A SYNOPSIS ON STUDY OF WORKING OF FOREIGN EXCHANGE MARKET

Submitted By: Anant Chhajed

IMPORT SECTION:
Receipt of Import Bills/ Documents
1. Receipt of import documents by the importer directly from overseas suppliers. 2. Receipt of import documents by the importer directly from overseas suppliers in case of specified sectors.

Import Document Has To Be Submitted By The Importer At The Time Of Remittance.

1. At the request of importer clients, bank may receive bills directly from the overseas supplier, only if the bank is satisfied about the financial standing/ status and track record of the importer customer. 2. Before extending the facility, the bank obtains on each individual overseas banker or a reputed credit agency.

Evidence of Import
1. Physical Imports 2. Non-physical imports

Common Import documents

1. Bill of Entry 2. Commercial Invoice 3. Import License 4. Bill of Lading 5. Master Airway Bills 6. Packing List 7. Certificates Of Origin 8. Certificate Of Analysis 9. Dangerous Goods Certificate 10.Material Safety Data Sheet

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LETTER OF CREDIT
Letter of Credit L/C also known as Documentary Credit is a widely used term to make payment secure in domestic and international trade.

Types Of Letters Of Credit

1. Irrevocable Letter Of Credit 2. Revolving Letter Of Credit 3. Transferable Letter Of Credit 4. Back To Back Letter Of Credit. 5. Red Clause Letter Of Credit 6. Green Clause Letter Of Credit 7. Payment Letter Of Credit 8. Deferred Payment Letter Of Credit 9. Negotiation Letter Of Credit 10.Confirmed Letter Of Credit 11.Standby Credit

Common L/C Documents

1. 2. 3. 4. 5. 6. 7. Declaration (FEMA) Undertaking Letter Merchant Trade Declaration Purchase Order Draft Of The L/C A1/A2 Form Also Import Documents.

EXPORT SECTION:
Export trade is regulated by the Directorate General of Foreign Trade (DGFT), functioning under the ministry of Commerce and Industries, Department of Commerce, Government of India. Policies and procedures are required to be followed for exports from India are given by the DGFT.
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General Guidelines For Exports:

GR Form:
The declaration in a GR form comprises the following steps: Exporter should fill in the GR form. To produce the GR form and the shipping bill to the Customs at the port of shipment.

PP Forms:
In the case of exports by post parcel, banks have complete responsibility to ensure that goods exported are allowed for export under Exim policy and where necessary export license is available. 1. The exporter has to present the PP form (in duplicate) to the Bank. 2. The Bank will ensure: That the parcel is addressed to the correspondent bank in the country of import.

Declaration In SOFTEX Forms:

The declaration in form SOFTEX in respect of export of computer software and audio/ video/ television software has to be submitted in triplicate to the designated official of Ministry of Information Technology, Government of India at the Software Technology Parks of India (STPIs) or at the Export Processing Zones (EPZs) or Special Economic Zones (SEZs) in India not later than 30 days from the date of invoice.

Common Export Documents:

1. 2. 3. 4. 5. 6. Commercial Invoice Export Licenses Master Airway Bills Bill Of Lading Exchange Control Declaration(GR) Form Custom Clearance
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7. Certificate Of Origin 8. Packing List 9. Dangerous Goods Certificate 10.Material Safety Data Sheet 11.Certificate Of Analysis

FOREIGN CURRENCY ACCOUNTS

A Foreign Currency Account with an authorised dealer in India under these Regulations may be opened, held and maintained 1) In the form of current or savings or term deposit account in cases where the account holder is an individual, and in the form of current account or term deposit account in all other cases; 2) Singly or jointly in the name of person eligible to open, hold and maintain such account.

Type Of Foreign Currency Accounts

a. Exchange Earners Foreign Currency Accounts b. Resident Foreign Currency Accounts c. Resident Foreign Currency (Domestic) Account d. Diamond dollar Account

EXPORT FINANCING
An exporter is one who exports the goods to another customer whether n domestic country or in abroad. In exporting the stipulated goods he nay requires financing. So export financing may be required at two stages. 1. Pre-shipment credit It is a loan/ Cash credit facility to exporter in pre-shipment stage. The institution seeks a L/C opened in favor of the exporter from the overseas buyer along with the irrevocable purchase order favoring the exporter.
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2. Post shipment credit It means any loan or advance granted by a bank to an exporter of goods/services from India after the shipment of goods/rendering of services to the date of realization of export proceeds.

EXTERNAL COMMERCIAL BORROWING

1. In the form of bank loans, buyers credit, suppliers credit 2. Foreign currency convertible bonds(FCCB) 3. Preference shares 4. Foreign currency exchangeable bonds

Documentation required
1. Indenture of Mortgage 2. No objection Certificate 3. Security Trustee Agreement 4. ESCOW Account 5. The Facility Agreement(lender)

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD.(ECGC) It provides a range of credit risk insurance to exporters against loss in
export of goods and services

Offers guarantee to Bank & Financial Institution Provide overseas investment insurance to Indian Companies
Products & Services Credit Insurance Polices Guarantees To Bank Special Schemes

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