Introduction :
i) FEDAI, a non profit making body was established in 1958 to regulate the dealing of and between Ads.
ii) The major functions includes to frame rules for level playing field and granting accreditation to forex brokers.
iii) All Ads are required to abide by the FEDAI rules relate to operations in foreign exchange for having uniformity in dealing.
FEDAI Rules
Rule 1 – Hours of business
Rule 2 – Export transactions ¨
Rule 3 – Import transactions ¨
Rule 4 – Clean instruments ¨
Rule 5 – Foreign exchange contracts ¨
Rule 6 – Early delivery, extension and cancellation of foreign exchange contracts ¨
Rule 7 – Business through exchange brokers ¨
Rule 8 – Inter-bank TT settlement
Global Depository Receipt, American Depository Receipt &
Indian Depository Receipt/
A GDR or ADR means any instrument created by the Overseas Depository Bank outside India and issued to non-resident investers against the issue of ordinary share of issuing company. ¨
The GDRs are listed on European stock exchange and ADRs are listed on US stock exchange and can be traded in their existing form. ¨Each GDR/ADR represent underlying share of issuing company. ¨
In principle, IDRs are the Indian equv. 0f GDR/ADR issued by Indian companies overseas.
Swap & Arbitrage
Swap : It is a transaction where bank purchases or sells the foreign currency simultaneously, for different maturities. ¨ ¨
Arbitrage : A foreign currency is generally quoted at different rates in different market due to uncertainties prevailing. The banks may purchase and sell foreign currency in different centres to take advantages of these rate differentials. Such transactions are called arbitrage operations.
Liberalised Remittance Scheme
Eligibility : Resident individuals including minors. Corporate, trust, societies not allowed. Proprietorship are eligible in individuals capacity.
Purpose : permissible current/capital account transactions. `All the facilities for release of foreign exchange available in Sch III (Misc. remittances) shall now subsumed in LRS.
Amount : USD 250000/- equv. per FY per family member subject to individual family member complying to the terms and conditions of the scheme. It is mandatory to have PAN no. to make remittances under the scheme. ¨
Be continue…….
