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Archive : Basics
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World Bank Group
Posted by Arun Agrata on January 30, 2012 · 0 Comment
The World Bank Group consists of five closely associated institutions, each institution having a distinct role to play in the mission to fight poverty and improve the living standards for people in the developing world. The institutions are:
1 International Bank for Reconstruction and Development (IBRD)
This aims to reduce poverty in middle-income and credit [...]
Filed in: Basics
International Monetary Fund
Posted by Arun Agrata on January 30, 2012 · 0 Comment
Even before the Second World War ended, the Allied countries began to devote serious thought and efforts in developing a system that would end the chaotic conditions prevailing and pave the way for an orderly conduct of international trade and promote good monetary relations among the countries. They worked with the objectives of finding a system, which would
1 help in removing the restrictions [...]
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Balance of Payments
Posted by Arun Agrata on January 29, 2012 · 0 Comment
Foreign Exchange is required to settle to economic transaction the country has with other countries. These economic transaction are captured n its balance of payment statement.
A business entity communicates to the outsiders periodically the results of its operations in the form of financial statements such as profits and loss account and balance sheet. These statements summarize the effect [...]
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Prior Approval of Central Bank
Posted by admin on January 23, 2011 · 3 Comments
In respect of the following transactions, prior approval of the Central Bank should be obtained. The restriction is not applicable if the payment is made out of funds held in Resident Foreign Currency Account or Exchange Earners Foreign Currency Account of the remitter:
Gift remittance exceeding USD 5000 per remitter or donor per annum.
Donation exceeding USD 5000 per remitter or donor per annum.
Release [...]
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Prohibited Transactions
Posted by Arun Agrata on December 24, 2010 · 27 Comments
The following transactions are prohibited in terms of Rule 3:
Remittance of income from racing or riding etc.
Remittance out of lottery winnings.
Payment of commission on exports under rupee state credit route, except commission up to 10% of invoice value of exports of tea and tobacco.
Remittances for purchase of lottery tickets, banned or prescribed magazines, [...]
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Current Account Transactions
Posted by Arun Agrata on December 24, 2010 · 14 Comments
The terms ‘current account’ and ‘capital account’ are used in the context of balance of payments of a country. Current account transactions are those relating to export and import of services, income on investments and unilateral payments (gifts, remittances for family maintenance, etc). Capital account transactions relate to change in assets and liabilities abroad held by residents [...]
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Functions of Foreign Exchange Department
Posted by Arun Agrata on December 24, 2010 · 8 Comments
The Foreign Exchange Department at the Central or Zonal office or the overseas branch is divided into well-defined sections, each undertaking a specialized activity. There is no uniformity among banks either in the allocation of the tasks or in the designations of the officers manning the sections. The functions of foreign exchange departments are follows:
1) Financing Exports
The financial [...]
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Capital Account Transactions
Posted by Arun Agrata on December 24, 2010 · 12 Comments
As against the liberal provisions for current account transactions, the capital account transactions are still restricted. Section 6 provided that Reserve Bank may, in consultation with the Central Government, specify the classes of and the limits for capital account transactions which are permissible. Reserve Bank has been empowered to frame regulations in respect of:
· issue or transfer [...]
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Foreign Currency Accounts
Posted by Arun Agrata on December 24, 2010 · 15 Comments
To facilitate dealings in foreign exchange, banks maintain accounts with other banks abroad where frequency of transactions is expected. The some of the accounts used by banks are follows:
Loro Account
The term loro is used when the account is referred by a bank other than the account maintaining bank and the bank with which the account is maintained. In other words, it is used in respect [...]
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Correspondent Arrangement
Posted by Arun Agrata on December 24, 2010 · 15 Comments
The sphere of activities of a foreign exchange department extends over vast regions and number of countries. There are no any possibilities for the bank to keep their own branches throughout the world. The difficulty is managed by banks by entering into correspondent relationships. In this basis of arrangement one bank acts as an agent of the other wherever its possible. The Bank from India [...]
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Organization of an Authorized Dealer
Posted by Arun Agrata on December 24, 2010 · 13 Comments
Foreign exchange is a highly specialized business and therefore concentrated in selected branches of the bank. The decision-making is done at the corporate level in most of the banks. The foreign exchange department is also known as International Banking Division, which is headed by a Senior Executive of the bank. The Chief Executive of the Bank or its Board of Directors are refer the matters [...]
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Authorized Money Changers
Posted by Arun Agrata on December 24, 2010 · 51 Comments
Other than banks and financial institutions some other firms, hotels and organizations are also permitted to deal in foreign currency transactions in notes, coins and traveler’s cheques from the Reserve Bank. These organizations and firms are called as “Authorized Money Changers”. An authorized money changer may be a “full-fledged money changer” or a “restricted money changer”.
[...]
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Foreign Exchange Dealer’s Association of India
Posted by Arun Agrata on December 24, 2010 · 7 Comments
Foreign Exchange Dealers Association of India (FEDAI) was established in 1958 as an association of all authorized dealers in India. All authorized dealers of Type 1 and Type 3, currently numbering over 90, are members. The headquarters is located in Mumbai and other local offices at Chennai, New Delhi, Bangalore and Kolkata. At the head office, by a managing committee the affairs of FEDAI are [...]
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Authorized Dealers
Posted by Arun Agrata on December 24, 2010 · 15 Comments
The Authorized Dealers are financial institutions, banks and other institutions authorized by the Central Bank of the country is to deal in the foreign exchange. The dealer should do with the instructions and important directions given by the Reserve Bank given from period to period. While Foreign Exchange Regulation Act was in force, such directions of standing nature were available in the Exchange [...]
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Authorized Persons
Posted by Arun Agrata on December 24, 2010 · 18 Comments
There is a need for foreign exchange for the exporters and importers in the country who are spread over a vast geographical area. Even though, the authority of administer of foreign exchange in India is given to the Reserve Bank, it cannot able to control by itself and it is impossible to do the work individually. Therefore, provision has been made in the Act of Section 10, the person who enables [...]
Filed in: Basics
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