Quick Success Series - Technologytestkart.in/download.php?file=qss_foreign_exchange.pdf · Quick Success Series – FOREIGN EXCHANGE November 30, 2015 Page 2 FEMA (Foreign Exchange

Quick Success Series - Technology April 24, 2010

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Quick Success Series

FOREIGN EXCHANGE

Updated By: Kumar Priyank Chief Manager Training, SBLC Deoghar Mobile- 8987107275 Email- [email protected]

QUICK SUCCESS SERIES an initiative of SBLC Deoghar to facilitate the preparation of pro-motion seeking personnel of our Bank, ap-pears to have succeeded in its objective to a large extent as the readers are still approach-ing us for its revision/updation despite avail-ability of plenty of other study materials. We would not have been able to sustain this unique effort of ours, without the active support and continuous encouragement of our DGM cum Circle Development officer Sri Bijayananda Padhi. We are deeply indebted to him for his co-operation and guidance. Sri Champak Das, Chief Manager (Training), Sri Rakesh Roshan, Chief Manager (Training) and Sri Mukul Manohar, Chief Manager (Training) & Kumar Priyank, Chief Manager (Training) at this SBLC have owned up this project and have taken pains to keep it rele-vant to the users by updating & improving it at half yearly interval. Though every care has been taken while up-dating the contents, we request our readers to point out any lapses at the earliest. Need-less to mention that this book is not a sub-stitute of circular instructions issued by the Bank from time to time. For detailed guide-lines please refer to Bank’s latest circulars. Soft copy of this edition is available on our ftp://10.151.51.33 in QSS folder and on SBI TIMES>PATNA CIRCLE>SBLC Deoghar site. Team SBLC Deoghar is humbled by the re-sponse and recognition, it is receiving from readers within and beyond the circle. Our Team wishes the readers grand success in their endeavours.

Satish Kumar Singh Assistant General Manager, State Bank Learning Centre, Deoghar- 814112 Phone- 06432-232895 Fax - 06432-231810 E-mail: [email protected]

(UPDATED UP TO 30 November, 2015)

ftp://10.151.51.33/

Quick Success Series – FOREIGN EXCHANGE November 30, 2015

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FEMA (Foreign Exchange Management Act) came into force on 01.06.2000. It is an Act to consolidate and amend the law

relating to foreign exchange in India, with the objective of facilitating external

trade and payments and for promoting the orderly development and

maintenance of foreign exchange market in India

Liberalised Remittance Scheme (LRS) for resi-dent individuals (increase in the limit from USD 125,000 to USD 250,000)

AD banks may now allow remittances by a resi-dent individual (even minors are entitled) up to USD 250,000 per financial year (Apr-Mar) for any permitted current or capital account transaction or a combination of both. Individuals can avail of foreign exchange facil-

ity for the following purposes within the limit of USD 250,000 only. Any additional remit-tance in excess of the said limit for the follow-ing purposes shall require prior approval of the Reserve Bank of India.

Facilities for persons other than individual - The following remittances by persons other than individuals shall require prior approval of the Reserve Bank of India. (i) Donations exceeding one per cent of their foreign exchange earnings during the previous three financial years or USD 5,000,000, whichever is less, for- (a) creation of Chairs in reputed educational institutes, (b) contribution to funds (not being an in-vestment fund) promoted by educational in-stitutes; and (c) contribution to a technical institution or body or association in the field of activity of the donor Company.

The permissible capital account transactions by an individual under LRS are: i) opening of foreign currency account abroad with a bank; ii) purchase of property abroad; iii) making investments abroad; iv) setting up Wholly owned subsidiaries and Joint Ventures abroad;

v) extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013.

Further, to facilitate ease of transactions, all the facilities (including private/business visits) for release of exchange/remittances for cur-rent account transactions available to resident individuals, shall now be subsumed under the overall limit of USD 250,000.

However, for remittances such as emigration, expenses in connection with medical treat-ment abroad and studies abroad, individuals may avail of exchange facility for an amount in excess of the overall limit prescribed under the LRS, if it is so required by a country of em-igration, medical institute offering treatment or the university respectively.

Gift in Indian Rupees by resident individuals to NRI relatives as defined in the Companies Act, 2013 shall also be subsumed under the LRS limit.

The Scheme cannot be made use for making remittances for any prohibited or illegal activi-ties such as margin trading, lottery, etc. (e-cir 278 dt. 05/06/2015).

For gifting purposes, both the individuals i.e.

remitter and recipient (NRI) should be close

relatives as defined in the Companies Act

2013. (e-cir 413 dt. 07/07/2015) Capital account transaction It means a transaction which alters the assets

or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India, and includes transactions re-ferred to in sub-section (3) of section 6.

Current account transaction

It means a transaction other than a capital account transaction. Such transaction in-cludes,- (i) Payments due in connection with foreign trade, other current business, services, and


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short term banking and credit facilities in the ordinary course of business, (ii) Payments due as interest on loans and as net income from investments, (iii)Remittances for living expenses of parents, spouse and children residing abroad, and (iv) expenses in connection with foreign trav-el, education and medical care of parents, spouse and children.

Remittences : Facilities for Residents

Private visit Abroad (other than Nepal & Bhutan)

USD 250,000 in one financial year (FY).

Going abroad for em-ployment


For business Visits (Vis-its in connection with attending of an interna-tional conference, sem-inar, specialized train-ing, apprentice training, etc., are treated as business visits)


Gift / Donation USD 250,000 in one (FY). Remittances ex-ceeding the limit of USD 250,000 will re-quire prior permission of RBI.

Emigration USD 250,000 in one financial year (FY).

Maintenance of close relatives abroad


Medical treatment abroad (In addition to the above, an amount up to USD 250,000 per financial year is allowed to a person for accom-panying as attendant to a patient going abroad for medical treat-ment/check-up.)

USD 250,000 in one financial year (FY). (For amount exceeding the above limit, estimate from the doctor in India or hospital/ doctor abroad, is required to be submitted to the Authorized Dealers.)

Students for pursuing their studies abroad

USD 250,000 in one financial year (FY). (A student holding NRO account may withdraw and repatriate up to

USD 1 million per finan-cial year from his NRO account. USD 3000 or its equivalent may be carried by the student in the form of foreign currency (which shall be within the overall limit of USD 2,50,000 or the estimate received from the institution abroad) while going for study abroad.

Remittance towards consultancy services procured from outside

USD 1 million (Infra-structure : 10 million)

Airline companies which have been permitted

by the Directorate General of Civil Aviation to operate as a schedule air transport service, can make advance remittance without bank guarantee or an unconditional, irrevocable standby letter of credit up to USD 50 million in the case of import of aircrafts/ helicopters/ other aviation related purchases.

SALE OF EXCHANGE Authorised Persons may release foreign ex-

change for travel purposes on the basis of a declaration given by the traveller regarding the amount of foreign exchange availed of during the financial year.

Out of the overall foreign exchange (USD 250, 000) being sold to a traveller, exchange in the form of foreign currency notes and coins may be sold up to the limit indicated below: (i) travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Rus-sian Federation and other Republics of Com-monwealth of Independent States - not ex-ceeding USD 3000 or its equivalent. (ii) travellers proceeding to Iraq or Libya - not exceeding USD 5000 or its equivalent. (iii) travellers proceeding to Islamic Republic of Iran, Russian Federation and other Repub-lics of Commonwealth of Independent States - full exchange may be released. (iv) travellers proceeding for Haj/Umrah pil-grimage- full amount of BTQ entitlement in


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cash or up to the cash limit as specified by the Haj Committee of India, may be released.

A resident Indian is allowed to take INR of de-nomination of Rs.100 or lesser denomination, to Nepal and Bhutan, without any limits. For denominations of Rs 500 and Rs 1,000, the limit is Rs 25,000.

The form A2 relating to sale of foreign ex-change should be retained for a period of one year by the Authorized Persons, together with the related documents, for the purpose of verification by their Internal Auditors. For ef-fecting current account remittances not ex-ceeding USD 25,000 Authorized Dealers need only a simple letter from the applicant con-taining the basic information, viz., names and the addresses of the applicant and the benefi-ciary, amount to be remitted and the purpose of remittance. However, this is subject to the condition that the payment is made by a cheque drawn on the applicant's bank ac-count or by a Demand Draft.

Unspent Foreign Exchange Unspent foreign exchange brought back to In-dia by a resident individual should be surren-dered to an Authorised Person within 180 days from the date of return of the traveller. However, a returning traveller is permitted to retain with him, foreign currency; travellers cheques and currency notes up to an aggre-gate amount of USD 2000 and foreign coins without any ceiling beyond 180 days.

Payment in Rupees Authorised Dealers may accept payment in cash for amounts which do not exceed the amount equivalent to Rs. 50,000/- (Rupees fif-ty thousand only) against sale of foreign ex-change for travel abroad (for private visit or for any other purpose).

Issue of Guarantee – Import of service AD Category-I banks are now permitted to is-sue guarantee for amount not exceeding USD 500,000 or its equivalent in favour of a non-

resident service provider, on behalf of a resi-dent customer who is a service importer. In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry of Finance, Government of India for issue of guarantee for an amount exceed-ing USD 100,000 (USD One hundred thou-sand) or its equivalent would be required.

Acquisition of foreign securities under Em-ployees Stock Option (ESOP) Resident individuals who are either employ-ees or director of an Indian office or branch of a foreign company in which foreign holding is not less than 51 per cent are permitted to ac-quire foreign securities under ESOP Scheme without any monetary limit. They are also permitted to freely sell the shares provided the proceeds thereof are repatriated to India.

Cultural Tours Dance troupes, artistes, etc., who wish to un-dertake tours abroad for cultural purposes should apply to the Ministry of Human Re-sources Development (Department of Educa-tion and Culture), Government of India, for their foreign exchange requirements. Author-ised Dealers may release foreign exchange, on the strength of the sanction from the Ministry concerned, to the extent and subject to condi-tions indicated therein.

A resident individual is permitted to make a rupee loan to a NRI/PIO who is a close relative of the resident individual, by way of crossed cheque/ electronic transfer subject to the fol-lowing conditions:(i) The loan is free of inter-est and the minimum maturity of the loan is one year.(ii) The loan amount should be with-in the overall limit under the Liberalised Re-mittance Scheme of USD 2,50,000, per finan-cial year, available to the resident individual. (iii) The loan shall be utilised for meeting the borrower's personal requirements or for his own business purposes in India.(iv) The loan shall not be utilised, either singly or in associ-ation with other person, for any of the activi-ties in which investment by persons resident outside India is prohibited.


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A person coming into India from abroad can bring with him foreign exchange without any limit. However, if the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000 or its equiva-lent and/or the value of foreign currency alone exceeds USD 5,000 or its equivalent, it should be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in India.

Permissible foreign exchange can be drawn 60

days in advance. In case it is not possible to use the foreign exchange within the period of 60 days, it should be immediately surren-dered to an authorised person. However, res-idents are free to retain foreign exchange up to USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their Resident Foreign Currency (Domestic) [RFC (Domestic)] Accounts.

A foreign national of non-Indian origin who

has retired from an employment in India or who has inherited assets from a person resi-dent in India or who is a widow of an Indian citizen who was resident in India, may remit an amount not exceeding USD one million, per financial year (April-March).

Authorised Person

It means an authorized dealer, money

changer, off-shore banking unit or any other person for the time being authorized under sub-section (1) of section 10 to deal in foreign exchange or foreign securities.

Authorized Dealers can take all types of foreign exchange transactions.

Types of Authorised Dealer: AD Category- I: Who can take all current and capital account transactions. E.g commercial banks, State Co-op Banks, Urban Co-op Banks. AD Category II: Upgraded FFMC with a mini-mum net owned funds of Rs. 10 cr and func-tioning for last 2 years. RRBs can undertake non trade related current a/c transactions.

AD Category III: transactions incidental to the foreign exchange activities undertaken by select financial institutions.

Full Fledged Money Changers (FFMC) are au-thorized to issue and encash foreign currency travellers cheques and Currency notes.

Categories of Bank Branches dealing with forex transactions :

Category A : Branches authorized to maintain Foreign Currency accounts including ACU ac-counts and would handle all types of forex

transaction.

Category B : Branches authorised to handle trade-related and Service-related transac-tions denominated in foreign currencies and Indian rupees and authorised to oper-ate on Bank's Foreign Currency accounts.

Category C-1 : Branches authorized to handle and report all types of transactions, as B Cate-gory Branch does, through their Link Office (designated B Category Branch). However, those C1 Category Branches, authorized to handle FCN transactions can directly report through Mfx (for FCN only) for immediate po-sitioning. Handle trade and service related transactions in foreign currencies and rupees through designated link office; report transac-tion to a nearby B category branch.

Category C-2 : Branches authorised to

handle service -related transactions de-

nominated in Indian rupees including

opening and maintenance of NRE ac-

counts.

RBI is entrusted with the responsibility of en-

forcing the rules and regulations in respect of foreign transactions.

Foreign Exchange Dealers Association of India, Bombay (FEDAI) is an association of all ADs, who issues guidelines to its members for con-duct of forex business and ancillary.

SBI Organisational set up International Division, Mumbai supervises

forex business of State Bank Group. It is re-sponsible for opening and control of foreign


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branches, International Borrowings, corre-spondent relationship etc.

Global Market Unit, Kolkata (GMUK) (previ-ously known as FD Kolkata) is responsible for maintaining Nostro A/C, rate list for few cur-rencies, Barter Deal, compliance with ex-change control requirements.

Treasury Department, Mumbai provides online exchange rates to the forex branches under Mercury FX report and control and co-ordinates transactions on foreign currencies effected by forex branches.

IBD (International Banking Department):- Located at LHO to take care of the foreign ex-change operations of the branches.

Direct quotation method : The domes-tic currency per unit of the foreign currency. In other words, it involves quoting in fixed units of foreign currency against variable amounts of the domestic currency. eg. USD 1 = INR 67.

Indirect quotation method : the amount of foreign currency required to buy or sell one unit of the domestic currency. An indirect quote is the opposite or reciprocal of a directquote. eg. INR 100 = JPY 45.

Cross Rate : the exchange rate between 2 for-eign currencies without the intervention of the home currency. eg. GBP 1=USD 1.5.

Cash rate : The exchange of currencies take place on the date of deal.

Tom rate : The exchange of currencies takes place on the next working day.

Spot rate : The exchange of currencies is ef-fected on second working day from the date of quoting the rate.

Forward rate : The exchange of currencies is effected on a future day from the date of quoting the rate.

When a currency is costlier in forward market compared to the spot rate, it is at Premium

and when it is cheaper in forward market, it is at Discount.

Based on Sodhani Committee recommenda-tions on forex markets, each bank is now al-lowed to fix its own over-night open position limit, with the specific approval of RBI.

Nostro Account: A bank account held in a for-eign country by a domestic bank, denominat-ed in the currency of that country. An a/c maintained by our Bank with a correspondent Bank. (our a/c with you)

Vostro account: An a/c maintained by a Cor-respondent Bank with us. (Your a/c with me).

Loro account: The a/c of the third bank in the books of the Correspondent Bank will be re-ferred to by us as Loro a/c (their a/c with you).

T.T selling rate is quoted for clean transac-tions such as T.T issued , finest selling rate for customer also rupee is received in advance. E.g. a draft in USD issued to the customer.

T.T buying rate is quoted for TTs received in favour of the customer. Eg. a draft in USD paid to the customer.

Bill selling rate is quoted for import bills real-ized.

Bill buying rate quoted for negotiation of ex-port bills. E.g an export bill for GBP 50000 drawn under LC is to be negotiated. e.g a bill for collection drawn in USD 10000 received from our Newyork office is retired by the cus-tomer.

Forward Contract is a contract with a cus-tomer/another bank for an exchange transac-tion to be put through at some future date at an agreed rate of exchange. Exporters and Importers enter into forward contract agree-ment with AD to protect against forex fluctua-tions.

Arbitrage : When a currency is purchased at one centre and immediately sold at another centre to take the advantage of exchange rate difference is called Arbitrage.


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Hedging: Buying foreign currency forward at current price so as to cover for the unpredict-ed change in the market.

L.C (Letter of Credit) is an undertaking by a

bank, on behalf of the buyer (importer), to the beneficiary (seller) of the credit that it would honor bills drawn in terms of the cred-it.

Irrevocable Letter of Credit: Can’t be amend-ed or cancelled by the opening bank without the consent of all the concerned parties.

Revocable Letter of credit: Can be revoked at any time by the opening bank without the consent of the parties.

Standby Letter of Credit: One bank advises another bank to pay only if a transaction agreed to by the opener of the credit with the beneficiary is not performed.

Revolving Letter of Credit: On payment of bill the LC shall be reinstated by the value of the bill negotiated but within the original value of the LC and before its validity. The validity of such LCs should not be more than one year.

Red Clause Letter of credit: When the open-ing bank requests the advising bank to give loan to the exporter for the purpose of ex-port.

Green Clause Letter of Credit: When the Red Clause credit provides for the grant of storage facilities at the port of Shipment.

Back to Back Letter of Credit: When an inland LC is backed by the Foreign Letter of Credit for supply of goods by the manufacturer to the exporter for onward exporting the goods to foreign country.

Demand/sight bill under import LC shall be

crystalised if not retired by the customer on the 10th day from the date of receipt thereof by converting the foreign currency amount in to rupees at the Bank’s Bill selling rate. (Crystalisation)

OGL(Open General License) refers to the list of items mentioned in the foreign trade policy which can be imported freely.

UCP(600) (Uniform Custom and Practices for Documentary Credits): various rules, practic-es and assumptions relating to LC. Codified by ICC (International Chambers of Commerce) Paris and effective from 01.07.2007. There are 39 articles in the UCP 600(2007).

DOCDEX : ICC DOCDEX is a dispute resolution procedure specifically designed for the world of trade finance, whereby a panel of three in-dependent and impartial experts render a de-cision on a dispute arising out of a trade fi-nance instrument, undertaking or agreement.

Bill Of Lading is a document issued by the

shipper. It is as evidence of contract to carry goods and receipt of good received. If a Bill of lading is submitted to the bank for collection or negotiation after 21 days from the date of shipment, this is regarded as Stale.

R-Return enables RBI to arrive at Balance of Payment (BoP) position of the country. GMUK consolidates R return of all branches and submits fortnightly (within 7 days of corre-sponding fortnight) to RBI in respect of for-eign exchange transactions.

Two types : R-Return (Nostro)- submitted by A and B branches and R-Return (Vostro)- to be submitted by branches which are main-taining the Vostro a/c of foreign banks.

ENC : report of all export bills negotiated and sent for collection – forms basis of assessing export performance of the country – com-

Foreign Trade Documents

Term of Contract Insurance arranged by

Carriage cost paid by

FOB(free on board) Buyer Buyer FAS(free alongside ship)

Buyer Buyer

C&F(cost and freight)

Buyer seller

CIF(cost, insurance and freight)

Seller seller


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pared with DGFT’s figures on Exports as a cross check.

XOS : Export receivables outstanding for more than prescribed period. To be submitted to RBI at half yearly interval (30thjune and 31st Dec).

BEF : Non submission of Bills of Entry in re-spect of Imports made (To be submitted to RBI quarterly).

NRD CSR : Detailed return on NRI deposits.

IBS Statistics : Detailed return on external liabilities and assets of banks.

Export Credit is priority sector advance now for Indian banks and foreign banks in India with 20 or more branches. But it has no sepa-rate target.(RBI guidelines)

In Pre-shipment finance (rupee) (CC/OD/DL) advance has to be repaid within a maximum period of 360 days. RBI would provide re-finance only up to 180 days.

Realization and Repatriation of proceeds of export of goods / software / services : It is obligatory on the part of the exporter to real-ize and repatriate the full value of goods / software / services to India within a stipulated period from the date of export, as under:

(i) the period of realization and repatriation of export proceeds shall be nine months from the date of export for all exporters including Units in SEZs, Status Holder Exporters, EOUs, Units in EHTPs, STPs & BTPs until further no-tice.

(ii) Goods exported to a warehouse estab-lished outside India: As soon as it is realized and in any case within fifteen months from the date of shipment of goods

Crystallization of export bills: All export bills not realized within stipulated period should be reversed. Different periods are reckoned for crystallization depending on the credit risk rating of the customer.

Pre-shipment Credit in Foreign Currency (PCFC): The exporter can avail packing credit in any convertible currency USD, EURO etc. instead of rupees with a max period of 360 days.

Post-shipment credit in Foreign Currency (PSCFC) is extended in the form of export bill rediscounting facility only. Banks can now re-discount export bills up to 180 days usance from the date of shipment.

GR Form is an export declaration form in which the exporter has to declare the value and quantity of the shipment. The exporter submits the duplicate GR form along with other shipping documents to AD within 21 days from the date of shipment.

SDR (Special Drawing Rights) are issued by IMF (also known as liquid gold), is a device to increase international liquidity.

SBI Exporters Gold Card Scheme: To provide hassle free WC finance to credit

worthy exporters. Eligibility : A/c classified as Standard for last 3

years / not black listed by ECGC and in the de-faulter’s list of RBI / not incurred loss during the past three years.

Export turnover up to Rs 100 cr, simplified assessment in terms of Nayak Committee norm not exceeding 25 days in case of new sanction and 15 days for renewal.

Standby limit of 20% of sanctioned limit. Valid for a period of 3 years Concessional rate of interest, 25 bps less than

normal export credit. Under FEMA, any person staying in India for

more than 182 days in the preceding financial year is a resident. ( as per Income Tax also)

Non-resident Indian (NRI): An individual shall be deemed to be a non-

resident in following cases, as per section 2(w) of FEMA 1999:

a. When he / she stays in India for less than or up to 182 days during the preceding fi-nancial year. The period of stay may not be 'continuous' and the same shall be calculat-


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ed by adding up the days of his / her stay in India during that financial year.

b. When he / she goes or stays outside India for any one of the following purposes. In such cases, the person becomes a 'non-resident' irrespective of the period of his stay in India. i. For taking up employment outside India

ii. For carrying on outside India a business or vocation outside India

iii. For any other purpose, in such circumstances as would indicate his intention to stay outside In-dia for an uncertain period

Person of Indian Origin (PIO): PIO is an individual (not being a citizen of Pa-

kistan or Bangladesh or Sri Lanka or Afghani-stan or China or Iran or Nepal or Bhutan) who fulfils anyone of the following: I. at any time, held an Indian Passport

II. who or either of their parents / grandpar-ents / great grandparents was born and per-manently resident in India as defined in Gov-ernment of India Act, 1935

III. who is a spouse of a citizen of India or PIO

Resident but not ordinarily resident (RNOR): A Non Resident who has returned to India for

good is covered under the provisions of sec-tion 6(6) of the Income-tax Act. He / she is given a special status of Resident but not or-dinarily resident (RNOR) if he / she satisfies one of the following conditions: a. The person is non-resident, as per the above provisions, for at least 9 out of 10 pre-vious years prior to the previous year under consideration.

b. The person's stay in India during the 7 pre-vious years prior to the previous year under consideration should be 729 days or less.

A person who is returning to India after 9 years of stay outside India (and who was non-resident for each of the 9 years under the In-come Tax Act, 1961), shall remain RNOR for the period of two years only.

Resident Bank account maintained by residents in India – Joint holder – liberalization RBI on review has been decided that AD banks

may include an NRI close relative (relatives as defined in Section 6 of the Companies Act, 1956) in existing / new resident bank accounts as joint holder with the resident account holder on “Either or Survivor” basis subject to the certain conditions. ( e-cir- 1133 dtd 16.01.2014)

NRI DEPOSIT SCHEMES

NRE a/c Non Resident (External) A,B,C-1,C-2 branches can open. Credit only by funds remitted from overseas to

India. To be opened in Indian Currency. Savings, Current, Fixed Deposits (TDR/STDR) and

Recurring Deposit. Interest income tax free in India. Loan can be given and be repaid from local or

external sources. Both Principal and Interest are freely

repatriable. Joint a/cs with NRIs, resident Indians. Funds can be transferred to NRO and FCNB a/c Interest rates have been freed by RBI Exchange risk faced by the depositor Nomination allowed but repatriation allowed if

nominee is NRI

NR(O) a/c (Non Resident Ordinary) A,B,C-1,C-2 branches can open Credit by funds remitted from overseas to India

or funds from Indian sources. To be opened in Indian Currency. Savings, Current, Fixed Deposits (TDR/STDR) and

Recurring Deposits. Taxable as per Income tax rules. Loan can be given and be repaid from local or

external sources Current Income up to US $ 1 million (condition-

al). Interest is freely repatriable subject to de-duction of tax.

Transfer to NRE a/c not allowed. Domestic interest rates applicable. Not convertible in other currencies so no ex-

change risk


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Nomination allowed if nominee is NRI, but re-patriation will not be allowed, his NR(O) a/c will be credited

Joint a/cs are allowed with NRIs, Resident Indi-ans.

FCNB a/c (Foreign Currency Non-Resident (Bank)

Only designated branches can open Credit only by funds remitted from overseas to

India. To be opened in foreign currency. Term Deposit (TDR/STDR) in only six currencies

namely USD, GBP, Euro, Australian Dollar, Ca-nadian Dollar, Yen.

Interest income tax free in India. Loan can be given and be repaid only from ex-

ternal sources Both Principal and Interest are freely

repatriable. Funds can be transferred to NRO and NRE a/c Interest rates have been freed by RBI Exchange risk faced by the Bank Nomination allowed but repatriation allowed if

nominee is NRI Joint a/cs with NRIs, Resident Indians.

FCNR (B) – Premium Account Dollar Premium Account is renamed as

“FCNR (B) – Premium Account”. Deposit Tenor: 1 year Minimum deposit: USD 2000 / GBP 2000 /

EUR 2000 / AUD 2000 / CAD 2000 / JPY 2,00,000.

• can be opened by i) Conversion of existing balance of NRE Savings Bank/Fixed Deposit to FCNR(B) deposits ii) Remittances from abroad

Both principal and interest are payable in Indian Rupees and to be credited on maturi-ty in NRE Savings bank account only. No au-to renewal facility is available.

The product will be available to the NRIs on specific request.

No interest is payable if the FCNR (B) depos-it is closed before maturity.

Maturity proceed is fully repatriable from NRE Savings bank account.

Only authorized branch can open.

HCD a/c (Home Coming Deposit A/c) A/C for an NRI or a PIO(person of Indian

origin) who returns to India, for permanent settlement

USD, GBP Euro, min USD 1000, period- 1 to 3 years, GBP and Euro only as Term Deposit (in SBI). It can be opened as SB, CA or STDR/TDR in any convertible foreign currency (as per RBI).

HCD balances are not subject to SLR.

Resident Foreign Currency (Domestic) A/c To park funds for returning Indians (for per-

manent settlement). Fixed Deposit (TDR/STDR) only. Joint account allowed but only with any per-

son who is eligible to open an RFC. Both Principal and Interest are freely

repatriable. Interest income tax free in India till account

holders status changes The a/c can be opened in GBP, EURO and

USD.

Exchange Earners’ Foreign Currency Accounts ( EEFC) Individuals, firms, companies, professionals

can open an account in foreign currency with a bank in India to credit earnings in converti-ble foreign currency.

A non interest bearing current account Can be opened in USD, GBP, EURO, Yen,

AUD(Australian Dollar) & CAD (Canadian Dol-lar

CRR and SLR is applicable. No loan.

Diamond Dollar Account (DDA) I) Under the scheme of Government of India,

firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / or studded with / without diamond and / or other stones, with a track record of at least 3 years in import / export of diamonds / col-oured gemstones / diamond and coloured gemstones studded jewellery / plain gold


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jewellery and having an average annual turn-over of Rs. 5 crores or above during the pre-ceding three licensing years (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Ac-counts. (ii) They may be allowed to open not more than five Diamond Dollar Accounts with their banks.

EXTERNAL COMMERCIAL BORROWINGS (ECB) Indian companies are allowed to access funds from abroad in the following methods:

(i) External Commercial Borrowings (ECB) : ECBs refer to commercial loans in the form of bank loans, securitized instruments, buyers’ credit, suppliers’ credit availed of from non-resident lenders with a minimum average ma-turity of 3 years.

(ii) Foreign Currency Convertible Bonds (FCCBs): FCCBs mean a bond issued by an In-dian company expressed in foreign currency, and the principal and interest in respect of which are payable in foreign currency.

(iii) Preference shares: Preferences Shares (i.e. non-convertible, optionally convertible or par-tially convertible).

(iv) Foreign Currency Exchangeable Bonds (FCEBs): FCEBs means a bond expressed in foreign currency, the principal and interest in respect of which are payable in foreign cur-rency, and exchangeable into equity share of another company.

ECB can be accessed under two routes, viz., (i) Automatic Route, (ii) Approval Route.

Different limit has been fixed for different corporate.

ECGC (Export Credit Guarantee Corporation): Established in 1964. It provides credit insur-ance to Banks and policies to exporters to cover the risks involved in exports.

EXIM (Export Import Bank) was established in

1982, grants term loan and other loan facili-ties to export oriented industries.

Tarapore Committee is related to Capital Ac-

count Convertibility.

Director General of Foreign Trade (DGFT), Kolkata issues importer exporter code(IEC).

Forfeiting: To undertake financing of export receivables. EXIM bank and Ads (Category I) are permitted to undertake such services.

Foreign Exchange (Compounding Proceed-ings) Rules, 2000 have been framed and pub-lished by the Government of India empower-ing the Reserve Bank to compound contraven-tions under FEMA, 1999.

SBI EXPRESS WORLDWIDE It provides web-based assistance to facilitate

processing of wire transfers made from Eu-rope to India (to start with).

The Service is enabled to send remittances in the following currencies viz. EURO, GBP, DKK and CHF.

It is a Customer Initiated Payment (C.I.P) mode to transfer money to the beneficiary's account expeditiously.

Money is transferred from Remitter’s Bank in Europe by means of Online /wire transfer to SBI GLS’s account with the Correspondent bank viz. Deutsche Bank, London.

It is meant for individual remittances only. SBI Express Worldwide cannot be used for

remitting money to Business/Commercial ac-counts

Minimum & maximum amount of Funds Transfer limits per transaction are equivalent of 50 and 100,000 of the respective foreign currency.(EURO / GBP / CHF /DKK)

INCOTERMS The Incoterms rules explain a set of three-

letter trade terms reflecting business to-Business practice in contracts for the sale of goods. Incoterms stands for International Commercial Terms published by International Chamber of Commerce.

The Incoterms rules describe mainly the Tasks, Costs and Risks involved in the delivery of goods from sellers to buyers.

There are 11 (eleven) Inco terms, presented in two distinct classes:


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(A) Rules for any mode or modes of transport: 1. Ex works (EXW) 2. Free Carrier (FCA) 3. Carriage Paid to (CPT) 4. Carriage and Insurance Paid to (CIP) 5. Delivered at Terminal (DAT) 6. Delivered at Place (DAP) 7. Delivered Duty Paid (DDP) (B) Rules for Sea and Inland Waterway Transport 1. Free Alongside Ship (FAS) 2. Free on Board (FOB) 3. Cost and Freight (CFR) 4. Cost, Insurance and Freight (CIF)

LATEST- Foreign investment in India by Foreign Portfo-lio Investors

All future investments by an FPI within the limit for investment in corporate bonds shall be required to be made in corporate bonds with a minimum residual maturity of three

years. (e-cir 1319 dt 06/02/2015).

FPIs shall be permitted to invest in govern-ment securities, the coupons received on their existing investments in government se-curities. These investments shall be kept out-side the applicable limit (currently USD 30 bil-lion) for investments by FPIs in government

securities. (e-cir 1323 dt 07/02/2015)

Forex Outward Remittance ‘fxout’ In order to facilitate outward remittances of foreign exchange for personal SEGMENT customers

through a centralized platform, in a hassle free manner, GMU-K has rolled out a new product viz. “FXOUT”, which can be accessed by all the branches through CBS. (e-cir 1503 dt 31/03/2015) The salient features of the product are :

Available for retail remittances only. Available to SBI account holders only. Max remittance limited to amount equivalent

to INR 10 lacs.

Centralized Processing at GMU-K. Available across all the branches. Available for all currencies (presently for USD

only).

No specialized knowledge of forex required at branch.

System driven calculations. Single point contact for at GMU-K for all que-

ries.

ANNUAL REPORT 2015 The number of foreign offices of the Bank is

191 and is spread across 36 countries.

During FY2015, the Bank has opened a new Representative Office in Myanmar and Indian Visa Application Receiving Centre at Dhanmondi, Bangladesh.

Oman, Qatar and Kingdom of Saudi Arabia have now been given International Toll Free Number Facility. Now, the bank has 19 Inter-national Toll-Free numbers servicing 20 coun-tries.

Launched NRI Family Card- a prepaid card for use in India, mapped to the account of NRI and which can be topped up at anytime from anywhere by the customer through his INB account. It helps in solving payment related needs of relatives in India.