What is International factoring?
International factoring usually has two factors viz. export factor and import factor. The export factor looks at financing the exporter and collection of account receivables. The import factor evaluates the importer in respect of collecting the dues in time and assessment of chances of default by the importer. The exporter on receipt of export order…
Read article
Raising Trade Credits for imports in India
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…
Read article
Calculation of forward exchange rates explained with the illustrations
A currency forward contract is a customized, written contract between two parties that sets a fixed foreign currency exchange rate for a transaction, set for a specified future date. Currency forward contracts are used to hedge foreign currency exchange risk. They are most commonly made between importers and exporters headquartered in different countries. A forward…
Read article
‘Options’ in security market/Forex market
Option is an agreement between two parties offering to buy or sell a security (a stock, bond, commodity or other instruments) from or to the other party at a specified price within a specific time period. In option contracts, there is no obligation on the part of buyer or seller to buy or sell the…
Read article
Reporting of Foreign Exchange Transactions to Trade Repository
The Reserve Bank of India is expanding reporting requirements for foreign exchange transactions. Starting February 10, 2025, authorized dealers must report all spot deals, including Cash and TOM transactions, to the Clearing Corporation of India’s trade repository. “To ensure completeness of transaction data in TR for all foreign exchange instruments, it has been decided to…
Permissible Modes of Acquiring Property outside India by a Resident
Updated as per RBI circular dated April 6, 2023 The Foreign Exchange Management (Overseas Investment, or OI) Rules, notified by the Reserve Bank of India (RBI) on 22 August 2022, supersedes the erstwhile provisions governing the acquisition of immovable property overseas by a resident individual. According to section 6(4) of the FEMA, a person resident…
Read article