DATE TIME TOPICS COVERED FACULTY HOURS
7.30 pm to 9.30 FOREX OPERATION - BRIEF EXPLANATION, EXCHANGE RATE MECHANISM Shri. Ramesh
22/01/24 Kalyan
2.00
pm
7.30 pm to 9.30
23/01/24 pm CANCELLATION OF FORWARDS, EARLY DELIVERY, SWAP COST Do 2.00
7.30 pm to 9.30
FEDAI RULES , REMITTANCES INCLUDING LRS, FACTORING, FORFAITING, ADR,GDR
24/01/24 pm Do 2.00
7.30 pm to 9.30
29/01/24 FEDAI RULES , REMITTANCES INCLUDING LRS, FACTORING, FORFAITING, ADR,GDR
pm Do 2.00
7.30 pm to 9.30
30/01/24
pm EXPORTS & FACILITIES TO EXPORTERS, ISBP Do 2.00
7.30 pm to 9.30
31/01/24 EXPORT FINANCE & REGULATIONS, ECGC
pm Do 2.00
7.30 pm to 9.30
DOCUMENTARY CREDITS - LC MECHANISM, UCPDC-600, INCOTERMS – 2020
01/02/24 pm Shri.Jamess John 2.00
7.30 pm to 9.30
02/02/24
pm LC CASE STUDIES Do 2.00
FEMA, FTP, GOLD CARD SCHEMES, HSS, MERCH TRADE , URR, URC, NRE/NRO and FC
7.30 pm to 9.30
03/02/24 accounts Do
pm 2.00
18.00
Certificat Date : From 22nd January 2024
e Presented by – RAMESH K,
Course in (Retd.) Senior Manager (SBI)
Foreign
Exchang
e
Guidelines on Foreign Exchange Operations for
Banks
Foreign Exchange transactions :- Instructions from
GOI
DGFT
RBI AP- Master Directions
FEMA
FEDAI Rules
ECGC
Bank’s instructions
Intl Guidelines viz; UCPDC / INCOTERMS/URC/URR/URDG/ISP
What is Foreign Exchange-All deposits, credits, drafts,
cheques,Currency Notes,TC, export/import bills, etc
FOREIGN payable in any foreign currency.
EXCHANGE : What is a Foreign Exchange transaction
Definition( Sec What is an exchange rate.
2 of FEMA
1999)
Facilitate Currency Conversion
Provide instruments to Manage Forex Risk
Functions
Allow investors to speculate in the market
of Forex to enable make profit
Market/ INR slowly becoming an international
About INR currency.
FEMA widely accepted.
Forex reserves started rising. USD 590.78 Bio. (3rd Nov 23)
Highest- USD 642.45 Bio in 3rd Sep 2021 & Lowest USD
1.00 Bio in June 1991.
Last year the reserve went down considerably.
Forex
That necessitated frequent intervention for orderly conditions
reserves in forex market by RBI.
USD out flow was due to oil import, Inflation worries.
Factors affecting depreciation of INR- high interest rates,
less of consumer spending, recession fears, FDI withdrawal
etc.
FEX TRADERS ARBITRAGEURS INVESTORS
MARKET
Commercial Banks
Investment Banks
Central Banks 2% Merchant Trades
Brokers 98% Speculative Trades
Institutional Investors
Individuals
September 11, 2025 BFM Module A - INTERNATIONAL BANKING 7
Excessive out flow of USD due to
Why Rupee huge FII withdrawals
depreciates Impact of Russian – Ukraine war
all time low Mounting Crude oil import cost- nearly 82%
? RBI crude oil is imported.
interventio RBI intervention to support depreciating
n. Rupee, Avg USD 1.6 Bio /day
CASH TOM SPOT FORWAR
D
Date of 17.07.202 17.07.202 17.07.202 17.07.202
Contract 2 2 2 2
TYPES OF Date of 17.07.202 20.07.202 21.07.202 Any date
FOREIGN Settlement 2
(Same
2
(Next
2
( Second
beyond
21.07.202
EXCHANGE date of
contract)
working
day in
working
day in
2
( Any day
CONTRACT both the both the beyond
countries) countries) second
S working
day in
both the
countries)
Why different rates are applied in the FEX
transactions? Eg; TT Buy, TT Sell, Bill B/S, Ch
Purchase, Currency B/S----- Commission
Common rates applied for Trade
transactions
EXPORTS IMPORTS
Purchase/Discount/
Negotiation BILLS Buying Bill Retirement BILLS Selling
Collection TT Buying Crystallisation BILLS Selling
Crystallisation TT Selling (Bills under LC are Crystallised)
Crystallised Bill
Realised TT Buying
FORWARD
RATES
What is a Forward :- Delivery of the currencies takes place beyond two working days ie;
SPOT
It represents the future value of a currency
Forward rates are derived from spot rate
Forward rate is a function of – Spot Rate, Forward Period & Interest rate differential of
the 2 currencies
(eg; If average Int rate of INR is 7% and USD is 2%, then the int rate differential between
these currency is 5% .
CASE:- Suppose I buy $ from UBI Bk @ 82 for 3 months
I will repay the $ to UBI Bk after 3 months @ 82
INR- Int 7% USD 2 % - loss of 5% int- 82 + Rs 3 = 85 Premium
How to distinguish the market is at a
Premium or discount ?
Premium Discount
Forward rate is more than the Forward rate is less than the
spot rate spot rate
Computing Future value of the currency Future value of the currency
is costlier than its current is cheaper than its current
Forward value value
Rate Forward Rate = Spot rate +
Premium
Forward rate = Spot rate -
Discount
Forward points are in Forward points are in
ascending order descending order
Eg: Spot USD/INR: 72.50/60 Eg: Spot GBP/INR: 89.10/20
1 M Forward Premium: 5/10 1 M Forward Discount: 10/05
Ps 1 Month Forward :
1 Month Forward : 72.55/70 89.00/15
Given : Forward
Period
Buying Rate Selling Rate
Spot 1M Spot Buying: 72.40 Spot Selling: 72.50
+1 M Fwd Pts: 0.10 + 2 M Fwd pts :0.20
USD/INR – = 72.50 = 72.70
72.40/50,
Forward 2M Spot Buying: 72.40 Spot Selling: 72.50
+ 2 M Fwd Pts:0.25 + 2 M Fwd Pts:0.35
Points: = 72.65 = 72.85
1 M – 10/20
Ps 3M Spot Buying: 72.40 Spot Selling : 72.50
+ 3 M Fwd Pts:0.40 +3 M Fwd Pts:0.50
2 M – 25/35 = 72.80 = 73.00
Ps
3 M – 40/50
Ps
Floating Rate
Fixed Rate Mechanism Mechanism
Official rate set by the
Value of a currency is
Central Bank of a
decided by the supply &
Fixed Rate country- For India, RBI demand factors
Rate is pegged to one
& Floating or more currencies
Value of a country’s
currency changes based
Rate Avoids speculation &
on market forces
World economies
helps govt to check
adopted floating
inflation. exchange rate since
Saudi riyal is pegged to 1973.
USD since June 1986 India switched over to
ie; 1USD = SAR 3.75 floating rate regime in
1993
