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, Rule 4.5 deals with compensation for delayed payment.Rule 4.6 deals with Transfer of funds between Vostro Accounts with two banks.
Outward Remittance:
As per FEDAI rule 4.1, the authorized dealer shall apply the TT selling rate of the bank ruling on that date or at the Fx contract rate for outward remittance.
Encashment of foreign currency notes and instruments:
As per FEDAI rule 4.2, the “foreign currency travelers’ cheques‟, currency notes, foreign currency in the prepaid card, debit/credit card will be encashed at the options of authorized dealers at the appropriate buying rate ruling on the date of encashment.
Payment of foreign inward remittance:
As per FEDAI rule 4.3, the Authorised dealers may convert foreign currency remittance into Indian Rupees immediately on receipt provided the information required for crediting the remittance to beneficiary account is available and there is no instruction to the contrary. This rule applies only in the case of the bank’s own customer and up to a certain amount as per the uniform policy of the respective bank. Remittance in excess to such a certain amount shall be executed in foreign currency or can be converted to other currency/(ies) with due intimation to or consent from, the beneficiary.
The exchange rate for conversion of foreign currency:
As per FEDAI Rule 4.4, the rate applied for converting foreign currency inward remittance shall be the TT buying rate or the contracted rate as the case may be.
Compensation for delayed payment of inward remittance:
As per FEDAI rule 4.5, Authorised Dealers shall pay or send intimation, as the case may be, to the beneficiary in two working days from the date of receipt of credit advice / Nostro statement. The bank shall transfer funds for the credit of the beneficiary’s account on receipt of disposal instructions complying with guidelines and required documents from the beneficiary. The transfer of funds to the beneficiary’s account shall be made immediately but not exceeding two business days from the date of such receipt. In case of delay, the bank shall pay the beneficiary interest @ 2 % over its savings bank interest rate. The bank shall also pay compensation for adverse movement of the exchange rate, if any, as per its compensation policy specifying the reference rate and date applicable for calculating such exchange loss. When the beneficiary does not respond within five working days from receipt of intimation of inward remittance from the bank, the recipient bank shall crystallize the remittance within a certain period as per their policy, not exceeding the time allowed for surrendering of foreign currency under any Sta,ture or Regulation or RBI Directions. However, before initiating the action of crystallization the bank shall notify due action to the remitting bank and the beneficiary.
Read the following articles related to FEDAI rules
- What is the role of FEDAI?
- Important FEDAI Rules
- FEDAI rules regarding Foreign Exchange Contracts
- FEDAI rule: Transfer of funds between Vostro Accounts with two banks explained
- FEDAI rules related to clean instruments/ inward remittance
- FEDAI rules related to import transactions
- FEDAI RULEs related to export transactions
- FEDAI Rule: Export Bills sent for collection
- FEDAI rules: Interest/Swap charges in case of Substitution/Change in Tenor of a bill
- FEDAI rules related to Normal Transit Period and the notional due date
- FEDAI RULES: Business Hours for quoting FX rates
