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Category Archives: Foreign Exchange

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Repatriation of the sale proceeds of immovable property

Featured, Foreign ExchangeBy Surendra NaikMarch 3, 20202 Comments

[This article elucidates the FEMA rules for the transfer of sale proceeds of immovable properties abroad and documents required for the same.] Section 6(5) in the Foreign Exchange Management Act, 1999 provides that “A person resident outside India may hold, own, transfer or invest in Indian currency, security or any immovable property situated in India…

How much money you can carry abroad?

Featured, Foreign ExchangeBy Surendra NaikFebruary 15, 202010 Comments

[The following article offers details about how many days in advance one can purchase foreign currencies,how much foreign currency and Indian currency one can carry with him for traveling different countries,how much foreign currency can be purchased on cash payment, the purpose for which foreign currency can be purchased,Usage of cards on foreign travel, the…

Revised guidelines for Merchanting Trade Transactions (MTT)

Foreign ExchangeBy Surendra NaikJanuary 25, 2020

In the Indian context, when a transaction involves the shipment of goods from one foreign country to another foreign country through an Indian Intermediary it is called merchanting trade or Intermediary trade. Goods involved in the merchanting trade transactions would be the ones that are permitted for exports/imports under the prevailing Foreign Trade Policy (FTP)…

RBI permits Inter-bank dealings beyond on-shore market hours

Foreign ExchangeBy Surendra NaikJanuary 6, 2020

The Reserve Bank of India added the following section to Part C (Inter-Bank Foreign Exchange Dealings) of the Master Direction- Risk Management and Inter-Bank Dealings. “Transactions with person residents outside India, through their foreign branches and subsidiaries may also be undertaken beyond onshore market hours.” The RBI notification issued by RBI on Monday (January 6)…

Why an exporter needs ECGC cover

Foreign ExchangeBy Surendra NaikDecember 16, 201915 Comments

An exporter needs ECGC cover for the risk of non-payment by the buyer. The risk of non-payment may be due to political and economic changes all over the world. Political changes like an outbreak of war, civil war, a coup or an insurrection may block or delay payment for goods exported. Likewise economic difficulties or…

Hedging of foreign exchange risk by residents and non-residents: RBI issues final guidance

Foreign ExchangeBy Surendra NaikDecember 8, 2019

Pursuant to an announcement made in during February 2019 regarding the review of foreign exchange hedging facilities by non-residents and residents. RBI also issued the draft regulations for public comments proposing to replace the existing directions in Part A – Section I and II of the Master Direction on Risk Management and Interbank Dealing. The…

FEDAI rules regarding Foreign Exchange Contracts

Foreign ExchangeBy Surendra NaikNovember 24, 2019

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…

FEDAI rule: Transfer of funds between Vostro Accounts with two banks explained

Foreign ExchangeBy Surendra NaikNovember 22, 2019

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…

FEDAI rules related to clean instruments/ inward remittance

Foreign ExchangeBy Surendra NaikNovember 21, 2019

The 10th edition of FEDAI Rules came in force from 01 April 2019. The FEDAI rule 4.1 deals with Outward Remittance, Rule 4.2 deals with encashment of foreign currency notes and instruments, Rule 4.3 deals with Payment of foreign inward remittance, Rule 4.4 deals with the applicable exchange rate for conversion of the foreign currency,…

FEDAI rules related to import transactions

Foreign ExchangeBy Surendra NaikNovember 19, 2019

The FEDAI Rules (10th edition) for import transactions came in to force with effect from 01 April 2019. The FEDAI rule 3.1 deals with the application of exchange rate, rule 3.2 deals with the application of Interest, rule 3.3 deals with crystallisation of Import Bill under Letters of Credit as detailed below; Application of exchange…

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