'Foreign Exchange Dealers Association Of India - FEDAI'

Evolution of FEDAI
Under the Foreign Exchange Regulation Act (FERA), 1947, a few foreign banks, designated as Exchange Banks were permitted to transact foreign exchange business. The terms and conditions for undertaking such business were being laid down by the then Exchange Banks Association. With the increase in Indias foreign trade, several scheduled commercial banks were authorized by the Reserve Bank to deal in foreign exchange business. This led to the formation of FEDAI on August 16, 1958 with a mandate to lay down the terms and conditions which were mandatory in nature for the Authorized Dealers (ADs).

Foreign Exchange Dealer's Association of India (FEDAI) was set up in 1958 as an Association of banks dealing in foreign exchange in India (typically called Authorised Dealers -ADs) as a self regulatory body and is incorporated under Section 25 of The Companies Act.

 FEDAI determines many of the rules that overlook the day-to-day forex transactions in India. In addition to rule setting, FEDAI assists member banks by acting as an advisor and assists with the training of personnel. The association is responsible for accrediting India's foreign exchange brokers and announcing the exchange rates to its member banks.

What FEDAI Does ?

Guidelines and Rules for Forex Business. Training of Bank Personnel in the areas of Foreign Exchange Business. Accreditation of Forex Brokers Advising/Assisting member banks in settling issues/matters in their dealings. Represent member banks on Government/Reserve Bank of India/Other Bodies. Announcement of daily and periodical rates to member banks.

Member Banks
Public Sector Banks (26) Foreign Banks (42) Private Sector Banks / Co-Operative Banks (29) Financial Institutions / Others (4) Total Members (as of August 2013) : 101

Managing Committee Members

1. SBI Chairman 2. Citibank N.A. Vice Chairman 3. HDFC Bank ltd Additional vice chairman

Various rules of FEDAI

Rules No 1. of FEDAI deals with hours of business of banks which is the normal banking hours of ADs. On Saturdays no commercial transaction in foreign exchange will be conducted except purchase/sale of travellers cheques and currency notes and transactions where exchange rates have been already fixed. Rules No.2 deals with export transactions export bills purchased/discounted negotiation, export bills for collection export letters of credit, etc.

Main Roles & Functions - FEDAI

Frame guidelines and rules for Foreign exchange Business.
Training of Bank Personnel in the areas of Foreign Exchange Business. Accreditation of Foreign exchange Brokers and periodic review of their operations. They also advise the RBI regarding licensing of new brokers. Advising / Assisting member banks in settling issues / matters in their dealings. They provide a standardized dispute settlement process for all market participants.

 Represent member banks in discussions with Government / Reserve Bank of India / Other Bodies and provide a common platform for ADs to interact with the Government and RBI. Announcement of daily and periodical rates to member banks. At the end of each calendar month they provide a schedule of forward rates to be used by ADs for revaluating foreign currency denominated assets and liabilities. Announcement of spot date at the start of each trading day to ensure uniformity in settlement between different market participants. Circulate guidelines for quotation of rates, charging of commissions etc. by ADs to their customers and by brokers for interbank transactions.

Conclusion
Due to continuing integration of the global financial markets and increased pace of deregulation, the role of SRO like FEDAI has also transformed. In such an environment, FEDAI plays a catalytic role for smooth functioning of the markets through closer co-ordination with the RBI, other organizations like FIMMDA, the Forex Association of India and various market participants. FEDAI also maximizes the benefits derived from synergies of member banks through innovation in areas like new customized products, bench marking against international standards on accounting, market practices, risk management systems, etc.

FEDAI Workshops / Seminars Held

List of Nominated Banks conducts FEDAI Workshops / Seminars on FOREX under XXIII Series 2013. FEDAI 3-Days Workshop on Inspection of Forex Business at B Category branches of AD I Banks Mumbai , 2 - 4, December 2013.