What is correspondent banking?
Generally, correspondent banking arrangement involves two banks establishing reciprocal accounts with each other through bilateral agreements. These accounts are established to enable the domestic bank to make payments or money transfers on behalf of the foreign bank. The most common services provided by correspondent banks are currency exchange, wire transfer, handling business transactions and trade…
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Interest Equalisation Scheme for Export Credit
The interest Equalisation Scheme (IES) for pre and post shipment rupee export credit is being implemented by Directorate (DGFT) through commercial banks.The scheme came into effect from 01.04.2015 and is for a period of 5 years.(The scheme was earlier called as ‘interest subvention scheme’ which was existing for the period from August 2010 to 31.03.2015).…
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Salient Features of FEMA- Foreign exchange Management Act
Foreign exchange Management Act (FEMA) 1999 came into effect in India from June 1, 2000 replacing earlier law FERA 1973. FEMA is a regulatory mechanism that enables the Reserve Bank of India to pass regulations and the Central Government to pass rules relating to foreign exchange in tune with the Foreign Trade policy of India.…
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What is a forward contract?
A forward contract is a privately negotiated agreement between two parties to buy or to sell an asset at a specified price on a future date. Under forward contract, there is an obligation for the buyer to pay for what has been bought and receive delivery thereof as per contract, and for the seller to give…
Read article What are FOB value and CIF Value?
The export order received by an exporter from a foreign buyer may be on FOB terms, CIF firms, and CIP or CPT terms are among the most common of the 12 international commerce terms (incoterms) established by the International Chamber of Commerce (ICC) in 1936. These are international shipping agreements used in the transportation of…
What is meant by ‘Buy low Sell high’?
The maxim practiced by the banks is “Buy Low Sell High” for direct quotations and “Buy high Sell Low” for indirect quotation. Let us take an example of a fruit vendor who purchases apple from the market at 1 KG apple for Rs.75 and sells the same to his customers at 1KG apple for Rs.90/-.…
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