INTERNATIONAL BANKING Foreign Exchange : It refers to that section of economic activity, which involves conversion of one currency of a country

into another and vice versa. Buying and selling of commodities between two different countries. Any individual or an organisation that has been issued a license by RBI to buy and sell foreign currency is called Authorised Dealer. When bank buys foreign currency and gives Indian Rupee, it is Purchase transaction. It is also called inward remittance. When bank sells foreign currency and takes Indian Rupee, it is Sale transaction. It is also called outward remittance. It is the principal source for compilation of balance of payment data of the country. These also enable RBI to ensure adequate control over the foreign exchange business handled by Authorised Dealers. These are submitted fortnightly to RBI by A & B category branches Various types of R-Return : R1 -Transaction in GB Pound-Sterling. R2 -Transaction in USD. R3 - Transaction in EURO. R4 - Transaction in Japanese Yen R5 - Transaction in non-resident rupee account of foreign banks, ACU transactions. R6 - Transaction in currencies other than USD, G B Pound sterling EURO, JPY. Our account with foreign correspondent abroad in foreign currency. The management of fund vested with Global buisness unit . Foreign correspondents account with us in Indian Rupee to carryout their transactions. These are third party account with our foreign correspondent. Foreign currency is a commodity and it has some value. It's relation with other currency is determined by rate of exchange. DIFFERENT TYPES OF RATE Applicable for ail clean sale transactions viz. issuance of drafts, TT's. Applicable for retirement of import bills under LC. Applicable for all clean purchase transaction where fund is already provided to our Nostro Account. Applicable for negotiation of export bills under LC. Applicable for buying currency/Foreign Travellers Cheque Applicable for selling currency /Travellers Cheques Conversion of one currency into other immediately

Foreign Trade Authorised Dealer PurchaseTransaction Sale Transaction R-Return

: : : : :

Nostro Account Vostro Account LORD Account Rate of Exchange TT Selling rate Bill Selling rate TT Buying rate Bill Buying rate Currency/TC Buying rate Currency/TC Selling rate Spot transaction

: : : : : : : : : : : :

Forward transaction Letter of credit Controlling bodies

A category branch B category branch C I category branch C II category branch

Conversion of one currency into another at a future date and at an agreed rate A guarantee given by a bank on behalf of its customer to honour its commitments provided the beneficiary submits the necessary documents as mentioned in the LC : Director General of Foreign Trade, RBI, FEDAI, Export Promotion council, Export Promotion Board CATEGORY OF FOREX SERVICE RELATED BRANCHES : Offices authorized to handle all type of Forex transactions currency accounts. : Offices authorised to handle trade related & Service related transactions, denominated in foreign currencies, Indian Rupees and authorized to operate on Banks NOSTRO A/c for transactions in foreign currency. : Offices authorized to handle trade and service related transactions through link office. : Offices authorized to handle service related transactions in India Rupee only including the maintenance of NRE A/c. : :

Non-Resident Indian (NRI)

As per FEMA 1999, a NRI is defined as: a person who has gone out of India a) for or on taking up employment outside India, or b) for carrying on outside India a business or vacation outside India, or c) for any purpose, in such circumstances as would indicate his intension to stay outside India for an indefinite period As per IT Act, a NRI is defined as a person residing in India for less than 182 days during a financial year.

Persons of Indian Origin

A citizen of any country (other than Bangladesh or Pakistan), if (a) he at any time held Indian passport or, (b) he or either of his parents or any of his grand-parents was citizen of India (c) the person is a spouse of an Indian citizen or a person referred to in (a) or(b)
NON-RESIDENT ACCOUNTS (FCNR (B)) SCHEME

FOREIGN CURRENCY Eligibility : Currencies : Type of A/c : Repatriability : Permitted Credits : Joint A/cs : Payment of Intt : Letters of Credit :

NRIs & Overseas Corporate bodies GBP, USD, EURO, Jap Yen Term deposit (Max period: 3 yr only) Fully repatriable Remittances to India, Proceeds of Foreign Currency Notes/Travellers Cheques All of the A/c must be NRIs. No 'A/c with resident Indian Half Yearly or Yearly. A LC is a letter issued by the importers bank in favour of the exporter undertaking that the bills drawn by the exporter up to a particular amount will be duly honoured by it, provided the terms and conditions of the credit are strictly complied with by the exporter. Parties in a LC - (1) opener/applicant, (2) Issuing bank, (3) Advising bank, (4)Beneficiary, (5) Paying bank. Type of LCs - (1) Clean LC, (2) Documentary, (3) Revocable, (4) Irrevocable, (5)Confirmed, (6) Unconfirmed, (7) Transferable, (8) Back to Back, (9) Revolving LC, (10) Red Clause LC etc