchased/Discounted/Negotiated.

 Cheques/DDs purchased by the bank.

Calculation

Spot Rate + Forward Premium (or deduct forward discount) – Exchange

margin.

TT Selling Rate Any sale transaction where no delay is involved is quoted at TT selling rate.

It is desired in issue of TT, MT or Draft. It is also desired in crystallization of

Export bills and Cancellation of Forward purchase contract.

Calculation

Spot Rate + Exchange Margin

Bill Selling Rate It is applied where handling of documents is involved e.g. Payment against

Import transactions:

Calculation

Spot Rate + Exchange Margin for TT selling + Exchange margin for Bill

Selling

Examples

Q. 1

Bank received MT of USD 5000 on 15th Sep. The Nostro account was already credited. What

amount will be paid to the customer: Spot Rate 34.25/30. Oct Forward Differential is 22/24.

Exchange margin is .80%

Solution

TT buying Rate will be applied

34.25 - .274 = 33.976 Ans.

Q. 2

On 15th July, Customer presented a sight bill for USD 100000 for Purchase under LC. How

much amount will be credited to the account of the Exporter. Transit period is 20 days and

Exchange margin is 0.15%. The spot rate is 34.75/85. Forward differentials:

Aug: .60/.57 Sep:1.00/.97 Oct: 1.40/1.37

Solution

Bill Buying rate of August will be applied.

Spot Rate----34.75 Less discount .60 = 34.15

Less Exchange Margin O.15% i.e. .0512 =34.0988 Ans.

( Transit period is rounded to next month since currency will be cheaper as it is buy transaction)

Q. 3

Issue of DD on New York for USD 25000. The spot Rate is IUSD = 34.3575/3825 IM forward

rate is 34.7825/8250

Exchange margin: 0.15%

Solution:

TT Selling Rate will Apply

Spot Rate = 34.3825 Add Exchange margin (.15%) i.e. 0.0516

TT Selling Rate = Spot Rate + Exchange Margin = 34.4341 Ans.

Q. 4

On 12th Feb, received Import Bill of USD-10000. The bill has to retired to debit the account of

the customer. Inter-bank spot rate =34.6500/7200. The spot rate for March is 5000/4500. The

exchange margin for TT selling is .15% and Exchange margin for Bill selling is .20%. Quote rate

to be applied.

Solution

Bill Selling Rate will be applied.

Spot Rate + Exchange margin for TT Selling + Exchange margin for Bill selling =

34.7200+.0520+.0695 = 34.8415 Ans.

Forward Contract – Due date and Transit period

(Bill Buying Rates and Bill Selling Rates)

If due date after adding transit period and forward period falls in a particular month

Buy Transactions

Quote rates applicable to lower month (if currency is at premium) and same month (if currency

is at discount) due to the reason that currency becomes cheaper and Buy low and Sell High

Sale Transactions

Quote rates applicable to Same month (if currency is at premium) and lower month (if currency

is at discount) due to the reason that currency becomes dearer and Buy low and Sell High

Forward contracts can be booked by Resident Individuals up to USD1lac.

Buy

Transactions-

Currency at

Premium

Transit Period is

rounded off to

lower month in

which due date

falls

Spot Rate on 16.07.2012 is 1 USD = 34.6850/7275

Spot August = 4000/4200, Spot Sep = 7500/7700, Spot Oct = 1.05/1.07

Spot Nov =1.40/1.42

Transit Period = 25 days , Exchange Margin = 0.15%

Calculate Forward Buying Rate of 3 M Usance bill.

Due date of realization of Bill = 16.7.2012 + 3M + 25 days = 9.11.2012

By Rounding Transit period to lower month, Oct Rate will be as under:

34.6850+1.05 - .0536 (exchange margin) = 35.6814

Buy

Transactions-

Currency at

Discount

Transit Period is

rounded off to

same month in

which due date

falls

On 22.7.2013,

Spot Rate is 35.6000/6500 Forward 1M=3500/3000 2M=5500/5000

3M=8500/8000

Transit Period ----20 days Exchange Margin = 0.15%.

Find Bill Buying Rate & 2 M Forward Buying Rate

Solution

Bill Buying Rate (Ready) : Bill Date +20 days = 11.8.2013

Spot Rate = 35.6000 Less Forward Discount 1M (0.3500) Less Exchange

Margin 0.15% (0.529)

i.e. 35.6000-.3500-.0529(0.15% of 35.2500) = 35.1971

Solution:

TT Selling Rate will Apply

Spot Rate = 34.3825 Add Exchange margin (.15%) i.e. 0.0516

TT Selling Rate = Spot Rate + Exchange Margin = 34.4341 Ans.

Q. 4

On 12th Feb, received Import Bill of USD-10000. The bill has to retired to debit the account of

the customer. Inter-bank spot rate =34.6500/7200. The spot rate for March is 5000/4500. The

exchange margin for TT selling is .15% and Exchange margin for Bill selling is .20%. Quote rate

to be applied.

Solution

Bill Selling Rate will be applied.

Spot Rate + Exchange margin for TT Selling + Exchange margin for Bill selling =

34.7200+.0520+.0695 = 34.8415 Ans.

Forward Contract – Due date and Transit period

(Bill Buying Rates and Bill Selling Rates)

If due date after adding transit period and forward period falls in a particular month

Buy Transactions

Quote rates applicable to lower month (if currency is at premium) and same month (if currency

is at discount) due to the reason that currency becomes cheaper and Buy low and Sell High

Sale Transactions

Quote rates applicable to Same month (if currency is at premium) and lower month (if currency

is at discount) due to the reason that currency becomes dearer and Buy low and Sell High

Forward contracts can be booked by Resident Individuals up to USD1lac.

Buy

Transactions-

Currency at

Premium

Transit Period is

rounded off to

lower month in

which due date

falls

Spot Rate on 16.07.2012 is 1 USD = 34.6850/7275

Spot August = 4000/4200, Spot Sep = 7500/7700, Spot Oct = 1.05/1.07

Spot Nov =1.40/1.42

Transit Period = 25 days , Exchange Margin = 0.15%

Calculate Forward Buying Rate of 3 M Usance bill.

Due date of realization of Bill = 16.7.2012 + 3M + 25 days = 9.11.2012

By Rounding Transit period to lower month, Oct Rate will be as under:

34.6850+1.05 - .0536 (exchange margin) = 35.6814

Buy

Transactions-

Currency at

Discount

Transit Period is

rounded off to

same month in

which due date

falls

On 22.7.2013,

Spot Rate is 35.6000/6500 Forward 1M=3500/3000 2M=5500/5000

3M=8500/8000

Transit Period ----20 days Exchange Margin = 0.15%.

Find Bill Buying Rate & 2 M Forward Buying Rate

Solution

Bill Buying Rate (Ready) : Bill Date +20 days = 11.8.2013

Spot Rate = 35.6000 Less Forward Discount 1M (0.3500) Less Exchange

Margin 0.15% (0.529)

i.e. 35.6000-.3500-.0529(0.15% of 35.2500) = 35.1971

USA, rate of interest is 6% whereas in Germany, rate of interest is 3% for

EURO. We will borrow from Germany and lend in USA where

1EURO =1.5 USD

Forward Point Calculation for 3 Months

Spot Rate x Interest rate difference x Forward Period

100 x Nos. of days in a year

= 1.5 x 3 x 90

100*360

=0.01125

3 month swap rate = 1.5 + 0.01125 = 1.5112

Calculation of Interest Differential

Forward Points x Nos. of Days x 100

Forward Period x Spot Rate

= 0.01125 x 360 x 100 =3%

1.5 x 90

Ex.1

Calculate TT selling rate for GBP/INR, if USD/INR is 43.85/87 & GBP/USD is 1.9345/49. A

margin of 0.15% is to be loaded.

Solution ; TT selling rate of GBP/INR

1 GBP = 1.9349 USD

= (1.9349 *43.87)+Margin 0.15%

=84.8841+.1273=85.0114 INR 85.0114-------------------------Ans.

Ex.2

A foreign correspondent intends to fund his Vostro Account maintained with Mumbai branch of

SBI. What rate will be quoted if 1 USD = 44.23/27 and margin is 0.08%

Solution : TT buying rate will quoted

44.23-.035 = 44.195 ---------------------------------------Ans.

Ex.3

If Swiss Franc is quoted as USD = CHF 1.2550/54 and in India, USD =INR43.50/52, how much

INR will exporter get for his export bill of CHF 50000.

Solution :

Swiss Franc will be sold for USD in overseas market and USD will be bought in local market i.e.

Sell Rate of CHF and Buy rate of USD.(Buy Low Sell High in both quotations)

1 USD = 1.2554 CHF and 1USD=INR 43.50

1CHF=43.50/1.2554 = 34.6503

Amount as paid to exporter = 34.6503*50000=17,32,515/- ----------------Ans.

(Both are direct quotations and Maxim Buy Low Sell High will apply in both)

Ex.4

If Swiss Franc is quoted as USD = CHF 1.2550/54 and USD =INR43.50/52, how much INR will

Importer pay for his import bill of CHF 50000.

Solution :

Swiss Franc will be bought against USD in overseas market and USD will be sold in local

market i.e. Buy rate of CHF and Sell rate of USD.

1 USD = 1.2550 CHF and 1USD=INR 43.52

1CHF=43.52/1.2550 = 34.6773

Amount to be received from Importer = 34.6773*50000

=17,33,865/- ----Ans.

(Both are direct quotations and Maxim Buy Low Sell High will apply in both)

Q. 5

Exporter received Advance remittance by way of TT French Franc 100000.

The spot rates are in India IUSD = 35.85/35.92 1M forward =.50/.60

The spot rates in Singapore are 1USD = 6.0220/6.0340 1M forward =.0040/.0045

Exchange margin = 0.8%

Solution

Cross Rate will apply

USD will be bought in the local market at TT Buying rate and sold at Spot Selling Rates in

Singapore for French Francs:

TT Buying Rates USD/INR = Spot rate – Exchange margin = 35.8500-.0287 = 35.8213

Spot Selling Rate for USD/Francs = 6.0340

Inference:

6.0340 Franc = 1USD

= INR 35.8213

1 franc = 35.8213/6.0340 = INR 5.9366 Ans.

(Both are direct quotations and Maxim Buy Low Sell High will apply in both)

Q.6 What rate will be quoted for repatriation of FCNR deposit (spot rate or TT rate)

Ans. No rate as the amount is to be paid in Foreign currency itself.

Forex Dealing

Room

operations

It is a service branch which deals Buying and Selling Operations of the

bank. It manages Foreign currency Assets and Liabilities and also

manages Nostro accounts.

A dealer has to maintain two positions:

1. Funds position

2. Currency Position

Currency position can be Overbought or Oversold.It is called Open

position. Hedging is done to square off the open position.

Mid Office deals with Risk Management.

Back Office takes care of settlement and Reconciliation.

Very important and useful General banking bits

1. A customer Mr Sharma had credit balance 40,000 in his saving ac and also had an OD ac with

overdue Debit balance of 20,000.Bank debits his saving account and adjusts OD ac. The bank is

said to have exercised Right of: Set-off

2. A Minor has extended Guarantee to a loan. It can be ratified by whom? It cannot be ratified by

any one.

3. A savings account becomes inoperative when it not operated for: 2 years

4. A term deposit of a HUF has become due. At the time of renewal, the Karta of HUF informs that

he has become Senior Citizen. What rate of interest will be given on term deposit? : Normal

interest rate. No benefit of senior citizen to be given

5. Additional interest is paid to senior citizens on which time FD: All fixed deposits (may vary from

bank to bank)

6. After Nomination in an account, what is the status of the nominee?: Trustee of legal heirs

7. An account of a customer can be closed in normal course on the request of the customer.

What are the other methods for closing account of a customer – (a) By negotiation; (b) As per

provisions of law; (c) After notice to customer in respect of undesirable accounts: Ans is C

8. An Illiterate person is generally not allowed to open which account – saving, term deposit,

recurring deposit, small account, Current Account: Current account.

9. As per RBI guidelines, Demand draft of Rs 50,000 and above should be issued against : by debit

to account but not against cash

10. As per RBI guidelines, minimum amount of deposit to open BSBDA account is: NIL

11. As per Sukanya Samridhi Account (SSA) the tenure of deposit is for years from the date of

opening of the account: 21 years

12. Bank is not required to produce original book of records but true copy can be submitted when

court has demanded as per which act? a) Civil procedure code b) Registration act c) B.R. Act d)

RBI act e) Banker Books Evidence Act.

13. Banker Customer relationship for deposits is ____: Debtor – Creditor.

14. Banker customer relationship in Safe Custody: Bailee Bailor.

15. Banker customer relationship in standing instruction: Agent – Principal

16. Bankers prefer Saving Deposits than Term deposits. Why?: Because cost of deposits for SB is

less.

17. Banks can decide interest rates of NRI, NRO or Term Deposits: Yes

18. Banks can raise what type of deposits?: Term and Demand Deposits

19. Banks should have the responsibility of currency management entrusted to a nodal official of the

rank not less than that of a General Manager and will be accountable for the obligations cast

upon currency chests by the Reserve Bank.

20. BC work as : Bank’s Agent

21. Business Correspondent can be identified by whom?: BDO,Post Master, Head of Village

Panchayat, other BC.

22. Business correspondents for banking for : serving weaker sections of society

23. Call money deposit is part of the sector : Organised sector

24. Complaints under Consumer forum should be dealt with within (Where no testing of commodities

is required) : 90 days.

25. Customer OD A/c has overdrawn Rs 2000/-. Saving A/c has balance Rs 3000. The bank adjusts

the OD A/c by which right: Set off.

26. DD of Rs.50000/- in cash : not allowed

27. Death claim settlement in how many days?: 15 days

28. Deposits held in Joint accounts; b) Corporate Deposits; c)

Inter-Bank deposit; d) Deposits of HUFs: Ans is Inter-Bank deposits.

29. Deposits which are not claimed for__years are required to be transferred by banks to

RBI: 10 years

30. DICGC cover is available in which of the following cases a) Credit balance in Cash Credit Account

b) Overdue Deposit c) Deposit of Government Department?: A & B

31. Differential rate of interest can be paid on fixed deposit if single deposit is for: Rs.1.00 crore

and above

32. Direct Tax Code will replace which of the following – Income Tax Act, Corporate Tax Act: Income

Tax Act.

33. Encashment of FOR with interest - payment can be made in cash if it is less than Rs 20000

34. Financial Inclusion means: providing banking services at affordable cost to the poor/distressed.

35. FULL FORM OF CASA? : CURRENT ACCOUNT & SAVING ACCOUNT

36. Garnishee order is not applicable to: a) Savings b) Current c) FD d) CC/OD with debit

balance: CC/OD with debit balance.

37. Govt. has decided to demonetize all the coins of paise 25 and below w.e.f. 30-6-2011.

38. How much amount can be deposited in a small account in a financial year?: Rs one lac

39. How much amount can be withdrawn from a small account in a month?: Rs 10,000

40. If in Garnishee Order no amount is mentioned, what should the bank do? Full amount to be

attached.

41. If payment of Rs 20000/- is made in cash in case of FDR what is the penalty: equal to the

amount paid

42. Illiterate account holder, how many witness for nomination: two

43. In Basic Savings Bank Deposit Account in all their accounts taken together and the total credit in

all the accounts taken together is not expected to exceed _____ in a year has been simplified to

enable those belonging to low income groups without documents of identity and proof of

residence to open banks accounts: 1,00,000/-.

44. In case Fixed Deposits account the rate of interest fixed by whom: Board of Directors of

respective bank.

45. In case of a/c transfer, with in how many days the address proof has to be submitted in the

transferee branch? Six Months

46. In case of an illiterate customer, process of nomination requires witnesses by how many

persons?: Thumb impression requires 2 witnesses.

47. In case of Deposit Insurance whether it mandatory or not: It is Mandatory for all banks.

48. In case of Deposit Insurance, Insurance premium is paid to DICGC by bank and depositor in

which ratio?: Entirely by bank.

49. In case of insurance of deposits by DICGC, premium is paid by: Bank. 100% of the premium

is paid by the bank and not by depositor.

50. In case of insurance of deposits by DICGC, what is the premium sharing ratio between bank and

depositor?: 100% of insurance premium is paid by the bank.

51. In case of Minor what is wrong? Minor can make himself liable for his actions.

52. IN CASE OF TRANSFER OF ACCOUNT, WITHIN HOW MANY DAYS, THE ACCOUNT HOLDER

SHOULD ADVISE NEW ADDRESS?: TWO WEEKS

53. In how many years of no transaction does a saving and current account become inoperative? :

two years

54. In Limited liability Partnership what is the liability of partner?: Amount agreed to be

contributed by partner at the time of joining partnership.

55. In saving accounts, interest is calculated on the basis of: daily product basis.

56. In Senior Citizen Saving Scheme account, who can be joint account holder?:Spouse



57. In small accounts as per RBI- No min. balance, nil/minimal charges etc

58. In small accounts monthly withdrawals to be upto- Rs.10000/-

59. Insurance of deposit is done by DICGC up to: Rs 1 lac per depositor per bank.

60. Interest rate on Saving Deposit is decided by : Banks individually

61. Interest rate on Savings accounts: Not regulated by RBI

62. Max amt for tax saver FD: Rs 150000

63. Maximum amount of deposit in Tax Saving Scheme of the bank can be: Rs 1,50,000

64. Maximum deposit for allocating a locker: 3 year advance rent plus locker breaking charges

65. Maximum period of NRE deposit: Bank Discretion.

66. Minimum and Maximum amount that can be deposited in PPF account is _____: Minimum Rs.

500/- & Maximum Rs. 1.50 lacs.

67. Minimum Lock in period for Tax saver FDR: 5 Years

68. Minimum Maturity Period for Certificate of Deposit is : 7 days

69. Missing person treated as having expired if missing for: 7 years

70. No Frills Accounts are opened for: Financial Inclusion

71. No of digits in Aadhar : 12

72. Non Resident (External) fixed deposit is normally accepted for a period of (a) 1 year to 3 year

(b) 1year to 5 year (c) 1 year to 4 year (d) 1 year to 7 year (e) 6 months to 3 year: 1 year to 3

year (As per RBI it is minimum 1 year and maximum bank discretion)

73. OD in PMJDY account upto: Rs. 5,000/-.

74. On a cheque presented for payment, amount is written in words but all other items are written in

Regional Language. What should the bank do?: Pay the cheque

75. Pensioner account can be opened jointly with? Spouse as Either of Survivor or Former or

Survivor.

76. Rate of Interest in Sukanya Samridhi Account for 2015-16: 9.20% & 8.6% FOR 2016-17

77. Relation between bank and judgment debtor: debtor & creditor.

78. Safe custody of Articles comes under which Act: Indian Contract Act.

79. Star series note can be issued in denomination of Rs 100 also. (earlier only Rs 10, 20 & 50)

80. Super senior citizen after: 80 years of age

81. The balance in the account is Rs 15000. A cheque of Rs 30000 was sent for collection. Before it

is realized a cheque for Rs 20000 has been presented for payment. What should the bank do –

(a) Return with reason effects not yet cleared. Present again; (b) Pay the cheque; (c) Return

with reason exceeds arrangement; (d) Return with reason Refer to Drawer; (e) Return with

reason Insufficient Funds: Insufficient Funds

82. The minimum & maximum period of certificate of deposit is : 7 days, 12 months

83. There is a credit balance in the saving account and there is a overdraft in the current account

amounting to Rs 555. Both accounts are in the same name. Bank wants to adjust credit balance

of saving bank account towards payment of overdraft. As per which right, bank can do this?:

Right of Set Off.

84. Under Sukanya Samridhi Account (SSA) the maximum period upto which the deposits can be

made is for ___ years from the date of opening of the account: 14 years

85. Under Sukanya Samridhi Account (SSA) the minimum amount of deposit is Rs 1,000 and Under

Sukanya Samridhi Account (SSA), the bank account will be opened for a girl child upto the age

of: 10 years

86. Under Sukanya Samridhi Account (SSA), the current rate of interest on deposits is which is the

highest amongst all other Govt. Saving Schemes: 9.20% & 8.6% FOR 2016-17

87. What are the Service charges for using ATMs of other banks for balance enquiries: Rs.20 for

Financial & Rs. 10 for Non- Financial upto 5 transactions ( 3 at Metros)

88. What documents are required for opening a small account?: Self attested photo and address

89. What is the bankers-customer relationship in case of deposits? Debtor – Creditor

90. What is the distance criteria for office of Business Correspondent?: The distance between the

place of business of a retail outlet/sub-agent of BC and the base branch should ordinarily not

exceed 30 kms in rural, semi-urban and urban areas and 5 kms in metropolitan centers.

91. What is the maximum amount of loan that can be granted against FCNR deposit? No limit.

92. What is the periodicity of review of risk classification of customers?: Every six months

93. What is the rate of interest payable on an overdue FD for overdue period if customer demands

payment and does not renew the same?: Saving Bank Rate

94. What is the special feature of Basic banking Account? Account can be opened with nil or very

small amount and there are no requirement of minimum balance.

95. What type of account can be opened in the name of NRI jointly with residents? NRO /NRE/FCNR



(earlier only NRO)

96. What type of activity can be performed by Business Correspondent - (a) processing and

submission of applications to banks; (b) disbursal of small value credit, (c) recovery of principal /

collection of interest (iv) collection of small value deposits: All of these

97. When a person wants to open an account with a bank but does not have proof of identification

and address, what type of account can be opened?: Small account

98. When Letter of Administration issued: When the person dies without leaving the Will- Intestate.

99. Whether “WILL” has to be registered? Not required.

100. Which form is used for cancellation of nomination in deposit accounts?: DA -2

101. Which is not a proof of Identity?: Ration card.

102. Which is the most important document for opening a Trust Account?: Trust Deed

103. Which of the following forms will be used for allowing exemption to a depositor aged 61 years

: Form 15 H

104. Which of these rates are periodically reviewed by RBI?: Repo rate, Bank rate, but not Savings

Bank Rate.

105. While opening account, a bank, in addition to observing various provisions of Indian Contract

Act should also – exercise utmost care and attention; look at profitability from account; exercise

due diligence: Due diligence

106. While opening the account with a bank, prospective customer is required to submit – PAN No

or Form 60 or 61

107. Who are eligible for preferential rate of interest under NRE deposits: a) Staff b) Senior citizen

c) Staff cum Senior Citizen d) none of these?: None of these

108. Who can do nomination in the account of a Minor?: Can be done by guardian not by

minor

109. Who of the following can exercise nomination – HUF, limited company, trust, Partnership firm,

sole proprietorship firm?: Sole Proprietorship firm.

BFM forex question bank

BFM- Forex Question Bank

1. INCOTERMS stands for

a) Indian commercial terms

b) International Commercial Terms*

c) Invisible commercial terms

d) None of these.

2. Which of these is not true of UCP-600- Articles

a) These are rules

b) These are laws

c) These apply to any Documentary credit ( Including to the extent any standby letter of credit)*

d) They are binding on all parties thereto unless expressly modified or excluded by the credit.

3. Any person resident in India going outside India or having gone out of India on a temporary visit, allowed to take/ bring from/into India (other than to and from Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to

a) 5000

b) 7500

c) 2500

d) 10000*

4. SPOT: Refers to transaction where delivery of foreign currency to be done on the -----working day from the date of contract

a) Second day*

b) Same day

c) Next day

d) None of these

5. Who is not considered as NRI for opening of NRE account?

a) Person resident in India leaves India for Nepal or Bhutan for taking up employment or for carrying on business or vocation outside India or for any other purpose indicating his intention to stay outside India for an uncertain period.

b) Students going abroad for Education.

c) Officials of central and state government and public sector undertakings deputed abroad on assignment with foreign governments / agencies/ organizations or posted to their own offices ( Including Indian diplomatic missions abroad )

d) Indians citizens working abroad on assignments with foreign government agencies or International / multinational agencies like united nations Organization (UNO) International monetary Fund ( IMF) , world bank(IBRD) etc

6. What is target for export finance for Public sector banks

a) 12 % of ANBC under Priority sector*

b) 12% of ANBC( NBC+ investment made by banks in non SLR bonds in HTM category

c) 10 % of ANBC under Priority sector

d) 10% of ANBC( NBC+ investment made by banks in non SLR bonds in HTM category

7. Export of computer software in CD to be declared on

a) GR Form

b) SDF Form

c) SOFTEX Form*

d) Either GR or SDF Form

8. Non-resident deposits is a

a) Current account transaction

b) Capital account transaction

c) Both of the above*

d) None of the above

9. What does ECGC do?

a) Provides a range of credit risk insurance covers to exporters against loss in export of goods and services

b) Offers guarantees to banks and financial institutions to enable exporters to obtain better facilities from them

c) Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan.

d) All of the above*

10. All export contracts and invoices shall be denominated either in freely convertible currency or in Indian Rupees but export proceeds shall be realized in ----------

a) Freely convertible currency*

b) May either be in freely convertible currency or in Indian Rupees.

c) US Dollar

d) None of these

11. Present version of INCOTERMS is

a) 1990,

b) 2000

c) 2010

d) 2011*

12. If nothing is mentioned on letter of credit it is treated as

a) Revocable

b) Irrevocable*

c) Either of these at the option of Issuing Bank

d) Either of these at the option of Beneficiary

13. Travelers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States Out of the overall foreign exchange being sold to a traveler, exchange in the form of foreign currency notes and coins may be sold up to

a) USD 5000

b) USD 3000*

c) No limit

d) None of these

14. In Conversion of proceeds of documents sent on collection basis the exchange rate applicable is

a) Bills Buying*

b) TT Buying rate

c) TT Selling rate

d) cross rate.

15. Who is person of Indian Origin (PIO)? A citizen of any country other than Bangladesh or Pakistan, if

a) He at any time held Indian passport.

b) He or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955.

c) The person is a spouse of an Indian citizen.

d) All of the above*

16. In case of export finance refinance is not available from Reserve bank of India in which of the following

a) More than 180 days

b) PCFC*

c) Both of the above

d) None of the above

17. Customs will give their running serial number on both the copies of GR Form after admitting the corresponding shipping bill. The Customs serial number will have ---- numerals

a) 12

b) 10*

c) 9

d) 11

18. Applications by persons, firms and companies for making payments, exceeding USD 500 or its equivalent, towards imports into India must be made in Form ---

a) A-1*

b) A-2

c) A-3

d) None of these

19. Compliance with the provisions of may be ensured for import of drawings and designs

a) Research & Development Cess Act, 1986*

b) Indian contract act

c) International drawing and designs act

d) None of these

20. How does ECGC help exporters?

a) Provides guidance in export-related activities

b) Makes it easy to obtain export finance from banks/financial institutions

c) Assists exporters in recovering bad debts Provides information on credit-worthiness of overseas buyers

d) All of the above*

21. How many rules are there in present version of INCO TERMS?

a) 13

b) 11*

c) 10

d) None of these.

22. As per UCP-600 Branches of a bank in different countries are treated as

a) Same bank

b) Separate Banks*

c) Either of these at the option of Issuing Bank

d) Either of these at the option of Beneficiary

23. The form A2 relating to sale of foreign exchange should be retained for a period of --------by the Authorized Persons, together with the related documents, for the purpose of verification by their Internal Auditors

a) 6 months

b) one year*

c) Five years

d) Twelve years

24. Bills Buying Rate is not applied in case of

a) Purchase of export bill

b) Discount of export bill*

c) Negotiation of export bill

d) Documents sent on collection basis

25. Which of the following account can be opened jointly with Residents?

a) NRE Account

b) NRO account*

c) FCNR (B) account

d) None of the above.

26. In case of Deemed Exports maximum period for Post shipment Finance is

a) 180days

b) 365 days

c) 30 days*

d) None of the above.

27. For conversion NRE to FCNR, ------will be applicable and for converting FCNR to NRE , ------will be applicable

a) TT selling rate, TT buying rate.

b) TT buying rate, TT selling rate

c) Both of the above

d) None of these*

28. Within ------ days from the date of export, exporter should lodge the duplicate copy of GR Form together with relative shipping documents and an extra copy of the invoice with the bank named in the GR form

a) 7 days

b) 180 days

c) 30 days

d) 21 days*

29. Any person acquiring foreign exchange is permitted to use it

a) For the purpose mentioned in the declaration made by him to an Authorised Dealer

b) For any other purpose for which acquisition of foreign exchange is permissible

c) Both of the above*

d) None of these

30. Policies-SCR or Standard Policy is issued to exporters whose anticipated export turnover for the next 12 months is more than

a) Rs. 100 Lac

b) Rs. 50 lac* or 5 crore

c) Rs. 10 crores

d) Rs. 20 Lac

31. Which of the following is not an INCO TERM?

a) FOB (Free on Board)

b) FOR (Free on Rail)*

c) DAT (Delivery at Terminal)

d) All are INCO TERMS

32. The expression “on or about” or similar will be interpreted as a stipulation that an event is to occur during a period of

a) 7 days

b) 5 days*

c) 10 days

d) None of these.

33. An amount of -------or its equivalent, on the basis of self declaration that the applicant is buying exchange for medical treatment outside India, without insisting on any estimate from a hospital/doctor

a) USD 20000

b) USD 100000*

c) USD 200000

d) USD 10000

34. TT Selling rate is applied when

a) Clean outward remittances in foreign currency by TT/MT/DD

b) Crystallization of overdue export bill

c) Import documents received directly by the importer

d) all of the above.*

35. In NRO account what are provisions for repatriability

a) Current income

b) up to USD 1 million per financial year (April- March), for any bonafide purpose out of the balances in the account / sale proceeds of assets in India acquired by way of inheritance/legacy inclusive of assets acquired out of settlement subject to certain conditions.*

c) Both of the above

d) None of the above.

36. Remittances against imports should be completed not later than ----from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc.

a) six months*

b) 180 days

c) 365 days

d) None of these

37. Banks may consider requests for grant of GR waiver from exporters for export of c, for export promotion up to 2 per cent of the average annual exports of the applicant during the preceding three financial years subject to a ceiling of Rs.----- lac

a) 1 Lac 

b) 2 lac 

c) 5 lac* 

d) None of these

38. A declaration to the Custom Authorities at the Airport in the Currency Declaration Form (CDF) if aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in by such person at any one time exceed -----or its equivalent and/or the aggregate value of foreign currency notes (cash portion) alone brought in by such person at any one time exceed ----or its equivalent

a) USD 10000, USD 5000*

b) USD 10000, USD 10000

c) USD 5000, USD 10000

d) none of these

39. A person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank notes maximum up to

a) Rs.7500*

b) Rs.5000

c) No limit however, notes of denominations of above Rs.100 not permitted

40. In case of Guarantee of ECGC Default to be reported to ECGC within

a) 4 months*

b) 6 months

c) 12 Months

d) none of these

41. Which INCO Terms represents the maximum obligation for the seller

a) CFR

b) CIP

c) DDP*

d) CIP

42. As per UCP-600 the sale contract between the buyer has impact on operation of Letter of credit

a) To the extent mentioned in letter of credit

b) Is integral part of letter of credit

c) Has nothing to do even if mentioned in letter of credit

d) None of these.

43. Dance troupes, artistes, etc., who wish to undertake tours abroad for cultural purposes should apply to ------for their foreign exchange requirements.

a) The Ministry of External affairs, Government of India,

b) The Ministry of Human Resources Development (Department of Education and Culture), Government of India,*

c) The Ministry of Human Resources Development (Department of Education and Culture), Government of state concerned,

d) The Ministry of Human Resources Development Government of country to be visited

44. BILL SELLING RATE: is not used for

a) Transactions involving remittance for imports

b) Crystallization of overdue import bill

c) None of these

d) All of these

45. The power of attorney holder in case of NRE/ NRO is not allowed which of the following activities relating to account

a) Withdrawals for permissible local payments

b) Remittance to the account holder himself through normal banking channels.*

c) Closure of account

d) None of the above

46. What is the maximum amount for Advance Remittance for import of goods?

a) No ceiling*

b) USD 100000 or its equivalent

c) USD 500000 or its equivalent

d) None of these

47. Realization and Repatriation of export proceeds in case of Status Holder Exporters is ------ from the date of export

a) Twelve months

b) 180 days*

c) 360 days

d) none of these

48. Airline companies which have been permitted by the Directorate General of Civil Aviation to operate as a schedule air transport service, can make advance remittance without bank guarantee, up to -----.

a) USD 50 million*

b) USD 5 million

c) USD 1 million

d) None of these

49. When an exporter receives advance payment shall be under an obligation to ensure that –

a) The shipment of goods is made within 180 days from the date of receipt of advance payment;

b) The rate of interest, if any, payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 150 basis points; and

c) The documents covering the shipment are routed through the bank through whom the advance payment is received.

d) All of the above*

50. Extension of due date beyond ----- days, in case of Guarantee of ECGS is to be sought

a) 180 days

b) 360 days

c) 270 days

d) 90 days*

51. Bank should obtain a report on each individual overseas supplier from the overseas banker or a reputed credit agency. However, such credit report on the overseas supplier need not be obtained in cases where the invoice value does not exceed -------and bank is satisfied about the bonafides of the transaction and track record of the importer constituent

a) USD 300000*

b) USD 500000

c) USD 100000

d) None of these

52. As per UCP-600 Banks deal with

a) Goods

b) Documents*

c) Both documents and goods

d) None of these

53. For Private Visits abroad (except Nepal and Bhutan) Release of foreign exchange admissible in one financial year, for one or more private visits is-

a) USD Two lakh

b) USD 10000

C) USD 25000

d) None of these.* (250000)

54. ----- means you bought and are holding it in the expectation that it will appreciate in value. ----means you are selling currency in the expectation that currency will depreciate in values

a) Long, Short

b) Short, long

c) Long, Long

d) Short, Short

55. The loans allowed to NRIs cannot be utilized for the purpose of

a) Re-lending

b) For carrying on agriculture or plantation activities

c) For investment in real estate business

d) All of the above*

56. In case of all imports, where value of foreign exchange remitted/ paid for import into India -------, it is obligatory on the part of the AD Category – I bank through whom the relative remittance was made, to ensure that the importer submits evidence of imports

a) exceeds USD 100000 or its equivalent*

b) exceeds USD 10000 or its equivalent

c) exceeds USD 500000 or its equivalent

d) None of these

57. The amount of undrawn balance is considered normal in the particular line of export trade, subject to a maximum of ----- per cent of the full export value.

a) 5

b) 20

c) 25

d) 10*

58. Where imports are made in non-physical form, i.e., software or data through internet / datacom channels and drawings and designs through e-mail/fax, a certificate from a -------- that the software / data / drawing/ design has been received by the importer, may be obtained

a) Chartered Accountant*

b) Reserve Bank of India

c) Department of Electronics Govt. of India

d) Registrar of Companies

59. Banks may approve, Reduction in Invoice Value in case of exports if satisfied about genuineness of the request, provided:

a) The reduction does not exceed 25 per cent of invoice value:

b. It does not relate to export of commodities subject to floor price stipulations

c. The exporter is not on the exporters’ caution list of the Reserve Bank,

d) All of the above*

60. Exchange Fluctuation Risk Cover of ECGC is intended to provide a measure of protection to exporters of capital goods, civil engineering contractors and consultants who have often to receive payments over a period of years for their exports, construction works or services. Where such payments are to be received in foreign currency, they are open to exchange fluctuation risk as the forward exchange market does not provide cover for such deferred payments. is available for maximum

a) 5 years

b) 10 years

c) 15 years*

d) 7 years

61. after goods have been shipped, they are to be transferred to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does not exceed 25 per cent of the invoice value and the realization of export proceeds is not delayed beyond the period of 12 months from the date of export

a) RBI permission is required

b) AD can permit

c) None of the above* 

d) All of the above

62. As per UCP-600 the drafts are to be drawn on

a) Applicant

b) Beneficiary

c) Issuing Bank*

d) Negotiating Bank.

63. Gift per financial year per remitter or donor other than resident individual is

a) USD 10000

b) USD 20000

c) USD 5000*

d) USD 25000

64. In forex market the maxim is Buy ---and sell ---.

a) Low, High*

b) High, Low

c) High, High

d) low, low

65. As per e-UCP in case bank’s system is unable to receive a transmitted electronic record,

a) The bank will be deemed to be close on that day and expiry date shall be extended to the first following banking day.*

b) Banks are not responsible

c) Bank is responsible as bank is supposed to keep its electronic system in proper form.

d) None of the above.

66. Loan against deposits allowed to NRIs is to be credited to

a) NRE Saving fund account

b) NRO Saving fund account*

c) To be paid in cash only

d) None of the above

67. Banks should normally dispatch shipping documents to their overseas branches/ correspondents expeditiously. However, they may dispatch shipping documents direct to the consignees or their agents resident in the country of final destination of goods in cases where:

a) Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment

b) The exporter is a regular customer and the bank is satisfied, on the basis of standing and track record of the exporter and arrangements have been made for realization of export proceeds

c) Documents in respect of goods or software are accompanied with a declaration by the exporter that they are not more than Rs. 25,000/- in value and not declared on GR/SDF/PP/SOFTEX form.

d) All of the above*

68. Documents evidencing import into India should be preserved by bank for a period of -----from the date of its verification. However, in respect of cases which are under investigation by investigating agencies, the documents may be destroyed only after obtaining clearance from the investigating agency concerned.

a) one year*

b) Six Months

c) 3 months

d) 5 years

69. Contracts involving only ‘one-shot operation’, in case of software exports , the invoice/bill should be raised within ---- days from the date of transmission

a) 180 days

b) one year

c) 15 days*

d) 30 days

70. e-UCP is

a) SUPPLEMENT TO UCPDC FOR ELECTRONIC PRESENTATION*

b) APPLICABLE WHERE CREDIT INDICATES THAT IT IS SUBJECT TO e-UCP

c) Both of the above

d) None of the above

71. Write off in cases of Payment of Claims by ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA)

a) Banks may write off the relative export bills and delete them from the XOS statement*

b) RBI permission is required

c) Cannot be deleted from XOS till amount is realized in full

d) None of these

72. As per UCP-600 partial acceptance of an amendment is

a) Allowed at the option of beneficiary

b Allowed at the option of Advising Bank

c) Not allowed*

d) None of these.

73. to a person, irrespective of period of stay, for business travel, or attending a conference or specialized training abroad the entitlement for foreign exchange is –

a) USD 25000*

b) USD 10000

c) USD 100000

d) USD 20000

74. When a bank is prepared to deal in the two ways quoted rates is called as

a) Market maker*

b) Market user

c) Seller and Buyer

d) none of these

75. TDS in case of NRI deposits interest is not to be deducted in

a) NRO saving fund account

b) NRE saving fund account*

c) Both of these

d) None of these

76. Statement on half-yearly basis as at the end of June & December of every year, in form ----- furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within 6 months from the date of remittance

a) BEF*

b) XOS

c) STAT

d) CDF

77. As per UCP-600 In documents other than,----------the description of the goods, services or performance, if stated , may be in General terms not conflicting with their description in the credit

a) The bill of lading

b) The commercial invoice*

c) Bill of Exchange

d) None of these

78. In cases where exporters present documents pertaining to exports after the prescribed period of 21 days from date of export, banks

a) May handle them without prior approval of the Reserve Bank, provided they are satisfied with the reasons for the delay*

b) Return the documents to exporter

c) Seek RBI Approval

d) None of these

79. What is Merchanting Trade?

a) The trade transactions where goods are not touching boarders of the country. Goods are procured by the trader from abroad and exported to third country

b) The trade between merchants of the same country

c) The trade between merchants of the two different countries .*

d) None of these

80. What is relationship of e-UCP AND UCP?

a) A CREDIT SUBJECT TO e-UCP ALSO SUBJECT TO UCP

b) WHERE e- UCP APPLIES , ITS PROVISIONS SHALL PREVAIL TO THE EXTENT THEY PRODUCE DIFFERENT RESULTS.

c) Both of the above*

d) None of the above

81. As per FEMA In merchanting trade, the transactions do not involve foreign exchange outlay for a period exceeding ----

a) three months.*

b) Six Months

c) 12 months

d) one month

82. As per UCP-600 Reimbursing bank charges are on account of

a) Applicant

b) Negotiating Bank

c) Issuing Bank*

d) Reimbursing Bank

83. General permission is available to any resident individual to surrender received / realized / unspent / unused foreign exchange to an Authorised Person within a period of ------ days from the date of receipt / realisation / purchase /acquisition / date of return of the traveller, as the case may be

a) 180 days*

b) 90 days

c) One year

d) none of these

84. COVER RATE: is the rate at which

a) ADs can cover the transaction in the interbank market without making profit or incurring loss

b) Merchants cover the transaction with Ads

c) Both of the above

d) None of the above

85. What is income tax rate in case of NRO Deposits

a) Tax deductible irrespective of type of account and amount of interest, rate 20% in case of foreign remittance and 30% on deposits from local income. Surcharge and education cess extra.*

b) 10% in case PAN number submitted to bank

c) 20% in case PAN number not submitted to bank

d) Income tax is not applicable in case of NRO deposits.

86. As per UCP-600 in transferable letter of credit , letter of credit can be transferred

a) Any number of times

b) Only Once

C) To second beneficiary/ beneficiaries.*

d) Both b& c

87. The duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to the banks for negotiation, collection, etc.,

a) Should not ordinarily be returned to exporters, except for rectification of errors and resubmission*

b) Should be sent to RBI

C) Should be sent to customs for revalidation

d) None of these

88. Under Liberalized Remittance Scheme for Resident Individuals Authorized Dealers may freely allow remittances by resident individuals up to ------per financial year (April-March) for any permitted current or capital account transactions or a combination of both.

a) USD 200,000

b) USD 250000*

C) USD 100000

d) USD 20000

89. After effecting remittances under the license, banks may preserve the copies of utilized license /s till

a) They are verified by the internal auditors or inspectors*

b) One year

c) five years

d) None of these

90. IN CASE OF PAPER PRESENTATION

a) UCP alone shall apply

b) Both UCP and e-UCP shall apply

c) Both of the above*

d) None of the above

91. Supply of goods/ services by Indian exporter to UN agencies for execution of projects in India where payment is realized in foreign currency is called as.

a) Deemed exports*

b) Merchanting trade

c) Domestic supply

d) None of these

92. As per UCP-600, A nominated bank acting on its nomination, a confirming bank, if any, and the issuing bank shall each have a maximum of------- days following the day of presentation to determine if a presentation is complying.

a) 5 days

b) 5 banking days*

c) 7 days

d) 7 banking days

93. Authorized Dealers may accept payment in cash up to Rs. ---- against sale of foreign exchange for travel abroad (for private visit or for any other purpose). Wherever the sale of foreign exchange exceeds the amount equivalent to Rs. ----, the payment must be received only by a crossed cheque Banker’s Cheque / Pay Order / Demand Draft or Debit / credit / prepaid cards

a) Rs.50000*

b) Rs 49999.99

c) Rs 20000

d) Rs 19999.99

94. ---is the lowest price that the buyer is offering for a particular currency at the moment. -----is the highest price acceptable to the seller

a) Bid, Offer

b) Offer, Bid

c) BID, Bid*

d) Offer, Offer

95. Which account can be opened by a foreign national of non-Indian origin visiting India, with funds remitted from outside India through banking channel or by sale of foreign exchange brought by him to India.

a) NRO current account

b) NRO Saving account*

b) Both of the above

c) None of the above

96. NGOs engaged in micro finance activities can raise ECB up to or its equivalent during a financial year. Designated AD bank has to ensure that at the time of drawdown the forex exposure of the borrower is fully hedged

a) USD 5 million

b) USD 1 million

c) USD 10 million*

d) None of these

97. Banks should furnish to the Reserve Bank, on a half-yearly basis, a consolidated statement in Form XOS giving details of all export bills outstanding beyond six months from the date of export as at the end of June and December every year. The statement should be submitted in triplicate within -----days from the close of the relative half-year.

a) 7 days

b) 10 days

c) 15 days*

d) 30 days

98. As per UCP-600 A presentation including one or more original transport document must be made by or on behalf of the beneficiary not later than ------days after the date of shipment

a) 21 calendar days

b) not later than the expiry date of credit

c) Both of these*

d) none of these

99. What are provisions for Interest rates in case of NRE Fixed Deposits?

a) LIBOR / SWAP rates, as on the last working day of the previous month, for US Dollar of corresponding maturities PLUS 175 BASIS POINTS*

b) LIBOR / SWAP rates, as on the last working day of the previous month, for US Dollar of corresponding maturities PLUS 100 BASIS POINTS

c) LIBOR / SWAP rates, as on the last working day of the previous month, for US Dollar of corresponding maturities PLUS 75 BASIS POINTS

d) None of the above.

100. DIRECT QUOTATION means

a) A given number of units of foreign currency per unit of domestic currency e.g. Rs. 100=$2.46

b) A given number of units of domestic currency per unit of foreign currency e.g. $1=Rs. 45.56*

c) Any of the above

d) None of the above

101. What is the maximum amount of Loan against NRE/ FCNR (B) Deposits?

a) Rs. 100 LAC

b) Rs. 500 lac

c) No limit*

d) None of the above

102. Which of these is not correct about FCNR(B) deposits in PNB

a) FCNR (B)) can be opened and maintained by designated branches only.

b) Indian staff posted at Indian Embassy in Pakistan/Bangladesh and their non-resident dependents may open these accounts

c) These accounts can be opened in six currencies*

d) None of the above

103. The Interest on deposits accepted under FCNR (B) scheme shall be paid on the basis of ---- days a year

a) 365 days

b) 366 days

c) 360 days*

d) 365/ 366 days in accordance with leap year.

104. Minimum period for NRE/ FCNR ( B) fixed deposits is

a) 7 days

b) 3months

c) One year*

d) Five years

(all the questions as per RB circular may some incorrect and so read circular and correct your self)

Current Affairs on 19th September 2018

Today's Headlines from www:

 *Economic Times*

📝 Jio adds a record 11.8 million users in July: TRAI

📝 Cognizant buys Advanced Technology Group for undisclosed amount

📝 10-year bond yield rises to 8.14% from 8.10%

📝 Qatar Airways files $69 million loss amid Gulf crisis

📝 UiPath plans to raise headcount to 1200 in India on back of fundraise

📝 SBI to install solar panels over 10,000 ATMs in 2 yrs

📝 LIC yet to seek open offer exemption for IDBI takeover: Sebi

📝 Cargill India's Gemini brand forays into rice bran oil segment

 *Business Standard*

📝 Arun Jaitley bats for blending subsidy with investment to boost farm sector

📝 Flipkart infuses $500 mn ahead of Big Billion Days festive season sale

📝 RCom to exit telecom biz completely, focus on real estate: Anil Ambani

📝 Govt may decide on 4G spectrum allocation to MTNL, BSNL by Dec: Manoj Sinha

📝 Sebi pares IPO listing time to 3 days from 6, clears UPI as payment option

📝 China strikes $60 billion of US goods with tariffs in widening trade war

📝 Morgan Stanley ups September 2019 BSE Sensex target by 17% to 42,000

*Financial Express*

📝 Several cos show interest in Usha Martin’s steel biz

📝 Sebi caps maximum fee for MF schemes, cuts TER

📝 Textile, apparel exports in August up 18% at Rs 21,895 cr

📝 National Pension System: PFRDA caps equity mutual funds investment by NPS

📝 IL&FS Transportation Network to get Rs 425 cr compensation from NHAI

📝 Ayushman Bharat to give fillip to Digital India, says JP Nadda

📝 Govt launches portal for giving security clearance to businesses

*Mint*

📝 Govt penalizes insurers for delay in settling crop insurance claims

📝 Nestle, Unilever, Coke make bids in $4 billion-plus GSK India sale: report

📝 CCI asks Linde and Praxair to sell their India assets before global merger

📝 TPG, ChrysCapital, others in talks to invest up to ₹600 crore in Ess Kay Fincorp

📝 IPPB ties up with Bajaj Allianz to offer life insurance products

📝 Power spot prices plunge on low demand

📝 Sebi approves KYC norms for FPIs, new settlement mechanism

📝 Investors lose ₹2.72 trillion in two days of market fall.