FOREIGNEXCHANGE DEALERS' ASSOCIATIONOF INDIA (FEDAI)
PEDAL a non-profit making body was established during 1958 to take over the functions of the then Exchange Banks Association.
Objective of FEDAI : To regulate the dealings of and between ADs.
Functions of FEDAI: Major functions include (1) to frame uniform rules for a level playing field (b) granting accreditation to forex
brokers.
All ADs are required to mandatorily abide by the FEDAI rules. FEDAI rules relate to operations in foreign exchange for having
uniformity in dealings. Important rules are provided as under:
Rule 1 Hours of
business
Each AD to fix its own working hours with approval of its management.
Rule 2 Exports Crystallisation of export bills - Banks have discretion to crystalise the export bills. Earlier it used
to be 30 days on expiry of normal transit period.
Normal transit period - NTP for all bills in foreign currencies is 25 days. For rupee bills drawn
under LC where reimbursement is provided at the same centre - 3 days. Other centre in India - 7
days. For rupee bill not drawn under I C - 711 days.
Payment of interest - AD to pay interest to exporter for delay in payment on export bill sent for
collection and realized, if the delay is more than the prescribed period.
Rule 3 Imports Import bills retirement - Banks will apply bank's bills selling rate ruling on date of retirement.
Crystalisation: All foreign bills under LC I not retired on receipt, shall be crystallized into rupee
liability on 10th day after date of receipt of documents.
Rule 4
instruments
Clean Conversion : Inward remittance up to an amount of Rs.1 lac to be converted into Rupee
immediately. Above this amount, conversion to be doneafter getting instructions of the
beneficiary.
Compensation: For delay in payment of inward remittance beyond 10 days from date of
receipt of remittance or if advice of receiptis not sent within 3 days, compensation at 2%
p.a. above SB rate.
Rule 5 Forward contract
1. Contracts to be of definite amounts and periods.
2. Contract must state the first and last date of contracts.
3. Option of delivery is with merchant, whether he is buyer or seller.
4. Banks to pay/recover SWAP difference in case of early delivery.
5. For extension of contracts, contracts to be cancelled at appropriate selling or buying rate
and re-booked at current rates.
6. Contracts can be cancelled on or before maturity against recovery of difference.
7. Where customer does not request for cancellation, overdue contract to be cancelled on rh
day after the maturity date.
Rule 6 Exchange
brokers
Business to be undertaken through accredited exchange brokers.
Rule 7 Inter-bank
settlements.
TT 1.Buyer bank to pay rupee equivalent on value date as per seller bank's instruction.
2.SeIler bank to arrange delivery of foreign currency funds on value date into NOSTRO account as
per instructions of buyer bank.
3.In case of default or delay in settlement of rupees or foreign currency, the banks to make
compensation to the other party.
PEDAL a non-profit making body was established during 1958 to take over the functions of the then Exchange Banks Association.
Objective of FEDAI : To regulate the dealings of and between ADs.
Functions of FEDAI: Major functions include (1) to frame uniform rules for a level playing field (b) granting accreditation to forex
brokers.
All ADs are required to mandatorily abide by the FEDAI rules. FEDAI rules relate to operations in foreign exchange for having
uniformity in dealings. Important rules are provided as under:
Rule 1 Hours of
business
Each AD to fix its own working hours with approval of its management.
Rule 2 Exports Crystallisation of export bills - Banks have discretion to crystalise the export bills. Earlier it used
to be 30 days on expiry of normal transit period.
Normal transit period - NTP for all bills in foreign currencies is 25 days. For rupee bills drawn
under LC where reimbursement is provided at the same centre - 3 days. Other centre in India - 7
days. For rupee bill not drawn under I C - 711 days.
Payment of interest - AD to pay interest to exporter for delay in payment on export bill sent for
collection and realized, if the delay is more than the prescribed period.
Rule 3 Imports Import bills retirement - Banks will apply bank's bills selling rate ruling on date of retirement.
Crystalisation: All foreign bills under LC I not retired on receipt, shall be crystallized into rupee
liability on 10th day after date of receipt of documents.
Rule 4
instruments
Clean Conversion : Inward remittance up to an amount of Rs.1 lac to be converted into Rupee
immediately. Above this amount, conversion to be doneafter getting instructions of the
beneficiary.
Compensation: For delay in payment of inward remittance beyond 10 days from date of
receipt of remittance or if advice of receiptis not sent within 3 days, compensation at 2%
p.a. above SB rate.
Rule 5 Forward contract
1. Contracts to be of definite amounts and periods.
2. Contract must state the first and last date of contracts.
3. Option of delivery is with merchant, whether he is buyer or seller.
4. Banks to pay/recover SWAP difference in case of early delivery.
5. For extension of contracts, contracts to be cancelled at appropriate selling or buying rate
and re-booked at current rates.
6. Contracts can be cancelled on or before maturity against recovery of difference.
7. Where customer does not request for cancellation, overdue contract to be cancelled on rh
day after the maturity date.
Rule 6 Exchange
brokers
Business to be undertaken through accredited exchange brokers.
Rule 7 Inter-bank
settlements.
TT 1.Buyer bank to pay rupee equivalent on value date as per seller bank's instruction.
2.SeIler bank to arrange delivery of foreign currency funds on value date into NOSTRO account as
per instructions of buyer bank.
3.In case of default or delay in settlement of rupees or foreign currency, the banks to make
compensation to the other party.
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