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Short Note
As per section 2 of Foreign Exchange Regulation act 1947, Authorized Dealer means
a person, for the time being authorized to deal in Foreign Exchange. In other words
Authorized Dealer means a Bank, authorized by Central Bank to deal in foreign
exchange. There are some persons or firms, authorized by Central Bank to deal in
foreign exchange with limited scope, are called Authorized Money Changers.
[Foreign exchange dealers can also be defined as any financial body or institution
that has been given authorization from the Forex regulatory body to act as foreign
currency exchange dealer, dealing with the trade of foreign currencies. Each
country will have its own Forex regulatory body to ensure that all Forex trading are
above board and just.]
5. Balance of Payments
The balance of payments (BOP) is a set of accounts that record a country's
international transactions, and which (because double entry bookkeeping is used)
always balance out with no surplus or deficit shown on the overall basis. A surplus
or deficit, however, can be shown in any of its three component accounts: (1)
Current account, covers export and import of goods and services, (2) Capital
account, covers investment inflows and outflows, and (3) Gold account, covers gold
inflows and outflows. BOP accounting serves to highlight a country's competitive
strengths and weaknesses, and helps in achieving balanced economic-growth.
6. Balance of Trade
Balance of Trade (BOT) is the difference between the monetary value of exports
and imports of a specific country's economic output over a certain period of time. It
is one of many economic fundamentals that affect the relative value of a country's
currency. A positive or favorable balance of trade is known as a trade surplus when
exports exceed imports. Conversely, a negative or unfavorable balance is referred
to as a trade deficit or trade gap. The BOT is also part of a nation's current account,
which includes income from the international investment positions, as well as
international aid and other cross-border transactions.
7. Bill of Entry
A bill of entry is a formal declaration describing goods that are being imported or
exported, including details and the quantity of the goods, along with an estimate of
their value. This document is examined by customs officials to inspect the shipment
to determine whether or not it is consistent with the bill of entry, and discrepancies
can be grounds for legal proceedings. Once the document has been reviewed and
the shipment has been inspected, it can be cleared for sale or transfer. If there is a
problem, customs may opt to confiscate the goods.
8. Bill of Exchange
A written, unconditional order by the drawer to the drawee to pay a certain sum,
either immediately or on a fixed date, for payment of goods or services received.
The drawee accepts the bill by signing it, thus converting it into a post-dated check
and a binding contract. A bill of exchange is also called a draft but, while all drafts
are negotiable instruments, only "to order" bills of exchange can be negotiated. A
bill of exchange is the most often used form of payment in local and international
trade, and has a long history- as long as that of writing.
32. Inco-terms
Inco-terms, short for "International Commercial Terms," are used to make
international trade easier by helping traders in different countries understand one
another that was published by the International Chamber of Commerce (ICC) are
commonly used in both international and domestic trade contracts. The last revision
(1999) is named 'INCOTERMS 2000'. In brief these terms are: Cost & Freight, Cost-
insurance-Freight, Delivered at frontier, delivered duty paid, ex quay, ex ship, ex
works, free alongside ship, free on board, free on board airport, free on rail/free on
truck, free carrier, free carriage paid to and free carriage paid to and insurance.
37. LIBOR
LIBOR is an acronym for London InterBank Offered Rate. This rate is that which is
charged by London banks, and is then published and used as the benchmark for
bank rates all over the world. LIBOR is compiled by the British Bankers Association
(BBA).
This market allows banks with liquidity requirements to borrow quickly from other
banks with surpluses, enabling banks to avoid holding excessively large amounts of
their asset base as liquid assets. The LIBOR is officially fixed once a day by a small
group of large London banks, but the rate changes throughout the day.
51. SWAP
Swap refers to the exchange of one security for another to change the maturity
(bonds), quality of issues (stocks or bonds), or because investment objectives have
changed. The most common type is an interest rate swap, in which one party
agrees to pay a fixed interest rate in return for receiving a adjustable rate from
another party. Other types of swap are: Currency swap, Debt swap, Debt to equity
swap, and Debt to debt swap.
52. SWIFT
The Society for the Worldwide Interbank Financial Telecommunication (SWIFT) is a
co-operative organization, founded in Brussels, 1973, operates in more than 200
countries is dedicated to the promotion and development of standardized global
interactivity for financial transactions. SWIFT's original mandate was to establish a
global communications link for data processing and a common language for
international financial transactions. The Society operates a messaging service for
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financial messages, such as letters of credit, payments, and securities transactions,
between member banks worldwide. SWIFT's essential function is to deliver these
messages quickly and securely- both of which are prime considerations for financial
matters.
0pening Bank:
The Bank issuing the L/C in favor of exporter is known as opening Bank. The
opening bank opens L/C on request of importer according to application of the
importer.
Advising Bank:
The Bank through L/C is advised their agent (correspondent Bank) abroad. The
duty of the advising Bank is to authenticate the message so that is to the seller can
act on it without any fear of forgery etc.
Beneficiary:
Seller and exporter in whose favor the L/C are opened. The beneficiary is normally
the seller of good who receive payment under documentary credit. If has compiled
with terms and conditions thereof.
Negotiating Bank:
The Bank that is authorized to handle (purchase) the documents under the L/C in
the exporting country is known as negotiating Bank. L/C will stipulate either a
notified bank to negotiate (restricted L/C) or any bank can negotiate in the sellers
country (unrestricted L/C).
Reimbursing Bank:
The Bank that is (by the L/C issuing Bank) to effect reimbursement is known as
reimbursing bank. Reimbursing Bank authorized to honor the reimbursement claims
in settlement of negotiation/ accepting/ payments lodged with its by the paying/
negotiating/ accepting Bank.
Confirming Bank:
A Confirming Bank is one which adds the guarantee to the credit opened by another
bank. Therese undertaking the responsibility of payment/ negotiating/ acceptance
under the credit in addition to that of the issuing Bank. A confirming Bank normally
does so it requested by the issuing Bank.