Foreign Exchange Regulations In India

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By: mousumisutradhar (13 month(s) ago)

use full for me, may i have a copy of this at mousumi.7070@gmail.com?

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Foreign Exchange A Presentation By Rajiv Bajaj

Foreign Exchange:

Foreign Exchange Forex: The conversion of one country's currency into that of another.

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A country's currency is valued according to factors of supply and demand.

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Value can be pegged to another country's currency, such as the U.S. dollar, or even to a basket of currencies.

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Value may also be fixed by the country's government.

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Most countries float their currencies freely against those of other countries.

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Result: Constant fluctuation in value.

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Value Of Currencies D etermined by market forces based on:

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Global Trade

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Investments

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Tourism & Travel

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Political & Economical Stability

Definition Of Foreign Exchange:

Definition Of Foreign Exchange The market in which currencies are traded. Includes all of the currencies in the world.

The Forex Market:

The Forex Market The largest, most liquid market in the world. Average traded value exceeds $1.9 trillion per day. Largest market in the world in terms of the total cash value traded.

The Forex Market:

The Forex Market No central marketplace for currency exchange. Trade is conducted over the counter.

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Open 24 hours a day, five days a week.

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Currencies traded worldwide among major financial centers of: London New York Tokyo Zürich Frankfurt Hong Kong Singapore Paris Sydney

Exchange Rates Fixation:

Exchange Rates Fixation Most governments employ one of the following three exchange rate systems: Dollarization Pegged Rate Managed Floating Rate

Dollarization:

Dollarization When a country decides not to issue its own currency and adopts a foreign currency as its national currency.

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The country's central bank can no longer print money or make any sort of monetary policy. Example - El Salvador's use of the U.S. dollar.

Pegged Rates:

Pegged Rates Occurs when one country directly fixes its exchange rate to a foreign currency so that the country will have somewhat more stability than a normal float.

Pegged Rates:

Pegged Rates Allows a country's currency to be exchanged at a fixed rate with a single or a specific basket of foreign currencies. Currency will only fluctuate when the pegged currencies change.

Managed Floating Rates:

Managed Floating Rates A currency's exchange rate is allowed to freely change in value subject to the market forces of supply and demand. However, government or central bank may intervene to stabilize extreme fluctuations in exchange rates.

Foreign Exchange Rules - India:

Foreign Exchange Rules - India All travel abroad requires Foreign Exchange. Strict RBI rules govern issuance of Foreign Exchange in India. Covered under Foreign Exchange Management Act, 1999, as implemented from 01 June 2000. Some FAQ’s and their answers…

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Who are authorised by the RBI to sell foreign exchange for travel purposes?

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Authorised Dealers (AD) Category-I Banks Full-Fledged Money Changers (FFMCs) Above are permitted to release exchange for business and private visits.

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How much foreign exchange can one buy when traveling abroad on private visits to a country outside India?

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Up to an aggregate amount of USD 10,000, in any one financial year ( Known as Basic Travel Quota – BTQ). Bought on self-declaration basis, irrespective of the number of visits undertaken during the year.

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BTQ can additionally be availed of by a person who is also availing of foreign exchange for travel abroad for other purposes , such as Employment Immigration Studies etc. This is over and above their entitlements for specific purposes mentioned above.

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No foreign exchange is available for visit to Nepal and / or Bhutan for any purpose. Resident Indians allowed to take INR of denomination of Rs.100 or lesser denomination to Nepal and Bhutan without limit.

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For All Countries*: Maximum allowed as foreign currency notes / coins is up to USD 3000. Balance amount can be carried in the form of travellers cheques or banker’s draft. *See Next Slide For Exceptions.

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*Exceptions: Travellers to Iraq & Libya can draw foreign exchange in the form of foreign currency notes and coins not exceeding USD 5000 or its equivalent; Travellers to Islamic Republic of Iran, Russian Federation / Republics of Commonwealth of Independent States (CIS) can draw entire foreign exchange in the form of foreign currency notes or coins.

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How much foreign exchange is available for a business trip?

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Attending of an international conference, seminar, specialised training, study tour, apprentice training, etc, are treated as business trips. For countries other than to Nepal and Bhutan, a person may avail of foreign exchange up to USD 25,000 per visit.

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No Annual limit. Can draw up to USD 25,000 for each trip, even if travelling for just a day. For requirements above USD 25,000 a prior approval from RBI is required.

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How much foreign exchange can be drawn for medical treatment abroad?

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Without insisting on any estimate from a hospital/doctor in India/abroad: Forex up to USD 100,000 or its equivalent to resident Indians on self declaration basis.

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For Forex exceeding above limit, request must be supported by an estimate from a hospital / doctor in India / abroad.

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Additionally, over and above USD 100,000 - An amount up to USD 25,000 is allowed for maintenance expenses of the patient; OR To a person for accompanying as attendant to a patient.

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What are the facilities available to students for pursuing their studies abroad?

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Estimate received from the institution abroad OR USD 100,000, per academic year, whichever is higher.

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May also avail of an additional amount of USD 10,000 or its equivalent for incidental expenses while going for study abroad.

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How much foreign exchange is available to a person going abroad on employment?

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Can draw foreign exchange up to USD 100,000 from any Authorised Dealer in India on the basis of self-declaration.

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How much foreign exchange is available to a person going abroad on emigration?

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Up to the amount prescribed by the country of emigration OR USD 100,000 on self- declaration basis.

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This amount is only to meet the incidental expenses in the country of emigration.

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No amount of forex can be remitted outside India to become eligible or for earning points or credits for immigration.

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All such remittances require prior permission of the RBI. Also, if requirement exceeds USD 100,000, prior approval from RBI is required.

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Is there any category of visit which requires prior approval from RBI or GOI ?

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Must obtain prior approval from the Ministry of HRD (Dept. of Education & Culture), Government of India, New Delhi. Dance troupes, artistes, cultural troupes etc., who wish to undertake cultural tours abroad.

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How many days in advance one can one buy foreign exchange for travel abroad?

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Permissible forex can be drawn 60 days in advance. In case not possible to use the foreign exchange within 60 days, it should immediately be surrendered to an authorised person.

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However, residents are free to retain forex up to USD 2,000, in the form of foreign currency notes or TCs for future use.

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Can one pay fully by cash the rupee equivalent of foreign exchange being purchased for travel abroad?

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Forex can be purchased against rupee payment in cash only up to Rs.50,000/-.

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If Rupee equivalent exceeds Rs.50,000/-, the entire payment should be made by way of a crossed cheque/ banker’s cheque/ pay order/ demand draft/ debit card / credit card / prepaid card only. PAN No. also required.

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Is there any time-frame for a traveller who has returned to India to surrender remaining foreign exchange?

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Travellers are required to surrender unspent foreign exchange held in the form of currency notes and travellers cheques within 180 days of return.

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However, they are free to retain forex up to USD 2,000, in the form of foreign currency notes or TCs for future use.

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Should foreign coins be surrendered to an Authorised Dealer on return from abroad?

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The residents can hold foreign coins without any limit.

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Is it permitted to use International Credit Card (ICC) / ATM / Debit card for undertaking foreign exchange transactions?

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Use of Cards can be made for: Travel expenses / purchases abroad in connection with various purposes. Making personal payments like subscription to foreign journals, internet subscription, etc.

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The entitlement of forex Credit Cards is limited by the credit limit fixed by the card issuing authority only. Use of these instruments for payment in foreign exchange in Nepal and Bhutan is not permitted.

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How much Indian currency can a person carry while going abroad?

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Residents are free to take outside India (other than to Nepal and Bhutan) currency notes of GOI / RBI notes up to an amount not exceeding Rs. 7,500/- per person.

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They may take or send outside India (other than to Nepal and Bhutan) commemorative coins not exceeding two coins each.

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How much Indian currency can be brought in while coming into India?

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A resident of India, who has gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than Nepal and Bhutan), currency notes of GOI / RBI up to an amount not exceeding Rs.7,500.

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How much foreign exchange can be brought in while visiting India?

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A person coming into India from abroad can bring with him forex without any limit.

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However – If aggregate value of forex in form of currency notes, bank notes or travellers cheques brought in exceeds USD 10,000; OR Value of currency alone exceeds USD 5,000 or equivalent; It should be declared to the Customs Authorities at Airport on arrival on CDF.

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ACKNOWLEDGEMENTS www.investopedia.com www.rbi.org.in No copyright infringements intended. All rights of the images used are with their respective owners. Image sources: Google Images & Morguefile.com.

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Questions ?