We know that banks allow us to make payments only up to the credit balance available in our Savings Bank Account or Current Account. Whatever amount we have deposited to the account is credited to our account and whatever payments made through the account or amount withdrawn from the account is debited to the account.…
RBI today reiterated that the regulatory framework for ETCDs has remained consistent over the years and that there is no change in the RBI’s policy approach. The announcement was made as some concerns have been expressed about participation in the exchange traded currency derivatives (ETCD) market in the light of the Reserve Bank of India’s…
(This post offers salient features of ISDA, covering some of the points most important to the parties to the agreement for OTC derivatives transactions internationally.) The ISDA Master Agreement is an internationally agreed document published by the International Swaps and Derivatives Association, Inc. (“ISDA”) which is used to provide certain legal and credit protection for…
The Foreign Exchange Market in short also called the forex market is a global marketplace for exchanging national currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling, and exchanging currencies at current or determined prices. Foreign exchange trading uses currency pairs, priced in terms of one versus…
Trade Credits (TC) denote the credits extended by the overseas supplier, bank, financial institution and other permitted recognised lenders for maturity, for imports of capital/non-capital goods permissible under the Foreign Trade Policy of the Government of India. Depending on the source of finance, such TCs include suppliers’ credit and buyers’ credit from recognised lenders. The…
The revised guidelines on External Commercial Borrowing are as per the updated circular of RBI as of December 22, 2023. In simple terms, External Commercial Borrowings (ECB) means commercial borrowings availed (in the form of bank loans, trade credits, and securitized instruments) from external sources (from abroad) with a minimum average maturity of three years.…
RBI on Friday (January 5, 2024) issued revised Master circular in respect of Foreign Exchange Derivative Contracts, Overseas Commodity & Freight Hedging, Rupee Accounts of Non-Resident Banks and Inter-Bank Foreign Exchange Dealings etc. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with…
[This post contains fundamental aspects of foreign exchange; and forex markets; as well as over 100 terminologies used in forex dealings such as direct and indirect Quote; buying rate, selling rate, forward exchange rate, swap rate, spot rate, cross rate, transaction date, value date, Spread, premium, discount, points, arbitrage, Interest arbitrage, Interest parity, future, hedging,…
Buyers’ credit finance means finance for payment of imports in India arranged by the importer (buyer) from a bank or financial institution outside India. The suppliers’ credit means credits extended for imports directly by the overseas supplier instead of a bank or financial institution. Although both buyers’ credit and supplier credit are credit facilities to…
(The article offers a detailed explanation of fixed and floating exchange rates/ Real Effective Exchange Rates (REER) and their effects on our Foreign Trade and Internal Economy on the devaluation or depreciation of the Rupee. The article also elucidates the advantages and disadvantages of devaluation or depreciation of a currency.) There are two kinds of…