Meaning of Dirty Float

The Central Bank (RBI in India) sometimes intervenes in the volatile foreign exchange market in order to manage excessive volatility and to influence the value of a floating currency in an orderly condition. Such intervention of Central bank is called “Dirty Float”. The recent communication of the regulator informs that the bank would intervene in…

Overseas Rupee denominated bonds under ECB

The salient features of the framework for Rupee denominated bonds overseas under External Commercial Borrowing policy are as follows. Eligibility to borrow: All corporate or corporate body, Real Estate Investment Trust (REIT) and Infrastructure Investment Trusts (REITs) are eligible to borrow under ECB policy. Investors in bonds: Any investor from a Financial Action Task Force…

Rescheduling or Restructuring of External Commercial Borrowings (ECB)

The Reserve Bank of India has relaxed rules for rescheduling/restructuring of ECBs by permitting an increase in the total cost of borrowing offshore. In suppression of earlier provisions, this year the banking regulator has delegated powers to the designated AD category-I banks to allow changes/modification in the draw-down and repayment schedules notwithstanding the average maturity period or…

Who are the parties in a letter of Credit?

(Generally, there are eight parties involved in letter of credit transactions, out of which four principal parties involved in any transaction. This article briefs about four principal parties and other four ordinarily involved in letters of credit transactions). Definition of Letter of Credit: Letter of credit (LC) is an undertaking letter issued by the importer’s…

What is Standby Letter of Credit?

A Standby LC is a form of irrevocable guarantee for   a payment. Since American Banks are prevented from giving the guarantee in that country, the concept of ‘Standby LC’ came into existence. Standby Letter of Credit is an agreement wherein the buyer’s bank promises full payment of goods/services sold by him if the buyer fails to…