Basics of Foreign Exchange Transactions

This course covers the basic concepts relating to International Trade and Foreign Exchange transactions that Banks handle for their Customers in the Foreign Exchange Market. The transactions relating to inward remittances and outward remittances are explained along with the purpose towards which these remittances are being effected.

Among other topics, this course covers,

• Meaning of International Trade

• Meaning of Inward remittances and outward remittances along with the concept of Current account transactions and Capital account transactions under foreign exchange.

• The various purposes under which inward remittances can be received and outward remittances can be effected including the documentary requirements.

• Broad guidelines relating to handling each of these remittances

• Basic concepts relating to Exports, Imports, Foreign Direct Investments, Overseas Investments and External Commercial Borrowings.

• Methods of settling foreign exchange transactions viz., the Cash, Tom, Spot and forward settlements.

The course contains 13 Modules, and each module has a quiz at the end, which encapsulates the most important concepts in that module.

Module 1 - This module provides a brief overview of the meaning of International Trade, Foreign Exchange and the various current account transactions and the capital account transactions in the Indian Foreign Exchange Markets being handled by the Banks with examples.

Module 2 - This module explains the various purposes under which the inward remittances are received by the Banks for their Customers and also the meaning and purpose of each of the inward remittances being received.

Module 3 - This module explains the purposes under which the resident individuals may receive remittances from abroad and also the basic regulatory guidelines that need to be kept in mind while understanding the concepts relating to these remittances. The module also narrates the basic concept relating to receiving donations and contributions from abroad

Module 4 - This module details the meaning of Non-Resident Indian (NRI), the concepts relating to Non-Resident Ordinary account (NRO), Non-Resident External Account (NRE) and Foreign Currency Non-Resident Bank account (FCNRB) and the regulatory guidelines relating to operation and maintenance of these accounts.

Module 5 - This module explains the basic concepts relating to Export of Goods, Software and Services and the procedural formalities that needs to be adhered by the Exporters in export and also realization of the export proceeds from the Overseas buyer. The regulatory guidelines connected to Exports are also discussed in this module.

Module 6 - This module talks about the Foreign Direct Investments and the basic regulatory guidelines that needs to be adhered to by the Companies receiving equity investment. The module explains the procedural guidelines, the reporting requirements and also the scope of FDI and its importance.

Module 7 - This module explains the meaning, purpose and guidelines relating to Indian Companies borrowing from abroad for their Capital expenditure and Capital expansion programs. The concepts relating to procedural formalities of availing borrowings from Overseas lenders, reporting requirements, etc are discussed in this module.

Module 8 - This module talks about the scope and purpose of the Liberalized Remittances Scheme that is permissible for resident individuals including the documentation, procedural formalities and reporting aspects. The module also explains the regulatory guidelines relating to the LRS.

Module 9 - This module relates to the repatriation of funds by the NRIs - outward remittances by NRIs from their NRO accounts, NRE accounts and FCNRB accounts. The module explains the guidelines relating to outward remittances towards sale proceeds of Immovable properties held by NRIs in India, repatriation of investments made by them in India, etc.

Module 10 - This module talks about Import transactions, the customs formalities, regulatory guidelines and the procedural formalities relating to Imports. The basic concepts of Advance remittances, Open account, Documentary Collections and LCs are discussed in this module providing an understanding.

Module 11 - This module explains the procedures for Indian Companies (including Registered Partnership firms and LLPs) investing abroad. The regulatory guidelines and the documentation is explained thereby providing a basic understanding of the product. The reporting formalities and consequences on delayed reporting is also discussed.

Module 12 - This module relates to the outward remittances which are permissible for Corporates intending to expand their business overseas and explore opportunities abroad. Outward remittances relating to Agency Commission towards Exports, Consultancy services, etc are explained along with the documentation to be understood for such transactions.

Module 13 - This module explains the cover operations performed by the Dealing Room of the Bank. The topic revolves around various types of settlement of foreign exchange transactions like the Cash, Tom, Spot and Forward settlement of transactions.