IntroductionDerivatives are critical financial instruments used for hedging, speculation, and risk management. In India, the regulatory framework for derivative products is governed by the Reserve Bank of India (RBI) and supported by the Foreign Exchange Dealers’ Association of India (FEDAI). In January 2022, the RBI issued updated Master Directions on OTC derivatives, establishing a modern…
The Foreign Exchange Management Act, 1999 (FEMA) was enacted by the Indian Parliament to consolidate and amend the law relating to foreign exchange. Its primary objective is to facilitate external trade and payments, and to promote the orderly development and maintenance of the foreign exchange market in India. FEMA came into force on June 1,…
India’s exchange control regime is primarily governed by the Foreign Exchange Management Act, 1999 (FEMA). This legislation regulates foreign exchange transactions with the objective of facilitating external trade and payments while promoting the orderly development and maintenance of the foreign exchange market in India. The Reserve Bank of India (RBI), in consultation with the Government…
The 10th edition of FEDAI Rules came in force from 01 April 2019. As per the guidelines FEDAI rule no.2.4, if the Authorised Dealer accepts change in the tenor of Usance bill, in such cases, the Bank shall recover/pay notional swap difference for the relative cover. In case of early delivery of “Optional Delivery Date…
With effect from April 1st, 2013, the bank carrying out inter-bank VOSTRO transfer by RTGS should follow the procedure as detailed below as per FEDAI rule no. 4.6; i) In the “remark” column of RTGS message related to Vostro Accounts with two banks, the remitting bank should mention that “We undertake to send form A3…
The 10th edition of FEDAI Rules came in force from 01 April 2019. As per the guidelines FEDAI rule no.2.5, the realization proceeds of foreign currency export bill sent for collection or of goods sent on consignment basis shall be purchased by the Authorised Dealer at TT buying rate or FX contract rate as the…
The FEDAI Rules (10th edition) for import transactions came in to force with effect from 01 April 2019. Regarding foreign exchange contracts the FEDAI rule 5 specifies the norms detailed as below. Contract amounts: FEDAI rule 5.1 states that any ‘Exchange contracts’ shall be for definite amounts and periods”. Whenever a bill contract mentions more…
The 10th edition of FEDAI Rules came in force from 01 April 2019. Concepts of normal transit period and notional due date are linked to the interest rate on export bills and to arrive at the due date of the bill/export credit. Many people get confused with the Normal Transit period with the time taken…
EXIM Bank of India was established by the Government of India in 1982 under the Export-Import Bank of India Act, 1981 for financing, facilitating, and promoting India’s international trade. The bank conducts export market studies and assists Indian Joint ventures in third countries. The bank offers international merchant banking services and financing for overseas investment…
The basic functions of RBI (Reserve Bank of India) are “to regulate the issue of Bank Notes and keeping of reserves to secure monetary stability in India and generally to operate the currency and credit system of the country to its advantage.”In addition, to control the supply of portable money circulation, Reserve Bank of India…
