Member Banks Queries with FEDAI’s Response

As presented to the Managing Committee at its meeting held on 5th May 2021

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/ Guidelines issued by
RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply
1 15/03/2021 INR/FCY Swaps in case of Floating rate INR loan We would like to invite your attention on the deliberations that
1) Can the client enter into INR/FCY swap where took place under agenda no. 17 in Managing Committee
the INR Fixed rate for client to receive is equal to meeting held on 25 July 2017 details of agenda & minutes are
the INR interest rate on the underlying floating as under, which are self-explanatory.
rate loan (based on last interest fix). With the Agenda: This pertains to INR to FCY Currency cum Coupon
understanding swaps offered to corporate for an INR Liability of a corporate.
that while the rate on underlying floating INR loan Whereas the term loans in INR are typically offered on floating
could fluctuate, the INR fixed leg that client rate basis (for e.g., MCLR + XX) with resets the CCS are offered
receives will remain the same during entire tenor on a Fixed rate basis, whereas the initial setting of the INR loan
of swap. As per Risk management and interbank is taken as a fixed rate In today's falling rates scenario's the loan
dealings circular FCY Interest rate collar: rates might get reset lower than the Fixed Rate being received by
the corporate under the CCS.
The above situation would lead to a mismatch in the underlying
vis a vis the CCS thus expose him to a over hedged situation.
Would that then warrant a restructuring of the Swap to match the
interest rate of the loan?
Minutes of MgCom: The matter was placed as a table item on
the basis of written query form one of the member banks. The
matter was related to INR/FCY currency cum Coupon swaps
offered to Indian Corporates, wherein INR loans are on floating
rates linked to MCLR and CCS are done on fixed rates basis. In
case floating rates move downward it may be treated as over-
hedged situation under extent guidelines. The matter was
extensively discussed and member banks expressed their views.
The general opinion after discussion was to allow the hedge to
continue as such as impact of interest rate movement would be
nominal compared to total value of hedge and there is no
speculative element involved. The committee noted the agenda
item.
As regards to second query whether the client can enter into
2) Can the client enter into INR/FCY swap where INR/FCY swap where the INR Fixed rate for client to receive is
the INR Fixed rate for client to receive is higher higher than the INR interest rate on the underlying floating rate
than the INR interest rate on the underlying loan (based on last interest fix); in our opinion the same is not
floating rate loan (based on last interest fix). permitted.
2 23/3/2021 In case of High seas sale what is guidelines We invite your attention to Chapter 6 ‘High Sea Sale’ in FEDAI
about submission of Bill of Entry. Book No.6 Foreign Trade Policy 2015-20. Further, we draw your
attention towards a question answered by the Reserve Bank of
India in conference of AD Banks held on July 3, 2019 (Serial
Number 118) which reads as under:
Context: Master Direction - Import of goods and services - High
Sea Sales
Question: In case of High sea sales, in IDPMS, there is no
categorisation as HSS import. Also, the original importer name is
not mentioned.
One of the customer declines to submit High Sea
Sale Agreement, can bank settle BoE with ORM, Answer from RBI: No instructions on HSS are issued by RBI.
as in the BoE, original importer already The AD Bank is responsible to verify bonafied of underlying
mentioned. transaction and to ensure that either the original importer or only
one of succeeding Indian buyer draw foreign exchange to
overseas supplier. Your bank may exercise due diligence and
ensure compliance with best of your judgement.
In case of 3 to 4 chains of High Sea Sale Please refer our response for your above queries. If in absence
agreements, does bank need to obtain complete of copies of high sea sale agreement, your bank is not satisfied
chain of High Seas Sale Agreements or not. upon credential of underlying transaction the request of customer
may be turned down citing reasons on merits.
3 We seek clarifications on AD Bank's role while The details in the IEC now requires to be updated every year
24/3/2021
handling trade documents regarding IEC code as per during April-June period or else it can be deactivated, AD
DGFT amendment Notification : 58/2015-20 dated Banks will have to verify that any transaction where an IEC
24th February, 2021 is mandatory is done only with a client having an active IEC.
How these will be ensured by your bank is an operational
issue that you may address at your end.
However, in the case of transactions in the pipeline, in our
opinion, where the export or import is already cleared by the
Customs Department for given IE Code or EDPMS/IDPMS
Entry is received in tray of AD Bank, such AD Bank does not
have a valid ground (related to above regulatory
changes) to restrict receipt or payment for trade which has
already taken place.
Regarding the other operational queries related to
information sought from the DGFT you may examine the
DGFT site for solutions regarding these issues.
4 30/03/2021 If FCNR deposit with fixed maturity date remains FEDAI advised to forward your queries through the nodal
inoperative for a period of three year from the date of officer for FEDAI Identified in Indian Bank who is copied in
maturity can AD bank rollover the same deposit this email.
automatically for a period equivalent to the period as .
of the original contract.
5 5/04/2021 Valuation of CNH-INR deals As per FEDAI circular FEDAI publishing of CNH-INR rates was discussed in our
Revaluation Rates/SPL-1/2017 dated 31 January Managing Committee meeting held on 29th December 2016.
2017. Whether CNH-INR rates published by FEDAI The discussions were in context of revaluation of the
can be used for valuation of balances in mirror positions related to the SDR portfolio. Accordingly, FEDAI
account and outstanding spot / overdue and forward started announcing this rate effective from January 2017
contracts. onwards with a disclaimer that this rate was applicable only
for revaluation of SDR portfolio. Consequently, the CNH-INR
rate being published by FEDAI cannot be used for positions
arising out of any other exposures
6 5/04/2021 Client is looking to trade a cross currency swap for The revised guidelines issued vide A.P.(DIR Series) Circular
maturity of 9 months (quarterly payments). Earlier No. 29 dated April 7, 2020 do not stipulate any minimum
cross currency swaps lower than 12 months were not tenor in respect of Cross Currency Swaps. While the
allowed. With new RBI guidelines these structures Comprehensive Guidelines for Derivatives (CGD) are under
can be used for hedging. However, given that CDG review, Cross Currency swaps are one of the permitted
guidelines are not yet published, can banks start products under the existing CGD and these guidelines also
offering these products to the client? do not lay down any minimum tenor for CCS. Please note
that all other conditions and stipulations laid down by RBI
guidelines need to be complied with.
7 15/04/2021 Person Indian Origin (PIO) has booked an under In response to our query bank confirmed that PIO did not
contraction flat in India jointly with spouse who is a obtain required permission in 2006 under contemporary RBI
French National in the year 2006 & got completed in FEMA Notification No. 21 /2000-RB dated 3rd May 2000.
the year 2008. Hence, we advise you to refer the captioned matter to the
However the buyer OCI has not obtained any specific Reserve Bank of India for their ratification and approval for
permission for acquisition of the flat jointly with a disposal of the flat with full details of the transaction with your
French National spouse from the RBI. The mode of recommendations /comments in the matter.
payment of purchase consideration of the said flat is
the balance held in his NRE account maintained with
AD-I bank.
Now PIO would like to sell the flat to an Indian Citizen
a resident Indian & repatriate the proceeds to
overseas account of the OCI
8 16/04/2021 Context: FEDAI Circular SPL-16/Standby LC/2003 Referred FEDAI circular are to safeguard the interest of the
dated 1st April 2003 & Chapter - 9 Standby Letter of importers for import of goods into India as well as interest of
Credit, Para 9.3 in FEDAI book 4. - Fixing Limits for the Authorised Dealers.
Standby/ Undertaking to be obtained from the The Banks may consider obtaining a suitable indemnity
Applicant. /undertaking from the importer clients that all remittances
towards import of goods as per the underlying contract for
Whether obtention of the indemnity/ undertaking is which Standby LC is issued will be made only through the
mandatory in such cases same branch which has issued the standby letter of credit.
This provision is to ensure that the bank which has issued
the SBLC is aware of the remittances made towards imports
made under the contract in case a demand under the SBLC
is made and this provision is to protect the interests of the
bank issuing the SBLC.
9 16/04/2021 Context: Para C.1.1(e) of Master Directions on As per para c.1.3.3 (vi) of RBI Master Directions on import
Import of goods and services of goods and services regarding advance remittance quoted
by you:
The importer has received "in Principle" approval ‘Prior to making the remittance, the AD Category bank may
from DGCA for import of aircraft. The importer didn’t ensure that the requisite in principle approval of the Ministry
receive import license as per FTP from DGFT based of Civil Aviation in case of Scheduled Air Service Operators
on the approval given by DGCA. and in other cases approval of the Director General of Civil
The importer wanted to make advance remittance Aviation / other agencies in terms of the extant Foreign
pending receipt of import license as the first Trade Policy has been obtained by the company, for import.’
payment has to be made as per the agreement Accordingly, apart from the requirement of the obtaining of
signed with the supplier. Can bank send advance an in-principle approval of the DGCA please be guided by
remittance based on in-principle approval from the relevant provisions laid down in Chapter 88 in Schedule
DGCA. I – Import Policy of the Foreign Trade Policy.

10 19/04/2021 The FEDAI Code of Conduct Statement of The employees required to sign the Statement of
Commitment submission (due by 30 Apr 2021). Commitment (SOC) in the format given in Annexure I of the
whether the employee coverage within the bank FEDAI Circular referred to by you, we are of the view that
needs to include any other staff (eg, operational staff the Operations staff in the Treasury back office of your bank
working in Treasury back office, or Trade Finance will be required to sign the same. Regarding the staff in
etc)- given the reference to 'indirectly involved' in the Trade
below section of the attached letter. Finance you may exercise your judgement but we suggest
that if there is a Centralised Trade Finance Processing
office, the SOC may be obtained from the employees
working therein.
11 20/04/2021 Context: Annexure 4 and Annex 6 to RBI FED Master We invite your attention to Para 2.9 and 2.13 in FED Master
Direction No. 11/2017-18 on Investment by NRI/OCI Direction No.11/2017-18 dated January 4, 2018.
in India 2.9 FOREIGN INVESTMENT is any investment made by a
person resident outside India on a repatriation basis in
Please clarify the difference between these two capital instrument or an Indian company or to the capital of
annexures specifically for LLP as it seems to be an LLP.
contradictory. 2.13 INVESTMENT ON REPATRIATION BASIS is an
investment, the sale/maturity proceeds of which are, net of
taxes, eligible to be repatriated and the expression
INVESTMENT ON NON-REPATRIATION BASIS, will be
construed accordingly.
Therefore, the Annex 4 dealing with investments on a non-
repatriation basis and Annex 6 which deals with investments
in the capital of an LLP operating in sectors/ activities where
foreign investment up to 100 percent is permitted under
automatic route and there are no FDI linked performance
conditions, are not contradictory as mentioned in your email
but provides two separate windows to NRI & PIO to make
investments in India.
We would like to inform you that the Government of India,
Ministry of Finance (Department of Economic Affairs) vide
Notification S.O. 3732(E) dated 17th October, 2019 repealed
erstwhile RBI Notification on Foreign Exchange
Management (Transfer of Issue of Security by a Person
Resident outside India) Regulations, 2017 by Foreign
Exchange Management (Non-debt Instruments) Rules,
2019.
12 23/04/2021 Whether the bank can pass gain on cancellation of Bank is requested to forward query through nodal officer
contract in case of contracted exposures since with complete information. FEDAI also observed that query
customers reportedly contesting they are free to was not clear as the RBI guidelines are quite clear in respect
cancel the forward contracts booked against of the passing of gain in case of cancellation of Forward
contracted exposure. Contracts booked for Contracted Exposure.
13 23/04/2021 Given the recent surge in covid cases across the . In the circumstances, we are not considering As of now
country, many clients are finding it difficult to adhere there is no national lockdown and different geographies in
to the 15-day timeline for submission of evidence of the country have varying levels of restrictions. Our
Underlying exposure. Scanned copies too are not guidelines regarding the requirement for clients to submit
being easy to obtain given that the physical invoices evidence of underlying exposure for Forex contracts
are many times stored in office/factory, and booked under contracted exposure permits AD I banks to
scanners may not be available at residences. make exceptions under exceptional circumstances
Whether FEDAI is considering publishing any permitting any general relaxation to this rule as of now.
relaxation to the 15-day timeline to support
continued business during covid, or AD banks are
expected to manage the exceptions based on their
own clients’ specific requirements?
14 26/04/2021 As per para B.1 (6) of Master Direction “ Direct We invite your attention to question no.61 and answer
Investment by Residents in Joint Venture (JV) / thereof in RBI FAQ on 'Overseas Direct Investments',
Wholly Owned Subsidiary (WOS) Abroad. The available on following link.
Investments / financial commitments by an Indian [Link]
Party are not permitted in an overseas entity located _Toc453240667
in the countries identified by FATF as non-co- Quote
operative countries and territories as per list 61.Q - Whether Notification [Link].382/2016-RB dated
available on FATF website or as notified by the RBI January 02, 2017 prohibiting overseas direct investment
from time to time. Investments / financial (ODI) in a JV/ WOS set up/ acquired by Indian party under
commitments in Pakistan by Indian Parties are automatic route in FATF non-cooperative countries and
permissible under the approval route. While referring jurisdictions is applicable only on countries identified by
[ [Link] | [Link] ] , we Financial Action Task Force (FATF) as "Call for action"?
observe that there is no such classification as non Ans. Yes, the prohibition on ODI in terms of Notification No.
co-operative countries and territories. We understand FEMA.382/2016-RB dated January 02, 2017 is applicable
that there are only two classifications under which only on countries identified by Financial Action Task Force
countries are grouped namely (i) High Risk (FATF) as "Call for action".
Jurisdictions subject to a call for action (ii) Unquote
Jurisdictions under increased monitoring .
In our view any request for remittances towards
Overseas Direct Investment to countries classified
under the above two classifications should not be
made.
 Member Banks Queries with FEDAI’s Response

As presented to the Managing Committee held on 18th March 2021

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/ Guidelines
issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply
One of bank’s clients being born in UK is person of Who can open and what types of the accounts can
Indian Origin (PIO) and citizen of UK. Client who is be opened in AD Bank, is identified separately for
holding long term Visa for India, has business 'Residents' and 'Person resident out of India'. This is
28/1/2021 interest in India & resident in India. However, for answered explicitly in FEMA 1999 as well as various
1 business purpose she is reportedly keep visiting notifications issued by RBI in this regard. Please
different countries for business trips. Bank quote this guideline and advise which part was not
requested FEDAI to guide them whether the client clear to the bank.
can maintain domestic SB account or NRO SB
account.

No Objection Certificate (NOC) Issuance Reference to your email, we suggest that at the time
of funds transfer to the beneficiary bank through
Our bank has been receiving multiple requests for RTGS/NEFT you should provide necessary
an No Objection Certificate (NOC) for receipt of information in the RTGS/NEFT message. You may
funds through Vostro Mechanism for onward credit inform in your message that as per FEDAI Circular
to the beneficiary’s account from the beneficiary Letter No.16/2016 dated 17th October 2016
3/2/2021 bank /branch. These requests are being received beneficiary bank should issue eFIRC OR FIRC.
although all the necessary information about the Thereafter NOC for export transaction from
receipt of funds is already contained in the intermediary bank is not required.
RTGS/NEFT message shared by our bank. We will
hence be sending the email to all requesting final However, other than export cases banks should
beneficiary banks to clarify that we will not be follow the instruction laid down in our SPL-
issuing an NOC as all necessary information is 58/FIRC/2012 Dated 31st August 2012.
already contained in the RTGS/NEFT message.

Foreign Exchange Remittances business under new Please refer to RBI circular No.
Current Accounts by Banks - RBI specifically
mentioned about handling of transactions related [Link].30/21.04.048/2020-21 dated
to ODI and ECB by the designated AD only. Bank December 14, 2020.
sought advice on whether above said transactions
2 5/2/2021
can be handled by the AD (with less than 10%
Please also refer to the FAQ annexed to the circular.
If you have any specific query after reading the
exposure) through an operative account which is
same you may refer the same to us
opened for specific remittances only to ease out the
operational difficulties in handling outward
remittances.
 In context of the Benchmark Rate for FCNR(B) We would have appreciated if IOB had been precise
Deposits published by FEDAI bank requested us to in their query specifying what exactly was the
advise them likely impact of proposed LIBOR concern regarding FCNR(B) deposits.
cessation.
5/2/2021 FEDAI publishes the benchmark interest rate cap
4 Bank requested to clarify whether FEDAI will be applicable on FCNR (B)Deposit in line with
publishing the benchmark /Base rates for FCNRB regulatory guidelines issued vide RBI Master
deposits as is being done now post LIBOR cessation. Direction DBR. Dir. No.84/13.03.00/2015-16 dated
March 03, 2016. This issue has already been
referred to RBI and FEDAI will act in the matter as
per their directions.

In reference to Q no.17 of FEDAI Circular Letter Rollover of forward contract is nothing but a Fx
No.11/ 2020 dated 14th July 2020 can a Bank Swap where client should be charged/paid only the
execute a SWAP deal for simply rolling over of a FX swap points. Process currently used by you i.e.
corporate forward contract (Cancellation & roll- booking a spot leg and separate forward for new
over) on maturity date. If yes, then how do report maturity date results in client additionally paying
the transaction in the FTD (Forex Turnover data) to the spot bid-offer. Doing a Fx swap instead of two
RBI as the FTD format does not have a SWAP separate trades for forward rollover more efficient.
5/2/2021
product at all for reporting Merchant Transactions. For the transactions which for the specific example
5
given by you is simply a cancellation of an existing
Example: Original deal – Outright deal : Client A on outright forward contract and booking a new
1st December 2020 books a Purchase forward outright forward contract for longer maturity date,
contract for maturing on 04 Feb 2021. On 2nd Feb swap is only a mechanism to hedge the market risk
2021 : The client requests for a rollover of the on the transaction.
contract ( cancel & rebooking) from Spot date ( 4
Feb 21) to the new maturity date say 31 March 21. The same, going by the example, can be reported as
combination of spot and a forward transaction.

Reportedly, an exporter (Status holder) made its FEDAI examined the matter with reference of: (i)
own arrangements and was directly sending export Para 6.1.2 in Master Circular dt. July 1, 2015 on
document to overseas Factor. When Bank 'Rupee / Foreign Currency Export Credit and
questioned the Factor on exporter’s eligibility to Customer Service To Exporters'; (ii) Para C.10 in
sending document directly to non-resident Factor; Master Direction dt. January 1, 2016 on 'Export of
Factor clarified that since exporter is Status Holder, Goods and Services (Updated as on January 08,
hence entitled for direct dispatch of export 2021)'; and (iii) RBI Notification No.
document. FEMA.3(R)/2018-RB dt. December 17, 2018 on
'Foreign Exchange Management (Borrowing and
[Link] the Factor’s above response on direct Lending)Regulations, 2018.
9/2/2021
dispatch (reading RBI DBOD Master Circular on
6
Rupee/Foreign Currency Export Credit and In our view, ref. Master Circular dt July 1, 2015 on
Customer Service To Exporters – Para B- Para 'Rupee / Foreign Currency Export Credit and
[Link] with RBI FED Master Direction on Export of Customer Service To Exporters' direct discounting of
Goods and Services Para C.10) is relevant? export bills by exporters with overseas bank and/or
any other agency can be done only through the
2. Can the foreign factor be considered as exempted branch of an authorized dealer bank designated by
from Registration under Factoring Regulation Act, the exporter for the purpose.
2011, given that they are not an entity incorporated
in India. As regard registration of Foreign Factor, please refer
Factoring Regulation Act 2011 besides relevant RBI
guidelines.
 Clarification on Life Insurance Premium due issued Q1 -Ans – General permission is when the
by an Insurer Outside India. guidelines itself permits anyone who fulfils the laid
down criteria and adheres to the conditions laid
Q.1) RBI Circular states that the policy is held under down therein. Specific permission is when
a specific or general permission of the Reserve Bank permission has been obtained by referring the
matter to RBI and a case specific permission has
of India. Please provide the clarity on “general or
been obtained.
specific permission.”
Q 2. Ans – As per said circular Authorised Dealers
Q 2. A person resident in India may continue to
are permitted to remit the premium due on a life
hold any life insurance policy issued by an insurer insurance policy held by person resident in India
outside India when such person was resident under general or specific permission from any
outside India. If the premium due on a life insurance domestic account held by him maintained in INR or
policy has been paid by making remittance from Foreign Currency.
India, the policy holder shall repatriate to India
through normal banking channels. Here type of Q 3. Ans – RBI permission is not required to make
7 12/2/2021
Account is not mentioned. Earlier it was mentioned remittance from RFC Account for insurance premium
paid out of foreign currency resources. if he is otherwise eligible to remit insurance premium
as a resident.
Q 3. Whether prior permission is required from RBI
to make remittance through RFC Account. Q. 4. Ans -No

Q.4. Whether Life Insurance Premium payment Q 5. Ans -Life Insurance Premium payment is not
comes under LRS. allowed from LRS therefore code is not available.

Q 5. The purpose code is not available under LRS Q 6. Ans – please refer answer no.2
for Life Insurance Premium payment.
We observe that the answers to all the above
Q 6. Whether prior permission is required from RBI questions were evident from the RBI circulars itself
to make remittance through Domestic INR Account and a reference to FEDAI was not required.
if does not have any foreign resources.

Whether general Master Sales Agreement (MSA) With reference to your query, request you to
and Average Billing letter instead of transaction peruse FEDAI Circular Letter No.11/2020 dated 14
specific contract can be treated as underlying July 2020 and Circular Letter No.13/2020 dated 20
8 12/2/2021 documents for booking forward contracts in case of August 2020. In specific, we invite your attention to
Service Exports. The clients do not want to share Para 2.5 under heading 'Contracted Exposure'.
specific documents due to price sensitive Please be guided accordingly.
information.

In reference with FEDAI circular letter no. 24 dated This is an operational issue for which your bank
12/2/2021
24 Oct 2020; bank asked what action they should needs to seek a solution internally and it would not
9
take on customer who does not submit Annual be appropriate for FEDAI to give a view on this.
Statutory Auditors Certificate for the year 2019-20.

In context of guidelines on Deemed Export and Q.1-Ans- It is not clear why you are trying to
Running Account facility in RBI Master Circular on compare sub suppliers with deemed exporters in
export credit RBI/2015-16/47 DBR No. the matter of granting a running packing credit
18/2/2021 facility. 'Deemed export' is distinct to 'Sub-supplier
[Link].14/04.02.002/2015-16 dated 01-07-2015;
10 arrangement', in case of former the deemed export
order holder is entitled to avail export credit
Queries:
whereas in later case the sub-supplier shares the
similar entitlement with the export order holder
1. Can deemed exporter be treated at par with sub
provided the procedure as advised by RBI is
supplier in terms of sanctioning of running packing followed. In general, these two facilities are not at-
 credit facilities? par. While there is an explicit prohibition in RBI
guidelines in granting a running packing credit
2. Can exporter utilize proceeds received against facility in case of sub suppliers, this is not the case in
deemed exports for adjusting running packing credit case of Deemed exporters.
advance and avail concessional rate of interest? Q.2 & 3 In our opinion, it is an operational aspect
and respective bank is best judge to take decision
based upon information available with them and
3. Can exporter utilize proceeds received against
request of the customer, whether - exporter can
deemed exports for adjusting running packing credit
utilize proceeds received against deemed exports
advance used for export and avail concessional rate of for adjusting running packing credit advance
interest and benefit under interest equilization - exporter can utilize proceeds received against
scheme deemed exports for adjusting running packing
credit advance used for export. The concession in
interest rate if any offered by the bank (except the
Export Gold Card Scheme) under extant RBI
directives is sole decision of the respective bank.
Please remember that the benefits of interest
equalisation scheme were not available to deemed
export and only applicable on liquidation of export
outstanding from the proceeds realised from
overseas or balance in EEFC Account. Please refer
FEDAI Circular [Link]/Export Credit/2018 dated
11th September 2018, benefit of interest
equalisation is not available on the deemed export.

We request you to provide guidance/seek a We draw your attention to the question asked by
clarification from RBI on whether the bank would be Axis Bank in the AD Banks' Conference held at
in order in lodging export bills where the non-status Bhubaneswar on February 12, 2016 and answer
holder exporter has dispatched documents directly offered by the Reserve Bank of India, which is listed
to the overseas buyer and export proceeds are not at serial no. 4 in the compilation distributed. Also,
realized in full. we refer to the question asked by the ICICI Bank and
22/2/2021 was answered by RBI in AD Banks' Conference held
11 on July 3, 2019, which is listed at serial no. 51 in the
compilation distributed.

In view of the above we observe that the RBI has

adequately laid down directions on handling of
direct dispatch of documents by non status holder
clients through their Circulars and the replies given
in the AD conferences.

The Bank opened an LC for Indian importer however 1. In our opinion, the Art. 36 Force Majeure in UCP
on due date not honoured the claim under credit due 600 define liability or responsibility of the LC Issuing
to involvement of SDN (Specifically Designated Bank if the incident is crystallized as Force Majeure.
22/2/2021 National). Bank requested This article does not empower the LC Opening Bank
to classify unilaterally happening of any incident as
12 1. Whether the case/ situation/event can be Force Majeure Incident. Therefore, holding given
classified as ‘Force Majeure’ under Article 36 of UCP series of events as Force Majeure Incident is beyond
600? the authority of the LC Issuing Bank or FEDAI.

2. What action that Bank should take regards 2. We would not like to comment on what should be
payment/non-payment of the bill drawn under its appropriate course of action for IDBI Bank since it is
 LC? a business decision.

Amendment to FEDAI Rule No.1.1 and 1.2 Client Rule you have referred to is about Spot date shift for
leaves GTC FCY/INR Spot order post India market trades done before and after 12.00 midnight IST. As
hours and if the same gets executed before 12 regard client doing a swap for spot order done in
midnight, Can the client move it to a forward date late market hours i.e. beyond normal market timing
the next day similar to what currently we follow for and/or after day's closing, banks may follow the
22/2/2021 G-10 currency. FEDAI Rule No.1.1 and 1.2 - which same procedure as is currently in practice for non-
13 states that “Any transaction undertaken beyond the INR trades.
market hours prescribed under Rule 1.1, bank must
ensure that: Spot date Roll over for FCY / INR
transactions will take place at 12.00 midnight IST.
Please advise if we call allow client to move it to a
forward date the next day similar to what currently
we follow for G-10 currency.

Whether IEC is mandatory for import /export of No person shall make any import or export except
Services or Technology or if IEC requirement is where an IEC Number is fixed by the DGFT for
5/3/2021 exempted for such cases? certain categories. In case of import or export of
14 services or technology, the IEC shall be required only
when the service or technology provider is taking
benefits under the Foreign Trade Policy or is dealing
with specified services or technologies.

Clarification in reference with RBI circular RBI/2020- With reference to your trail mail we advise that the
21/104 [Link].45 /21.01. 003/2020-21 on operative words here are 'met out of the resources
Large Exposures Framework – of the same currency'. Accordingly, this provision is
not meant to allow banks to do incremental B/S
1) Whether this allows banks to deploy their surplus USDINR SWAP using INR liquidity to deploy in
9/3/2021
foreign currency in 0% risk weigh foreign sovereigns USTs/sovereign papers or any other 0% risk weigh
15
papers met out of resources of the same currency. foreign sovereigns papers.

2) Whether banks are allowed to do incremental B/S

USDINR SWAP using INR liquidity to deploy in
USTs/sovereign papers or any other 0% risk weigh
foreign sovereigns papers.

An NRI customer has reportedly bought Dubai Duty In routine course of business the AD Bank in India
Free Millennium Millionaire ticket online during permits inward remittance from overseas subject to
February 2021 and won price money USD one compliance of KYC Guidelines, Provisions of PMLA
million. In this regard bank requested FEDAI to 2002 and applicable sanctions. In the present case
clarify whether such inward remittance can be we are of the view that the AD Bank need to
12/3/2021 allowed. exercise high degree of due diligence in
16 consideration of given source, place of origination of
funds & quantum of funds being received by your
NRI Customer. Since response to this query
warrants scrutiny in context of statutory or
regulatory guidelines other than FEM Act 1999
which is out of purview of FEDAI, we would not
prefer to advise anything more than as above.
 Member Banks Queries with FEDAI’s Response

As presented to the Managing Committee held on 4th February 2021

(Disclaimer: Member Banks are requested to refer to the latest Circular / Notifications /

Guidelines issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply
1 16/12/2020 Bank is calculating VaR for Foreign As regards the methodology being used for
Exchange portfolio using VaR rates for VaR calculation, please refer to our
1,3,6 Months published by FEDAI on a daily Special CircularNo.1920/AGL-VAR/SPL-
basis. Kindly share methodology being used
97/96 dated 28th August 1996 which is
for VaR calculation including the input data
used in the method. available in our website in the Book
'Compendium of FEDAI Instructions /
Guidelines'.

2 24/12/2020 Required clarification on FEDAI Rule no4.5 A1. The FEDAI Rule 4.5 expects and
- facilitates FEDAI Member to have a policy
Q.1. In case of no response from the uniform for all their customers under which
customer within five working days from the un-responded inward remittance may
intimation, can the Bank hold the funds up either be returned or crystallised subject to
to a period as decided by the bank (with in the bank not exceeding the time allowed
permissible maximum) either to return or to for surrendering of foreign currency under
crystalize the funds. any Stature or Regulation or RBI
Q.2. If bank decides to crystalize and Directions. However in delaying the
subsequent to notifying its intention to crystallisation or return of funds beyond a
crystalize to the remitting bank & reasonable period, banks should be
beneficiary, if a request either from conscious of the risk in delayed action
Remitting bank or Beneficiary to return the beyond a reasonable period that the
funds received, can the bank return the respective bank may be held responsible
funds. for any adverse movement in exchange
rate. Therefore, it is advisable that banks
adhere to the FEDAI Rule.
A2. Yes unless the bank has a valid
reason to not do so.

3 4/1/2021 Clarification for the outward remittance : The RBI guidelines on the Liberalised
One of our customer has requested to Remittance Scheme has been laid down in
process remittances to Hotel Sofitel their Master Direction No.7/2015-16 on
Bahrain under contract for services
LRS. Para A.1 of the Directions state that
required. These services are in relation to a
wedding ceremony of his daughter. The under the Liberalised Remittance Scheme,
payments are being made to the hotel for Authorised Dealers may freely allow
accommodation and f&b. The total amount remittances by resident individuals up to
for remittance for the services is of 1,05,525 USD 2,50,000 per Financial Year (April-
BHD which is equivalent to 2,80,651/- in March) for any permitted current or capital
USD (Approx.)The transfer of funds will be account transaction or a combination of
done by Mr. A and Mr. B through their
both. As per Para A.4 of the Directions,
individual savings account branch in
Hyderabad. The customer wants to make Remittances under the Scheme can be
the payments in a phased manner as per consolidated in respect of family members
the agreement. Whether bank can allow the subject to individual family members
transaction Under LRS scheme and under complying with its terms and conditions.
which LRS code this shall be appropriate. You may take a decision regarding the
matter referred to us in your trail mail in the
light of the above provisions based upon
the customer's profile, bonafides of specific
underlying transaction and internal policies
of your bank. We also advise to raise your
query through the Nodal Officer identified
 to deal with FEDAI in your bank and avoid
writing us directly.

4 11/01/2021 In context of AP (Dir Series) Circular No.8 With reference to the three illustrations in
dated December 4, 2020, bank sought the first table therein, the overseas
whether set-off is permitted in below party/(ies) is/are not an associate or group
company of the Indian entity and hence do
mentioned scenarios.
not fulfil the eligibility stated in the above
circular for permitting set-off.

Indian Overseas Whether…….

entity entity
1. If entity/-ies in Indian not related to overseas
A&B C Exp. receivable of A from
(Group C can be set off with imp
companies) payable of B to C?
A B&C Exp. receivable of A from
(Group B can be set off with imp
companies) payable of A to C? With reference to two illustrations in
A&B C&D Exp. receivable of A from second table where the Indian
(Group (Group C can be set off with imp
companies companies) payable of B to D?
Exporter/Importer is setting off
export/import receivables/payables against
import/export payables/receivables
2. If entity/-ies in Indian related to overseas entity between other group/associate companies,
A&B C Exp. receivable of A from all three (a), (b) and (c) are related parties
(Group C can be set off with imp and hence can be considered for the set
companies) payable of B to C?
off as per RBI AP (Dir Series Circular
A B&C Exp. receivable of A from
(Group B can be set off with imp No.8) dated December 4, 2020. Any such
companies) payable of A to C? arrangement, of course would have to be
in compliance with other requirements as
stipulated in the said circular.
5 19/01/2021 Interest payments on CSA- Reference to our earlier email [Link]/F-
273/2020-21 dated 05 November 2020 on
As per para 7 FED Master Direction - your earlier query on the same subject.
Deposit and Accounts for Special Non - We invite your attention to Regulation
Resident Rupee (SNRR) Account and No.4(I)FEMA. 399/RB-2020 dated 23
FMRD notification on 23rd October 2020 October 2020 which allows AD Bank to
with respect to Foreign Exchange collect collateral in the form and manner as
Management (Margin for Derivative specified by the Reserve Bank.
Contracts) Regulations, 2020. Bank is in
discussion with Foreign Portfolio Investor While the above Regulation provides for
(FPI) to offer them derivative products for the receipt and payment of interest on
hedging allowed under the extant margin posted for a permitted derivative
regulations In order to mitigate credit risk contract entered into with a person
from the derivative contracts FPI will post resident outside India, operationally this
margin with DBIL in INR or foreign currency may not be possible till suitable
(FCY). We request your clarification on amendments are made in deposit
below points: guidelines. As per current Deposit
Guidelines, non-residents can only open
1. Can the bank pay interest on INR or FCY non-interest bearing, SNRR account for
margin placed by FPI ? and their business activities in India.
2. Whether such interest payment shall not
be subject to the treatment applicable to
'Bank deposits' under Master Direction -
Reserve Bank of India (Interest Rate on
Deposits) Directions, 2016, particularly with
regard to rate of interest and tenor. ?

6 20/1/2021 Clarification on due date of Export/Import Documents under collection received by

Bill under collection Rule B.7 of ISBP for the AD Bank are governed by URC 522,
where stated as such, otherwise by the
terms conveyed by the principal and not in
 the examination of documents under UCP any case by UCP 600. The terms of
600 states that: payment of such documents under URC
522 or otherwise, are as agreed mutually
"Payment is to be made in immediately between the supplier (Drawer) and buyer
available funds on the due date at the place (Drawee). The extant URC 522 does not
where the draft or documents are payable, provide guidance to either of the remitting
provided that such due date is a banking bank or collecting bank for determining the
day in that place. When the due date is a due date and payment, in addition to
non-banking day, payment is due on the whatever information is available on face
first banking day following the due date. of the documents. In our view, the
Delays in the remittance of funds, for collecting bank is expected to be abide by
example grace days, the time it takes to instructions received from principle w.r.t. all
remit funds etc., are not to be in addition to aspects including the instructions
the stated or agreed due date as defined by conveyed in case of the due date falling on
the draft or documents. "Hence, we a holiday. Hence, the guiding principle for
understand that as per the rule, in the event Draft/Document drawn under LC subject to
that the due date of a bill, presented under UCP 600 falling due for payment on
a letter of credit, falls on a holiday, at the holiday may not be applicable
place where the draft or the documents are Draft/Document under collection and falling
payable, the payment is due on the next due for payment on holiday.
banking day and such payment shall be
deemed as prompt payment without any
delay.

We are of the view that similar logic may be

applied for export/import bill on collection
basis also.

7 28/01/2021 Member bank sought FEDAI Guidance on In reference with Q.4 in RBI FAQ on
characteristics and features to be adopted Foreign Currency Accounts by Resident
for foreign currency current account to entity Individuals, it may be concluded that the
SEZ Unit being a non-individual person,
registered as SEZ
resident in India is explicitly allowed to
open Current Account with AD Bank. As
regards to characteristics & feature of such
current account, this is product specific
facilities which are to be decided by
AD Bank within broad regulatory
framework.
8 28/01/2021 In context of AD Bank in India maintaining The issue was examined with reference to;
ACU Dollar Account of a bank from an ACU 1. Rules of UCP 600 read with URR 725 in
country, the query was: Whether the AD general and Article 9 of URR 725 in
particular 2. regulations & provisions of
Bank can issue Irrevocable Reimbursement
RBI Notification No. FEMA 8/2000-RB
Undertaking in favour of dated 3rd May 2000; in specific with
reference to regulation No. 4.2(i) of FEMA
another AD Bank (Resident to resident) on 8/2000 RBI. In view of FEDAI the AD Bank
behalf of LC Opening Bank without adding in India may issue IRU (Undertaking
confirmation to the LC for which IRU is to be extending commitment of the IRU Issuer,
issued. in any case not exceeding their
commitment beyond what in general is
extended through guarantee) under FEMA
provided such undertaking is issued in
compliance with above discussed
directives of the Reserve Bank of India.
Needless to say here that compliance on
aspects other than FEMA is also required
to be ensured at your end.
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 22nd December 2020
(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/
Guidelines issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply
1 24/11/2020 In context of FEDAI Rule 4.5- if the (i) Only in case where delay in credit of inward
beneficiary of the inward remittance, remittance to beneficiary’s account isfor reason
does not respond within 5 working days attributed to action of AD Bank, the bank as per
from receipt of credit information then Rule;
whether 1. need to pay interest for delayed payment, and
[Link] may have their own policy on 2. shall also pay compensation limited to extent
compensation for delayed payment? for adverse movement of exchange rate.
[Link] may return the remittance to the (ii) The AD Bank shouldreturn remittance either
remitting bank under intimation to on instructions of remitter/beneficiary or if the
beneficiary after aspecified timeline given bank does not crystallise inwardremittance as per
in their policy? their internal policy.
[Link] may not crystallise the inward (iii) No comment is warranted from FEDAI on
based on their clientele and may operational matter or internal policy ofthe bank or
document the same in theirpolicy. In this where the bank does not crystalise at specific
case crystallisation of funds, is not instruction of their client. However, the policyof
mandatory? the bank needs to be uniform for all customer.
iv. As per 4.5 (a), banks may crystallize (iv) FEDAI Rule is explicit and we would not
as per their own policy, but maximum comment on whatever basis you keep theperiod
tenor not exceeding 180days from receipt 180 days.
of funds?
2 24/11/2020 An exporter wants to utilize an existing We would like to clarify that in case of Export Bill
forward purchase contract against drawn on DP Basis where the due date is to be
submission of his export documents arrived either relying upon the notional transit
whose tenure/ due date includes NTP (25 period as per FEDAI Rules or otherwise, the AD
days). Kindly clarify in case of early Bank has to add/deduct forward premium/
delivery, should bank deduct the SWAP discount in exchange spot rate.
charges of the NTP period as well
because the same is not added while In instant illustration given by you, your bank is
giving purchase rates. required to deduct swap charges from
Example: Forward Purchase Contract 13.01.2021 till 01.02.2021.
delivery date = 01.02.2021 to
26.02.2021. For, Purchase Bill of tenure
30 days sight (from 19.11.2020), the due
date will be - 13.01.2021 (including NTP).
If the exporter wants to utilize the
contract for the same, shall we deduct
swap charges from 19.12.2020 or from
13.01.2021 till 01.02.2021, as for simple
sight bill purchase no premium of NTP is
passed on the client.
3 1/12/2020 Clarification on FEDAI Rule 2.3 – a)As per the ICC Uniform Rules, be it
Concepts of normal transit period and documentary credit or Documentary Collection;
notional due date are linked to interest banks deal in documents and not with underlying
rate on export bills and to arrive at due goods. Based on the same principle, the FEDAI
date of the bill/export credit. Normal Rule is amply clear and the concept of Normal
transit period comprises of the average Transit Period is drawn taking guidance from
period normally involved from the date of expected time period required for realising
negotiation/purchase/discount till the proceeds of the document/export bill.
receipt of bill proceeds. Request
following clarifications in this regard: b)We clarify that FEDAI Rule 2.3 provides
a) The first para of rule specified that flexibility in fixing NTP subject to satisfaction of
NTP is the average time between date of the AD Bank. Individual banks may decide at
purchase to receipt of proceeds and it their end as to what can be considered as
should not be confused with time taken exceptional circumstances to vary the transit
for arrival of goods. However, the third period and FEDAI does not wish to provide any
para, says that NTP can be varied, under guidance in the matter.
exceptional circumstances, based on
historic data and also based on supply c) As regards to stipulation that no changes in
destination and mode of transportation. due date shall be permitted subsequent to the
This provision creates a confusion as it purchase/discounting or negotiating of export bill;
links NTP to movement of goods. it was stipulated so to avoid abuse of flexibility
b) Can normal transit delay in goods / provided in FEDAI Rule. Assuming if FEDAI Rule
payment track record of buyers be allows change in due date of export bill drawn on
considered while arriving at a different DP Basis, the exporter may ask extension of due
NTP? date for post shipment finance which are as
c) It is also stipulated that no changes in matter of fact stands as overdue payment.
due date shall be permitted subsequent
to the purchase / discounting or
negotiating of export bill. The NTP is an
average time line and in individual
circumstances the realization dates may
change. Further, there may be cases,
where the buyer may refuse the goods
and the seller may have to find another
buyer.
4 10/12/2020 Kindly guide as per the illustration :- The deemed exports is explained under chapter 6
A supplier supplies goods locally to its of Foreign Trade Policy2015-20. Please examine
sister/ associate concern against your issue whether supplies of goods locally to its
advance authorization license. sister/associate concern against advance
1. Will supply of goods to sister concern authorization license of goods to sister concern
will be treated as deemed export? will be treated as deemed export, in reference
2. If yes, then, is supplier eligible for with laid down FTP Regulations.
receiving benefit of concessional interest We assume your reference from 'concession in
rate as allowed for export credit in interest' is for 'interest equalisation'. As regards to
running packing credit account ? receiving benefit of interest equalisation on
deemed export; please refer FEDAI Circular SPL-
[Link]/Export Credit/2018 dated 11 September
2018.
5 11/12/2020 Query regarding FCNR(B) Loan We refer RBI’s FAQ & FEMA 5(R)/2016-RB
In RBI FAQ's on this subject under RBI dated 1stApril 2016 which are clear on FCNR (B)
website, it is mentioned as below: loan. Similar issue was raised & answered in RBI
th
"AD can sanction loans in India to the AD conference held on 10 January 2015 in Q.
account holder/ third parties without any No 107 and it was clarified that loans taken in
limit, subject to usual margin India shall be utilised for purposes in India. For
requirements. These loans cannot be purposes outside India, loans shall be availed
repatriated outside India and can be used from the branches/ correspondents outside India.
in India only for the purposes specified in Unquote
the regulations."
Query: In case where individual has
raised the loan in foreign currency
against FCNR(B) deposit, can the
amount of loan be remitted abroad?
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 17th November 2020

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/ Guidelines
issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply
1 31/08/2020 Handling Forex Derivatives as per RBI Circular As stated by you RBI has issued the guidelines
AP (DIR Series) Circular No. 29 dated Apr 07, which are more principal based and less
2020 and FEDAI Circular13/2020 dated Aug 20, prescriptive. To guide banks in interpreting the
2020 and FAQ issued by FEDAI. guidelines and implementing the same FEDAI has
issued a FAQ and a Guidance note on the same.
You may be guided by these three documents and
formulate your own bank policies on the basis of
these documents.
2 28/09/2020 As per RBI notification RBI/2019-20/210 It is not outstanding contracts booked 'upto USD
A.P.(DIR Series) Circular No.29 on Risk 10 Mio', it is if outstanding Contracts booked
Management and FEDAI circular letter 'exceeding USD 10 Mio'.
no.13/2020 dated 20th August 2020permits Secondly, it is not just contracts booked under
users to book derivative contracts involving INR Anticipated exposure, it’s contracts booked under
up to USD 10 million equivalent notional Anticipated or Contracted exposure.
outstanding at any point in time without the need Lastly, if the outstanding contracts booked under
to establish an underlying. this facility exceeds USD 10 MIO at any point in
In the above regard we seek your clarification time, irrespective of whether some of the second
whether a customer having booked contracts tracts are delivered or cancelled subsequently
under the anticipated Exposure facility upto resulting in outstanding contracts under these
USD 10 Million cannot avail of the facility further facility coming below USD 10 Mio, the client
during a financial year even if the contracts cannot avail of the facility further during a financial
booked under the facility is delivered or year.
cancelled.
3 29/09/2020 Loss on derivative for non-retail users : FEDAI cannot be advising member banks on their
As per the RBI circular on "Risk Management products (whether it is in compliance or in non-
and Inter-bank Dealings - compliance of regulatory guidelines). You may
Hedging of foreign exchange risk", dated 7 April please be guided by the extant RBI Directions on
2020 (effective 1 sep 2020), Under Eligible new Hedging Guidelines read with FEDAI Circular
Products for Non-Retail users In light of the Letter dated 14 July 2020, 20 August 2020 and 21
above, we request clarification whether the August 2020,and take a decision regarding the a
following cost reduction structures are allowed product complying with the extant
to be executed with non-Retail users: regulatory guidelines.
Example: Importer range forward:
A non-retail user Buys a USD call/INR put @
77.50 and sells a USD Put/INR call @ 75.50,
both for 1yr tenor. The spot reference at time of
deal is 73.50 and forward is 76.50. On the expiry
date if spot ends at 73.50 (same as spot on deal
date) then, looking from the reference of deal
spot i.e 73.50, there is no gain on the underlying,
while on the sold USD put/ INR call there is a
loss of INR 2 per USD notional. Thus, in the
underlying +
hedge derivative taken together, there is a loss
of 2 INR per USD.
Similar situation can also arise in case of
importer seagulls and exporter Range forward
and seagulls as well.
4 5/10/2020 CLARIFICATION ON EXCHAGE RATE FOR We suggest that after consulting tax expert in your
LRS CLOSING BALANCE OF RBI XBLR- bank or otherwise, if you are not able to
Finance Act 2020 has come up with new trace/ascertain specific instructions how to arrive
insertion of Tax Collected at Source (TCS) at the threshold limit in INR 700,000; you may be
effective from 1st Oct 2020. 5% on rupee guided as under.
amount or aggregate of amounts of Rs.7 lac or
more in a financial year for outward remittances. In our opinion, the amount debited in the account
Please clarify us the followings : - of the remitter by the remitting bank for each of the
to arrive rupee equivalent for earlier transaction remittance under the LRS Scheme should be
which had processed at other AD which taken in to consideration for arriving at actual
exchange rate needs to be applied to calculate amount remitted by an resident individual person
TCS since the RBI web port is showing only in a financial year under the LRS.
consolidated closing balances
5 7/10/2020 Query on Heding Guidelines:- The Reserve Bank of India opined that in the new
Query pertaining to trade booked under hedging directions the terms like hedging,
Anticipated Exposure. anticipated exposure and treatment of profits in
1) In case a customer books an export forward case of failure to sight underlying cash flows has
contract under Anticipated exposure. The been clearly spelt out. Further it is advised that
customer then cancels this contract. When the while dealing with such cases the AD Bank has to
customer receives the exports proceeds the be satisfied themselves about the cash flows in the
customer pay off PCFC Loan (in case availed) light of the principles set out in the RBI Directions.
or Accordingly, you may be guided by the RBI
transfer the export proceeds to Foreign currency guidelines, FEDAI FAQ and FEDAI Guidance Note
EEFC account. and avoid soliciting clarification on the procedural
Can this transfer either to pay PCFC loan or &operational issues.
EEFC account be considered as a underlying
cash flow settlement for purpose of passing on
gains related to the cancelled transaction?
6 8/10/2020 Query on Booking of Hedge Based on The RBI guidelines as conveyed vide their AP Dir
Anticipated Exposures : Circular No. 29 dated 07April 2020clearly defines
As per FEDAI Circular Letter [Link]/2020 what is Anticipated Exposure and needs no further
dated 25th September 2020. We wish to get clarification. Please do not expect any further
your advise on the matter, whether bank can be guidance on operational matters such as what kind
able to allow utilization of an amount hedged of exposures you can book contracts under
under Anticipated exposure for PP basis and Anticipated Exposures.
EEFC encashment (exercising the early
utilization option), Encashment of amount
disbursed against PCFC / PSCFC , Inward
remittances.
7 8/10/2020 Reference to Parliament Act on THE FOREIGN We advise you to go through the Government of
CONTRIBUTION (REGULATION) India, Ministry of Home Affairs notification dated 13
AMENDMENT ACT, 2020, Passed Vide ref No. October 2020. The same is available over the
33 of 2020 Dated 28.09.2020. This is with following link.
reference to the amended guidelines issued by [Link]
Government notification pertaining to FCRA /PDF_Doc/fc_notice_13102020.pdf
accounts. In the instant reference /query the section 17(1) as
We request you to kindly clarify us whether AD amended,
banks can pass on the credits received (Directly explicitly reads that the Central Government was
received from Overseas) to FCRA accounts to issue a notification on that behalf and it would
now. have been prudent for you to wait for the
(Or) the existing clients should be educated on notification instead of referring it to FEDAI. The
making arrangements to receive the foreign notification also states that a SOP for operation of
contributions only in an account designated as the account to be opened with SBI will be uploaded
FCRA Account in designated branch of State on the website. The answer to queries regarding
Bank of India at New Delhi. operation of such accounts, in any case, cannot be
expected from FEDAI.
8 9/10/2020 Opinion of FEDAI-Installation /set up of ETP Please note as per extant RBI guidelines, no entity
being offered by 24EXHANGE (Registered in shall operate an ETP without obtaining prior
BERMUDA) for trades in NDF – authorisation of the Reserve Bank. You may
We seek your guidance as to whether can we please be guided by RBI directions issued vide
avail the services of24EXCHNAGE for doing RBI Circular [Link].07/14.03.027/2018-
NDF trades on their Electronic Trading platform, 19 dated October 05, 2018.
taking into consideration RBI guidelines on NDF
trades using ETP.
9 14/10/2020 Creation of IRMs for old physical FIRCs We understand that RBI circular reference
RBI/2019-
Reference to FEDAI guideline on "Issuance of 20/[Link].07/12.07.150/2019-20
Foreign Inward Remittance one of our clients dated August 01, 2019 has approved alteration in
has presented to us a set of physical FIRCs the name of "The Royal Bank of Scotland plc" to
issued by the erstwhile Royal Bank of Scotland "NatWest Markets Plc" in the Second Schedule to
(RBS).These FIRCs were issued in 2015 and the Reserve Bank of India Act, 1934
2016. However, the IRMs were not uploaded by
RBS then. Since RBS is no longer operating in Therefore you have to check with "NatWest
India, our client has approached us for the Markets Plc” whether they have already raised
closure of softex forms against these FIRCs. IRM for said inward remittance. If not you may
Our client has approached us now since the take confirmation from the “NatWest Markets Plc"
softex were only recently approved by STPI. and create IRM in EDPMS for old inward
In this regard, since these physical FIRCS are remittances.
unutilized and the IRMs were not created we
wanted to seek your views on whether it would
be in order for us to create the IRMs now for
these old FIRCs.
10 20/10/2020 clarification as regard to rollover in Trade Credit Query of maturity period, please refer to the latest
We request you to please specifically seek guidelines on ECB/Trade Credit.
guidance/Clarification from RBI on following: In this context we advise you refer to RBI FED
1. Whether rollover is permitted for Trade Credit Master DirectionNo.5/2018-19 dated March 26,
in respect of non-capital goods and capital 2019, updated as on August 08, 2019,available on
goods? RBI Website.
2. If, yes, then how many times it is permitted for The Part II, Para 14(v) of this master directions
non capital goods and capital goods reads as below;
respectively? "Period of TC: The period of TC, reckoned from the
3. If, Yes, for how much period in respect of non date of shipment, shall be up to three years for
capital goods and capital goods respectively? import of capital goods. For non-capital goods, this
4. Whether operating cycle is applicable for non period shall be up to one year or the operating
capital goods only or for capital goods as well? cycle whichever is less. For shipyards /
shipbuilders, the period of TC for import of non-
capital goods can be up to three years." Please go
through the extant directives and let's know if still
you need any clarification on laid down guidelines,
in regards of Trade Credit.
11 21/10/2020 Query related to purchase of foreign cash We understand from your query that the son who
currency is non-resident Indian (NRI) delivered the foreign
1."A NRI visits India prior to COVID and he could currency to his father who is resident Indian.
not exchange foreign currency due to lock down. Father would like to deposit the same to his
Afterwards he went back and handed over the resident saving account. We have not come
currency to his parents." across any restriction from RBI to receive foreign
Query: In this situation can parents of NRI currency notes by the resident from the non-
deposit foreign currency cash in their Resident resident (including NRI) visiting India on account of
saving account? any bonafide transaction including gift. However,
2. Can a NRI gift foreign currency cash to his/her a person being an individual resident in India shall
friend/family (eg. gift in marriage and other surrender the received/ realised/ unspent/ unused
functions or family maintenance etc.) foreign exchange whether in the form of currency
notes, coins and travellers cheques, etc. to an
authorised person within a period of 180 days from
the date of such receipt.
12 22/10/2020 Clarification on Merchanting Trade Transactions 1) As per point (xiii) of RBI A.P. (DIR Series)
- Circular No.20-
Please clarify us followings. RBI/2019-20/152 dated January 23, 2020 RBI
[Link] cases payments are received beyond advised AD bank to ensure one-to-one matching
four months and kept Pending for RBI approval in case of each MTT and report defaults in any leg
for closure such bill and it continues to be by the traders to the concerned Regional Office of
Outstanding in our Bank Register. the Reserve Bank, on half yearly basis in the
[Link] per cited circular Third party payments for format as annexed to the said circular.
export and import Legs of the MTT are not We understand from your communication that in
allowed but some cases payments are received few MTT transactions payments have been
from Third party and kept pending for RBI received beyond four months from the date of
approval and it continues to be Outstanding in import payment resulting in outlay of funds beyond
our Bank Register. 4 months and you have taken up
Customer Justification : Since the related the matter with RBI for their approval instead of
payment is already received And such bill reporting the
should not be treated as default and such bill transaction as a deviation in half yearly statement
should not be Taken into account to arrive 5% as stated above.
ceiling of their annual export earnings and Need Since you have already referred the matter to RBI
not to be liable for caution listing. Such bills for their approval you may now await their approval
should be treated as deviation. 2) In some cases payment in respect of export leg
Further CA Certificate States as per the Books of MTT received from third party and you have
of Account provided by the customer the taken up the matter with RBI for their approval.
Outstanding Defaulting well within 5% of export Since both the above bills are pending with RBI for
earnings. Since customer had not shown the their approval you may continue to show the said
outstanding in their books of Accounts. But as bills as o/s for arriving the amount outstanding for
per Bank Register Outstanding Defaults causation listing the MTT i.e 5% of their annual
exceeds 5% of export earning till the closure of export earnings.
such Bills (outlay of foreign exchange beyond Kindly seek RBI advice in the matter and act
four months & Third party payment Bills). Such accordingly.
scenario how to handle Merchanting
13 4/11/2020 Forex transactions - PSU customer: It is to be This issue is proposed to be taken for discussion
noted that under the proposed mechanisum the in the next meeting of India Forex Committee
rates given by the bank will be accepted by the (IFXC).
customer, however, in case it is found that a
bank is giving off-market rates, it will be subject Discussions on the Agent or Principal role of AD1
to removal from the banking panel which is banks while dealing with their customers may also
asked to cover positions on behalf of the take place during the review of ICG guidelines.
customer. Please route all correspondence to FEDAI through
However as per the mechanisum client is asking your bank's nodal officer who is copied in this mail.
for is making the bank act like an Agent for the
customer. Request your kind advise on whether
the bank can participate in the above mentioned
mechanism requested by the customer.
14 5/11/2020 INR CSA with a FPI We refer your Query and certain clarifications
As a security against the hedge, we wish to offered thereupon by the Reserve Bank of India
explore signing an INR CSA where the FPI will quoted by you.
pay the MTM under the hedge. This will be In our opinion while one way CSA where Offshore
debited from the SNRR account. Entity posts collateral in INR is permissible, you
Request your guidance if we can sign onshore will need to examine by what route will the
CSAs with FPIs and whether we can debit the Offshore entity bring in INR and whether the same
client's SNRR account to settle the MTM under is permissible as per extant regulations. Please
the hedge. This will be a one way CSA, if the also examine whether the offshore party is eligible
MTM comes back to NIL or Positive for the to open an SNRR account and whether this is one
client, the INR amount will be credited back into of the permissible debits to the SNRR account and
the SNRR account at the agreed frequency. when the INR cash is posted with you how you will
be accounting for the same.
15 5/11/2020 Query regarding recovery of losses for We request you to elaborate with perspective to
derivatives booked under Anticipated Exposure policy point of view (&not on operational points of
: view), what in your opinion was not clearly defined
FEDAI Guidance Note on RBIs Hedging in RBI Directives in regards to the recovery of
Guidelines: losses. In our understanding the regulatory Risk
Net gains or losses will be applied on a contract Management and Inter-bank Dealings Guidelines
basis (i.e. at the level of each trade) i.e. gains for the recovery of losses on cancellation of Hedge
withheld can be netted against future losses on is explicit and sufficient.
a contract basis. However, gains cannot be
passed as an offset to losses already debited on We would like to clarify that FEDAI Rules in its
a prior date on a contract basis. For the purpose nature are complementary to the RBI Directives
of arriving at Net Gains calculation, date of and should not in any case be considered as
crystallization (of such gain or loss) shall matter. replacement of regulations. Hence, the FEDAI
FEDAI Rules: (Rule 6.4(b, c)) Rule No.6.4 is applicable in case of cancellation Fx
Banks Query: Contract as it were before RBI A.P.(DIR
The change in RBIs hedging guidelines, Series)Circular No. 29 dated April 7, 2020.
introduced booked of derivatives under However, the discretion to permit recovery of
Anticipated Exposure (AE). Though passing of losses in instalments needs to be exercised by the
gains on contracts booked under AE was clearly AD Category-I Bank judiciously depending on the
defined in the RBI guidelines, the recovery of applicability of the same in individual cases.
losses was not explicitly defined.
Can we apply FEDAI rule 6.4 - b and c, and
allow payment of losses in instalments for
contracts booked under AE?
16 10/11/2020 FEDAI Rule No. 6.4(iv)(a) This is an operational issue and there is no
Please clarify whether bank is in order to cancel regulatory guidance on the matter. Your bank may
the outstanding forward contract after giving take a suitable decision in the matter.
sufficient notice to the customer Please note that all correspondence to FEDAI
should be addressed through the nodal officer of
your bank for FEDAI who is copied in this mail.
17 10/11/2020 Margin For derivative contracts: In context with your specific Query (1), (2) and (3)
Foreign banks have expressed their inability to below and regulation of above referred notification,
provide quotes in the absence of CSA beyond we advised as under:
spot date because European Infrastructure
market regulation EMIR)Rules, which requires Ans1. In our opinion, AD Bank can execute on
the market participants to protect themselves shore CSA & settle collateral payment and receipt
against counter party credit risk by exchanging in INR.
collateral in the form of initial margin(IM) and
variation margin (VM) for un cleared OTC Ans2. In our opinion, each bank is free to form their
derivative transactions through CSA. own guidelines and presently we do not see any
In the above regard please clarify need for the same.
1. On date If FEMA regulation does not permits
to exchange collateral in the form of Intial Ans3. If you come across any operational
margin(IM),and Variation margin(IM) in order to challenge/issue which in your opinion requires
tide over the situation whether Bank can clarity from RBI, please specify. In our view, one
execute on shore CSA & settle collateral need not to wait for issuance of variation margin
payment and receipt in INR only with no cross guidelines for execution of CSA.
border movement.
2. For the clarity & benefit of all the member Considering Allahbad Bank is now merged with
banks please advise one general guideline Indian Bank, in future please route your queries
based upon the modalities adopted by different through the nodal officer identified in Indian Bank
Indian Banks for execution of CSA with different to deal with FEDAI. He is marked in this eMail.
foreign Banks.
3. Or Shall we wait for the Final direction from
Reserve Bank of India
18 LEI ID for Government entities (especially FEDAI has issued Circular letter No. [Link]/ 2020
Embassies/ Ministries et.) dated 29th September 2020 on Legal Entity
Identifier Code for Government/ Soverign Entity.
19 Non covering of whole -turnover pre shipment Reference received was handed over to State
and post shipment cover from ECGC for the ad- Level Export Promotion Committee, C/O SBLC
hoc facility given under Gold Card Gujarat for taking up as an agenda point in their
next meeting. Accordingly, query has been
dispose of.
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 29th September 2020

(Disclaimer: Member Banks are requested to refer to the latest Circular / Notifications /
Guidelines issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply
1 14/08/2020 In the current scenario (pandemic), RBI directs vide Circular [Link].62/
payment of export proceeds is being 04.02.001/2015-16dated December4,2015 in
delayed and shipment is being postponed general and para A (iii) of that circular in particular
and bank is receiving requests from reads; “The interest equalisation benefit will be
exporters to allow extension for three available from the date of disbursement up to the
months in the existing outstanding PC/PS date of repayment or up to the date beyond which
facilities which are at the verge of becoming the outstanding export credit becomes overdue.
overdue. However, the interest equalisation will be
In this scenario, whether exporter is entitled available to the eligible exporters only during the
to get the interest subvention under the period the scheme is in force.”
interest equalization scheme: The Reserve Bank of India has delegated authority
1. if extension is allowed on both pre- to AD Banks for extending the due date of export
shipment and post-shipment before the credit advance, subject to certain compliances.
due date? Therefore, in our opinion the AD Bank should pass
2. if extension is allowed after due date of the benefit of interest equalisation on outstanding
the Pre-Shipment/Post-shipment export credit from date of disbursement till extended
facility under Covid19 relief measures? due date arrived in line with extant guidelines,
provided no other irregularity exists in the account.
2 17/08/2020 In context to RBI’s new hedging guidelines:
a) Are the outstanding contracts booked A. No. The outstanding contracts booked under
under existing norms exclusive of the existing norms are to be included in the USD 10
USD 10 Mio Limit? Mio Limit.
b) Contracts not involving INR (FC/FC B. Please refer to Q. No. 5 of FEDAI FAQ circulated
contracts) to be under CE or AE norms vide FEDAI Circular letter dated 14 July 2020.
&accordingly to obtain underlying
documents C. If the amt. of o/s contracts exceed USD 10 Mio the
c) If the outstanding amount crosses USD user is required to submit documents as
10mio only, USER to submit underlying applicable to AE or CE depending on the
documents as per CE or AE. classification of the contract declared by him at
d) On crossing the limit of USD 10 Mio the time of booking the contract.
customer has to submit documents for D. Yes. He needs to submit documents only for the
all the outstanding contracts as per CE contracts outstanding when the limit of USD 10
or AE(no need for already utilized, Mio. is exceeded.
cancelled contracts)
2. Once outstanding amount (both under
CE & AE) crosses USD10 Mio, user to
submit the required documents for all the
contracts booked under CE .In this case,
a) the exceeding may result mainly due to
exchange rate movement. In this case, A. The amount of the outstanding contracts for
is daily revaluation of O/s contracts determining the
required to know the exceeding? If not, exceeding of the USD 10 Mio limit is to be
can a bank fix month end revaluation reckoned by considering the notional amount of
day or fortnightly revaluation day to the contract at the time of the inception of the
identify the exceeding? contract.
b) if outstanding exceeded USD 10 Mio, is
it the same 15 days calendar days that
 can be allowed for customer to submit B. If the outstanding exceeds USD 10 Mio limit the
the documents? customer has to submit documents for all the
c) in case customer fails to submit, should outstanding contracts immediately.
all such contracts be cancelled without C. Yes. Once the limit of USD 10 Mio is exceeded
passing any gains and recovering losses the existing contracts will be governed by the
if any? guidelines laid down for AE and CE contracts as
applicable
In respect of all your questions above, please also
refer to the RBI Circular, FEDAI FAQ and the
Guidance Note that is being issued by FEDAI and be
guided by the same
3 19/08/2020 A customer is reportedly in shipping line The facility of EEFC Account under FEMA is for
service industry, dealing with exports or exchange earners irrespective of whether the
importers in India and wanted to open the resident holds IEC or not.
foreign currency account. Customer The resident agent of non-resident shipping or airline
reportedly in business of booking company are allowed to open Foreign Currency
Cargo/space in Foreign Ships and expected Account(under category different than EEFC
to receive remittance from Indian exporter Account).
or importer in foreign currency. Further this Therefore, the AD Bank may open Foreign Currency
customer does not have: Account as per Regulation No. 4(G)(1) of RBI
1. IE Code Notification No. FEMA 10(R)/2015 -RB dated
2. no formal agreement/contract with January 21,2016 subject to Customer Due Diligence
foreign shipping liners for transacting their agency business for principle
overseas shipping or airline.
Customer reportedly claimed that some of If your bank is not satisfied on agency relationship
Bank allowing such type of EEFC accounts. between your customer and overseas shipping or
airline, the bank may call for further information or
explain ineligibility to customer. Please be guided as
above.
4 24/08/2020 The overseas subsidiary of an Indian Entity In our opinion the RBI FED Master Direction No.
(whose designated AD Bank is different 15/2015-16 dated January 1, 2016 is explicit enough
than Shinan Bank) requires Working Capital in general and on reporting by AD Bank vide Para 1
funds at overseas. in Part-II Operational Instructions to Authorised
The current Banker of the Indian parent has Dealer Banks, in particular.
agreed to issue an SBLC/BG to the Indian Regarding your query about whether the designated
branch of Shinhan Bank, India (subject to AD I banker of the client should give an SBLC or a
regulatory compliance). Whether the Guarantee to the local office of Shinhan Bank, these
Shinhan Bank India can, in turn, issue an are operational issues to be decided by your bank.
SBLC to one of its overseas branches to Regarding reporting please also refer to RBI FED
arrange for short term funding for the Master Direction No.18/2015-16 dated January 1,
Switzerland based subsidiary. 2016 read with above referred Master Direction and
What kind of regulatory reporting is required be guided accordingly.
for this transaction?
5 31/08/2020 FEDAI Rule 4.5 - Crystallization of Foreign Determining or Sourcing the Purpose Code for
Inward Remittances handling Foreign Exchange Transaction is separate
i)In most of the inward remittances, the issue and not relevant with FEDAI Rule 4.5. However
purpose of remittance is not clearly please note that the AD Bank cannot assume any
mentioned in the SWIFT message. In Purpose Code for crystallising the Foreign Currency
such cases, bank will have to presume Inward Remittance and should input the correct
certain purpose code which may be Purpose Code.
incorrect which may result in incorrect Here it would not be out of reference to mention that
reporting in R-Returns. Axis Bank was involved at every stage of drafting &
ii)The permissibility of the transaction with approval of 10thEdition of FEDAI Rule. Axis Bank was
respect to FEMA and other regulatory also member of the sub-committee formed for limited
guidelines cannot be ascertained in the review of 10th Edition, recently. Any concerns/issues
absence of purpose code and supporting that may be there regarding the Rules that are being
underlying documents from the customer. framed should be flagged and discussed by your
iii)Customer may want to keep the funds in bank representatives during the discussions being
EEFC account. held for the purpose and not after the Rules are
Considering that the Bank has an internal framed and circulated.
policy to return the unapplied nostro credits
 within the time allowed for surrender of Following FEDAI Rules is obligatory for member
foreign exchange, we request your opinion banks and please be guided by the same.
whether crystallization rule still needs to be
adopted by the Bank.
6 31/08/2020 Review of FEDAI Rules (Draft Document- The AD Bank under the extant instructions of the RBI
Corrections) is required to reconcile their Nostro Account entries
1. Rule 4.5: In some cases, beneficiary on an online basis and keeping the foreign currency
would have responded to the credit fund received un-applied beyond advised period is
intimation, but not to the satisfaction of AD not an acceptable practice. Therefore, we do not
who may need more clarity/further concur with your understanding that the AD Bank is
documents. In this case it is our not required to: (b) Crystallise the remittance, even
understanding that Bank is not required to: after the stipulated period has elapsed on the
a. Return the remittance to remitting Bank grounds that clarification is awaited.
or Your understanding on point (a) and (c)stands
b. Crystallise the remittance or correct provided bank complies with FEDAI Rules.
c. pay compensation for adverse movement
in rates
7 11/09/2020 FEDAI has clarified that Deemed exports We observed that the information relying upon which
are not covered under Interest Equalisation BoB first query was incorrect since:
Scheme. - the extant Foreign Trade Policy 2015-20 Chapter 7
covers Deemed Export, and
The SEZs falls outside the purview of - the chapter on SEZ was purged from FTP long
Deemed exports and in opinion of BoBthe back.
supply of goods to SEZ are treated as
actual exports as per the definition of DGFT. In context with provisions in SEZ Act 2005, FTP
Query – 2015-20 (Valid up to 31March 2021) and various
1. Whether interest equalisation benefit can directives of RBI we advise as under.
be passed to the company from DTA
selling goods to a unit in SEZ. 1. In our opinion, Company from DTA selling goods
2. RBI vide notification RBI/2019- to a unit in SEZ though eligible for export credit under
20/[Link].73/04.02.002/ specific instruction (Para 2.7 in RBI Circular DBR
2019-20 dated May 23 2020 increased [Link].14/04.02. 002/2015-16 dated July 1,
the maximum period of Pre shipment 2015), yet not eligible for Interest Equalisation
and Post shipment export credit Benefits.
sanctioned by Banks from one year to
15 months, for disbursements made 2. In our opinion, revision in export credit period is not
upto July 31, 2020. In this regard, we interfering with guidelines on eligibility of export credit
request clarification as to whether attracting Export Credit Interest Equalisation
Banks can extend the benefit under Scheme.
interest equalisation on such credits
which have been allowed for a period of
15- months in line with the above RBI
notification.

8 17/09/2020 A FCDL which is due for repayment and the As clarified by you the FCDL has been given in USD
bank does not receive the FCDL repayment and the repayment of the FCDL has been received in
proceeds on due date in India. The your nostro account maintained in a US based Bank.
repayment proceeds get credited in the In the circumstances, the repayment date of the
bank's Nostro account after the interbank FCDL is the date that you have received the credit in
market timings or after the closure of its your nostro account in US and the date prevailing in
branch business hours or in late night. US is the relevant date of repayment. Accordingly, if
Next business day, after taking the the credit in your nostro is on the due date of
confirmation of credit in Nostro account, repayment in US within the business hours at US
branch closes the FCDL account with 1 day irrespective of whether it is after the business hours
overdue interest, being charged by the here, overdue interest is not due on the FCDL.
bank's CBS system.
Please advise, if bank should recover the
overdue interest for 1 day from the
customer or not?
9 22/09/2020 Query related to Deposit Account 1) In our opinion an Authorised Bank may accept
Indian Rupees/ currency in NRE account, if AD
 1: Can cash in INR be deposited in NRE bank is satisfied with bonafide of the transaction
savings account ? If yes, then, is there and deduction of income tax. While accepting
is any ceiling on such cash (INR) Cash, Bank should comply with provisions of
deposits? Income Tax Act and any other such guidelines
2: Please guide with procedure for allowing from Government restricting the use of cash.
a Non-resident for operating his/her Bank may be guided by its internal policy as
NRE savings Account from outside regard accepting cash deposits in the account
India (Other than Net banking), which from third party.
has turned inoperative and there is no 2) we may mention that bank should follow their
resident Power of Attorney holder. internal policy, guidelines for allowing a Non-
resident for operating his/her NRE savings
Account from outside India (Other than Net
banking).
10 22/09/2020 Query on funding FCTL/FCDL 1. Though you haven't mentioned in your eMail, we
assume the context of discussion
Whether banks can avail of the under is Fx. SWAP Deal in on-shore market. This issue is
mentioned FC raising routes to fund the at present under reference to the RBI.
FCTL/FCDL requirement of their customers 2. We invite your attention to Part C, Para 3(a)(ii) in
(other than export credit) in India (onshore) FMRD Master Direction No.1/2016-17 dated July 5,
through 2016, which permits AD Bank in India to borrow
foreign currency funds from another AD Bank in
[Link] INR into FC India. This is in line with Regulation
2. Onshore borrowing of FC funds from AD No.5.A(iii) in RBI Notification No. FEMA.3(R)/2018-
banks in India RB dated December 17, 2018. In our opinion, the AD
Bank can deploy the foreign currency resources
raised through such borrowing for purpose of lending,
if otherwise permitted under the provisions of the
FEMA.
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 13th August 2020

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/
Guidelines issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply
1 9/07/2020 Please clarify whether the facility of premature In our view the very purpose of marking lien on the
withdrawal of NRE/FCNR (B) deposits shall be balance in NRE or FCNR(B) Account and not
available where the loan against such deposits permitting premature withdrawal while granting
are availed and the premature withdrawal loan against these deposits by AD Bank is to
proceeds of NRE/FCNR (B) are adjusted to the ensure sufficient security in the event of non
loan account that has been availed against such repayment of the loan. Therefore, bank can permit
deposits. premature withdrawal of the deposit and
simultaneous appropriation of balance in NRE or
FCNR(B) Account to liquidate loan outstanding
against such deposit, provided:
1. The request for premature withdrawal is
received from the deposit account holder, or
2. The bank has obtained mandate from the
deposit account holder to makepremature
withdrawal while loan against such deposit was
granted.
2 09/07/2020 IRM creation in EDPMS under FEDAI Guidelines RBI Vide A.P. Dir. Circular No. 74 dated May 26,
As per RBI AP Dir Circular No. 74 dated May 26, 2016 has advised A.D. Category–I banks to report
2016 and FEDAI Circular LetterNo.16/2016 all the inward remittances including advance as
dated 17th October 2016 whereby AD Banks well as old outstanding inward remittances
need to report all inward remittances (including received for export of goods/ software to EDPMS.
advance against exports) under EDPMS To give more clarity on execution of EDPMS
received against export of goods/software. As module, in consultation with RBI, FEDAI issued
per extant guidelines, IRM reporting to EDPMS Circular letter no. 16/2016 dated 17th October
needs to be done by the bank, when the funds 2016.
are credited to beneficiary exporter's account, The guidelines have been in existence for more
either thru NOSTRO, VOSTRO or RTGS/NEFT. than 3 years now and banks are well conversant
However, few banks are not adhering the with the same. However, if some banks are not
guidelines and rules issued by RBI /FEDAI. following the same in the case of transactions
Bank are not providing complete details of where the client is from your bank you may take up
inward remittance (Full details of Overseas the issue bilaterally with them and advise us the
Remitter, Purpose of Remittance, Currency & outcome.
Amount of remittance, Name and Account We may, if required, consider further course of
number of beneficiary and instructions to comply action at a later stage.
FEMA 1999 provisions) to upload details in IRM
in EDPMS.
3 13/07/2020 Whether a grandmother (Resident) can make a Any resident individual person may remit upto USD
remittance in US Dollar under LRS towards gift 250,000 in one FY as gift to a person residing
to her grandson who is pursuing his Bachelor's outside India. The person to whom such gift is
degree in USA. She is not qualified as "close given does not have to be a ‘close relative’ as
relative" as per the definition of close relatives defined by the Companies Act 2013 of the remitter.
under the Companies Act 2013. Hence we wish Please ensure that the other stipulations laid down
to seek your guidance on the subject request in the above Master Direction are adhered to.
received from the customer.
4 22/07/2020 We have a non-Constituent client requesting for Confirming a Letter of Credit amounts to your
Confirmation of Documentary Credit issued by undertaking the contingent liability. Regarding the
our Head Office Branch in Seoul, South Korea. accounting aspect and calculation of exposure on
The LC is drawn by Kookmin Bank Seoul in favor account of such confirmation, this is subject to your
of Indian Exporting Company. In this case we internal guidelines and the regulatory norms laid
seek your advice if the LC confirmation down in this regard which as an AD Bank we trust
constitute as Exposure in our Books you are well aware of.
(endorsements with the character of
acceptance) and also if it qualifies to be
computed under Large Exposure Framework
and Single borrower limit. Expecting your earliest
revert.
5 29/07/2020 We refer Master Direction - Risk Management Under the new hedging guidelines circulated vide
and Inter-Bank Dealings (FMRD)Master RBI Circular A.P.(DIR Series)No. 29 dated 07 April
Direction No.1/2016-17, Updated on January 07, 2020, there is no provision to book a Forward
2020)Please confirm whether we can offer Contract under the earlier provision of Past
forward contract under Probable exposures Performance. However, the new guidelines are
based on past performance to The Proprietor or effective from 01 September, 2020 and until then
Partnership Firm having Star Export House you may be guided by the existing provisions in this
Certification. respect.
6 4/8/2020 Ref. RBI A.P.(DIR Series) Circular No.33 dated The first query was responded in consultation of
22nd May 2020 & A.P. (DIR Series) Circular No. RBI
23 March 13, 2019 on Trade Credit The cited
A.P. (DIR Series) Circular No.33 dated 22nd 1. RBI has now advised us in the matter that there
May 2020 Please clarify the followings: has been no change in Trade Credit policy as
[Link] outbreak of COVID- 19 pandemic the regards to reporting. We advise you as under.
extension of time period for completion of  Wherever the payment term of import in to
remittances from six months to twelve months India ab initio is beyond 180 days from date
from the date of shipment for such imports of shipment, this need to be reported as
made on or before July 31, 2020 is to included supplier's credit in TC Form.
in reports as per settlement of delayed import  In case, the payment term of import in to
dues in terms of paragraphs B.5 and C.2 of the India ab initio was within 180 days from date
Master Direction or to be excluded since RBI of shipment and subsequently extended in
has permitted for extension. compliance of laid down guidelines for
[Link] cited circular has mentioned that the time extension of due date of import payment
period for completion of remittances against (including delay in payment by the importer),
normal imports can be extended from six the same is not required to be reported as
months to twelve months from the date of supplier's credit in TC Form.
shipment for normal imports made on or before
July 31, 2020. But it is not clarified that the 2. In our opinion the RBI Circular is explicit and
latest date of shipment to be taken into account extended the stipulated maximum time
while considering the importer request under period permitted for payment against import
disruptions due to outbreak of COVID- 19 in to India for all consignments with date of
pandemic. shipment on or before July 31, 2020.
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 10th July 2020 via Web / Video Call

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/
Guidelines issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply
Payment of Precious and Semi-Precious Please note that the said relaxation is not
Stones beyond six months in light of recent applicable for import of Platinum /Palladium/
relaxation vide RBI A.P. (DIR Series) Rhodium/Silver/Rough, Cut & Polished
Circular No.33 dated May 22, 2020 Diamonds /Precious and Semi-precious
1 26/05/2020
Stones which is subject to the provision
mention in para [Link] Mater Direction -
Import of Goods and Services (Updated as
on January 27, 2020).
We would like to seek clarification that as an With reference to your query vide your
AD Cat-1 Bank we can Dealwith Non trailmail please refer to RBI FMRD Master
Resident Bank in Forex Forward, whereas Direction No. 1/2016-17 dated July 5, 2016,
they will hedge the INRexposure of their SECTION II Facilities for Persons Resident
2 27/05/2020
corporate customer (Exporter to India) under outside India: Para 6. 'Facilities for Hedging
INR Invoiceand one due date they will pay us Trade Exposures, invoiced in Indian Rupees
INR through their INR Vostro Account and in India' Model I which is self explicit.
we will pay USD to their Nostro Account?
Remittances of Insurance Broker & Matter was referred to RBI and was
Reinsurer Clients; settlement of receivable advised as below:
and payable on netting-off basis. “We advise that such requests being far
and few between, would be examinedon a
3 01/06/2020
case to case basis on receipt of requests
with all relevant detailssuch as the type of
transaction, model, how it works etc. etc,
from the ADbank”
Whether the Bank should insist soft copy of No, AD Bank should stick with requirement
underlying for hedge booked from 15 Feb. to of obtaining only physical copy of the
4 01/06/2020 15 May 2020 in light of FEDAI Special evidence of Fx. Exposure booked from 15
Circular ref. SPL-08/COVID19 Relaxations/ Feb. to 15 May 2020.
2020 dated 19th May 2020
Queries on SNRR account: [Link], foreign national of Indian origin
Q1 Is SNRR Account available to Foreign having business in India are
national of Non-Indian origin? eligible to open SNRR Account.

Q2 Should the repatriation of the balances in [Link], it is not mandatory that the balance in
SNRR account be permitted on closure of SNRR Account can only be remitted on the
the account only? closure of the account. AD Bank can allow
overseas remittance provided the bank is
5 5/06/2020
satisfied that the account holder has paid
the tax due in India and arranged for
meeting their liability in India.
Q3 Can a Joint Holder be allowed in SNRR [Link] SNRR Account is a business
A/c? account and in that perspective holding the
account jointly with another non-resident
individual only arises if they own the
business jointly
 Q4 Shall the operations/rejection on [Link], the SNRR Account is not allowed to
operations for a power of attorney holder be be operated by power of attorney holder.
in the same line as they are fore NRE/ NRO
and FCNR (B) account? [Link] our views, the methodology of ensuring
Q5 As per 7.8 of RBI Master Direction dated regulatory compliance as regards to Para
1st January 2019 on deposit and Account, all 7.8 in FED Master Direction No. 14/2015-16
the transactions in the SNRR account will be dated 01 Jan. 2016 should be drawn by
subject to payment of applicable taxes in respective AD Bank and minimum they must
India. In such cases, do we require to obtain not allow overseas remittance unless
form 15CA/ CB for each debit transactions? satisfied on payment of taxes due in India.
Q6 Also, shall we extend facility of issuance [Link], bank can extend cheque book
of cheque books to SNRR account holders. facilities to SNRR Account holders.
Please advice
Q7 The RBI further provided that SNRR [Link] rules as regards to investment (FDI,
account can be used only exclusively for FPI or FVC) and SNRR Account is explicit in
transactions under Annex.2, annex 5 and RBI Notification FEMA.5(R), Ministry of
Annex 7 of its Master Direction on Foreign Finance Notification S.O. 3732(E) dated 17
Investment in India, dated 04/01/2018 October, 2019 and various circulars issued
updated upto 08/03/2019). Please advise us by RBI from time to time. Your bank needs
as to the procedure/ rules for effecting such to draw its own procedure meeting the
operational transactions in the account. regulatory guidelines.
Q8 As per point no 14 of Schedule 4 8. Please refer the Para 3 in FED Master
[Regulation 5(4)] of RBI Notification No. Direction No. 14/2015-16 dated January 1,
FEMA 5(R)/ 2016-RB dated 01/04/2016 2016 which reads, "Reporting instructions
(Updated upto 13/11/2019), the transaction can be found in Master Directions on
in the SNRR Account shall be reported to the reporting (Master Direction No. 18 dated
RBI in accordance with the directions issued January 1, 2016)". Please be guided
by it from time to time. While referring to the accordingly.
RBI Master Directions on Reposting, we
could not locate anything in SNRR account.
Kindly advice us in this matter, for
compliance of the same.
An exporter books forward contract for 30 In this context we advise as under:
days at every month end to the extent of bills (i) An overdue bill does not cease to be a
outstanding with the bank irrespective of the valid forex exposure merely by its being
maturity date or overdue status of the bill. overdue.
As the maturity of the hedge cannot exceed (ii) Hence such exposures may be
the maturity of the underlying, we advised considered for booking a forward contract
the customer that overdue export bills can be provided the AD I bank is satisfied about
considered as valid underlying only if the due the period of such exposure to ensure that
date of the same are extended. Ref.: FEDAI the conditions stipulated in FEDAI circular
circular SPL-63/Forward Contract/2012 SPL-63/Forward Contract/2012 dated 24th
6 dated 24th Sept'12 September 2012 are adhered to.
09/06/2020
However, since, in certain cases, there are (iii) Any other RBI guidelines laid down in
genuine delays, beyond period permitted by this connection may also be strictly
FEDAI, in receipt of proceeds because of the followed.
nature of counter parties abroad, we seek
your views on permitting the customer to
book the forward contract for the outstanding
export bills lodged with us for a maximum
period of 30 days. The contracts would be
utilized as and when the underlying amount
is realized.
Whether e-UCP will be implemented in The eUCP is neither a set of ICC Rule in
India? itself nor revision of rules of any publication
of UCP. eUCP Rules published by ICC is
only a supplement of UCP and therefore in
our view does not warrant specific approval
or concurrence from regulator if the AD
7 12/06/2020
Bank adopts dealing in digital document,
provided no directive restricts such practice
otherwise. Please refer FEDAI Circular SPL-
13/UCP 500/2002 dated 30 March 2002,
Which is readily available in Compendium of
FEDAI Circular as available in our website
 In course of cancellation of Fx Forward In context to query please refer to para c of
Contract, there is gain to customer. Whether the General instructions for OTC forex
customer is eligible to book forward contract derivative contracts entered by Residents in
USD/INR for said exchange gains under India of RBI Master Direction on Risk
FEDAI Rule 6.4? Management and Interbank Dealing which
states as under: QUOTE
'Derived foreign exchange exposures are
not permitted to be hedged. However, in
8 12/06/2020 case of INR- foreign currency swaps, at the
inception, the user can enter into one time
plain vanilla cross currency option (not
involving Rupee) to cap the currency risk.'
UNQUOTE
You may accordingly decide whether or not
the customer can book a USD/INR Forward
Contract for the exposure detailed by you in
your trailmail.
Calculation of interest on overdue FCNR (B) 1. If overdue period of FCNR Deposit
Deposit: is less than one year but more than 14
1. If overdue period is less than one year, days, AD Bank shall calculate amount of
what shall be the interest rate for calculating interest for the overdue period at the rate
interest for the overdue period? as per the policy approved by their board
since the discretion for the rate to be
applied is left to the AD I Bank
9 16/06/2020
2. If overdue period is more than one year, 2. The RBI Directives only differentiate the
what shall be the interest rate for calculating overdue FCNR(B) on basis of overdue
interest for the overdue period? period up to 14 day or more than 14 days
Therefore, please advise the context in
which your query differentiates the overdue
period in less than one year and more than
one year.
Query Regarding Remittance under LRS Please refer Para B.20 and Para C.1(1) in
towards purchase of Gold in non-physical FED Master Direction No. 15/2015-16 dated
form from M/s Pax Gold, New York January 1, 2016, the extant directive are
10 19/06/2020 explicit and does not permit investment in
derivative instrument valued on the basis of
underlying assets (Gold in present case), as
was explained in your eMail.
 Reference: FEDAI Circular SPL- Prior to introduction of EDPMS, our SPL-
58/FIRC/2012 dated 31st August, 2012, FAQ 58/FIRC/2012 dated 31st August 2012
on EDPMS and FEDAI Circular Letter No. advised member banks that “No FIRC
16/2016 dated 17th October, 2016. should be issued by member bank which
Bank A debit Vostro account held by it and received inward remittances for credit to
transfers the Indian Rupee funds to the Non- resident Rupee Vostroaccounts
account of the beneficiary with Bank B, the maintained with them but transfer those
Bank B has to report the IRM in EDPMS. remittances by debitingsuch Non-resident
Query Rupee Vostro accounts, to other member
In case Bank B has received, through the banks maintaining accounts of beneficiaries
relevant fields in the incoming RTGS for ultimate payment”.
message, all the information that it needs To avoid issuance of duplicate FIRC it was
from Bank A to issue the IRM (i.e. also suggested that “The member bank
information like full details of overseas issuing FIRCs against credit to beneficiaries’
remitter, remitter bank, currency and accounts maintained with it through Rupee
amount, beneficiary account number and remittances received by debit to Non-
name, purpose of remittance) - Prior to resident RupeeVostro accounts maintained
reporting the related IRM on EDPMS, is with other member banks, should confirm
Bank B still obliged in terms of FEDAI thatsuch remittances represent debits to
11 24/06/2020 circular SPL-58/FIRC/2012 dated 31st Non-resident Rupee Vostro accounts in
August, 2012 to obtain a confirmation from India and FIRCs have not been issued
Bank A that the funds have been received in against such remittances”.
a Vostro account with them and that they However, after introduction of EDPMS by
(i.e. Bank A) have not issued any FIRC. RBI member banks should captureexport
remittance in EDPMS. Accordingly, FEDAI
has issued Circular Letterno. 16/2016 dated
17th October 2016, as guidance for member
banks forreporting payment received thru
Nostro/Vostro or RTGS/NEFT in EDPMS
andissuance of e-FIRC. For more
clarification please refer Q 3,Q 4 & Q 5 ofthe
said circular.
As per above guidelines if bank “A” receives
instruction to transfer INR to Customer with
bank “B” & bank “B” report IRM for Vostro
payment, we suggest that confirmation from
bank “A” that they have not issued an FIRC
is not required.

Guidance Needed on Obtention of 15CA/CB We advise that you may direct such queries
- Outward Remittance from NRO Account for to the tax department of your bank.
12 25/06/2020 Family Maintenance and Savings

Our customer wants to supply the goods A similar query has been raised by one of
locally to the Indian branches of a the member banks in RBI ADconference
multinational company in USA. This US held on February 17, 2018 (Query no. 184).
based marketing agency will remit cost of
articles/goods in USD by foreign inward In replying to this query RBI informed that
remittance for such local supply. Request RBI was examining all suchcases on an
you to guide us as to whether the processing individual basis and they may be referred to
13 26/06/2020 of foreign inward remittance is falling under RBI. You mayaccordingly, refer to RBI the
AD Bank powers under general permission case referred to us in your email.
or the AD Bank need to approach RBI for
prior approval for processing the transaction.

Offering of Non INR NDF to resident Matter is in discussion with RBI and we
customer have sent detailed representation to
14 26/06/2020 FMRD.
 New RBI circular Risk Management and 'Retail' as referred to in the RBI Circular
Inter-bank Dealings - Hedging of foreign Risk Management and Interbank Dealings -
exchange risk dated April 07, 2020 has Hedging of foreign exchange risk dated April
provided definition of Non-Retail User. The 07, 2020 is meant to be different from the
RBI ICG Guidelines 2011 stipulates 'Retail/ Individual customer' referred to in
requirement of ISDA agreement for all Para 3.7 of Chapter 3 of RBI's Internal
15 derivative transactions, however exempted Control Guidelines and therefore we are of
30/06/20 Retail/Individual customers from such the view that it may not be sufficient to obtain
requirement. a specific individual contract note for Retail
In this regard, we wish to seek a clarification clients referred to in the RBI Circular dated
whether entering into an ISDA agreement is April 07, 2020.
required for Retail user ( as per the definition
in the new circular).
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 29 th May 2020 via Web / Video Call

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/
Guidelines issued by RBI/FEDAI and other authorities from time to time)

Date
Sr.
No.
of Query FEDAI Response
Reply
1 6/3/2020 Under the OPGSP arrangement: In our opinion, if there is no involvement of currency
- Bank receives bulk FCY conversion, the question of rendering currency
funding from Overseas conversion service does not arise. Hence, the cause of
OPGSP Partner and convert levying GST for currency conversion service is absent
FCY to INR for the bulk and no GST is payable on account of currency
funding. FCCT (Foreign conversion. In the circumstances it is not clear to us
Currency Conversion Tax) is whether there are any additional facet to issue because
recovered during this of which this question has arisen.
conversion.
- Converted INR amount is We would also like to get clarity from you since in best
disbursed as per Partner of our information the Account under OPGSP
instructions to multiple Arrangement is opened in form of
beneficiaries in India Nostro Account in a freely convertible foreign currency.
- The above process for OPGSP Would like to confirm with you the guidelines of the
is on the same lines of Rupee Regulator which permits AD Bank to operate Rupee
Drawing Arrangement (RDA): Account in India for OPGSP Service Provider.

IndusInd Bank requested our

views / confirmation for non-
applicability of FCCT for OPGSP
at the time of conversion for the
bulk funding of their INR Export
collection account.
2 12/03/2020 It has been opined that no need to RBI ICG Guidelines issued vide Circular Ref.
exchange, contract confirmations [Link]. No.18380 /02.03.137/2010-11 dated
for cash deals as they are intended February 3, 2011 (As amended from time to time
to be settled against the underlying stipulates as under:
transactions with the bank on the
same day. In line with the same, "Independent confirmation of contracts is obtained for
what is the view on Tom and Spot deals other than those put through the Clearing
deals. Corporation of India Ltd (CCIL), which are matched by
CCIL from the counterparty banks and subject to
exchange of one time bilateral agreement between them
and duly verified for correctness and in no case the
dealers sign the confirmation. In regard to
Cash/Tom/Spot contracts, confirmations may not be
followed-up, if the amounts thereof have already been
received in the Nostro accounts.

3 16/03/2020 An import bill was received from We refer your query and telephonic information (1) The
overseas bank during February City Union Bank has received IDPMS Entry confirming
2020 with tenor mentioned in the that the importer had already taken delivery of goods
Bill of Exchange as 180 days from and the same is at present in outstanding status (2) City
the date of Bill of Exchange. The Union Bank has received all original Bills of Lading (3)
bill of lading was dated June 2019. The overseas supplier has not claimed any amount of
The payment falls due in the interest in the invoice.
month of August 2020. The goods
In view of above we advise you;
 are non-capital goods (Teak 1. Satisfy yourself about bonafides and gentility of
Logs). underlying trade transaction. Some of the points which
need greater scrutiny may be
Bank’s View: As per the above
guidelines, the bill cannot be - Reason for unduly long gap bill of lading date (June'19)
handled as the period of supplier's and Bill of Exchange date (Feb.2020)
credit exceeds one year from the
date of shipment. - Does it match with Original payment terms as per the
purchase/sale order, invoice
Query: Kindly clarify whether our
view is in order. 2. Subject to Bank's satisfaction about reasons for delay
and as payment is required to be made for goods
received, it can be dealt in line with RBI directives in
general for delayed import payments and directives as
per FED Master Direction No.17/2016-17, (as updated
from time to time) in specific.

4 17/3/2020 Whether LEI require for below Reference your query in trailmail. RBI Circular No.
transactions- RBI/2018-19/83 [Link].10/11.01.007/2018-19
dated 29 November, 2018 stipulates as under::
1. Nostro to EEFC account of the
client, is more than 1 Million. 'Only those entities that obtain an LEI code on or before
the due dates applicable to them shall be able to
2. Closure of PCFC loans undertake transactions in these financial markets after
the due date, either as an issuer or as an Investor or as
3. Import transactions from FCY
a seller / buyer.’
SEZ account where we are not
touching FX markets, and the Our interpretation of the above as far as forex markets
amount is above USD 1 M, can I are concerned is that LEI is not required where a market
undertake. participant is not a seller or buyer in the forex markets.
Accordingly, transactions where no conversion from one
4. SEZ Branch office of foreign
currency into another currency is involved, LEI is not
company, head office registered in
required.
British Virgin Island (BVI)
representation on LEI requirement Regarding the query regarding where parent does not
& asking bank to take extension for have LEI as LEI Code is not mandatory in the country
complying the requirement of LEI. where the head Office is registered and SEZ Branch
The Country, at which our Head office of such company needs to do a transaction where
Office is registered, do not require LEI is required, we are of the view that LEI cannot be
LEI Code mandatorily, in other waived for the Branch Office transacting in SEZ in India.
hand, being Branch, without LEI
code of Parent Company, we
unable to apply for LEI code in
India.

5 20/03/2020 Query is carry forward from Reference to your email dated 13th February 2020.
previous quarter asking :
1)As per RBI Master Direction RBI/FED/2016-17/12
Whether AD Bank can allow FED Master Direction No. 17/2016-17 dated January 1,
extension of time to importer for 2016 on Import of goods & services point (ix) AD banks
submission of Bill of Entry where shall give extension for submission for BOE beyond the
advance remittance was made by prescribed A.P.(DIR Series) Circular No. 9 dated August
such importer? 24, 2000 (FEMA,1999).

Quote

Physical import of goods into India should be made

within three months (twelve months in case of capital
 goods) from the date of remittance and the importer
should give an undertaking to furnish documentary
evidence of import within fifteen days from the close of
the relevant period.

Authorised Dealers, if satisfied with the request, may

allow extension of time for import not exceeding one
month (three months in case of capital goods). In cases
where the advance remittance has been made against
a bank guarantee, the guarantee should be suitably
amended, if need be, to cover the extended period for
import of goods into India; and Authorised dealer should
ensure that in the event of non-import of goods, the
amount of advance remittance is repatriated to India or
is utilised for any other purposes for which release of
exchange is permissible under the Act, Rules or
Regulations made there under, to the satisfaction of the
Authorised Dealer.

Unquote

AD banks should do follow-up for closure of ORM as per

above guidelines.

2) AD banks can consider closure of BoE/ORM in

IDPMS that involves write off to the extent of 5% of
invoice value in cases where the amount declared in
BoE varies from the actual remittance due to operational
reasons and AD bank is satisfied with the reason/s
submitted by the importer.

In case, if advance remittance made by the importer &

importer receives goods short from overseas supplier
the importer should receive the excess amount from the
overseas supplier. In spite of the several reminder &
follow-up with overseas supplier, if the importer is
unable to receive the funds back the AD banks should
refer such cases to the concerned Regional Office of
Reserve Bank of India for necessary approval as per
para C.8 (xiv) of RBI Master Direction NO. 17/2016-17
dated January 1, 2016 on

6 26/3/20 LRS - Clarification with regard to Reference to your letter no. LRS_FEDAI_TCS_1 dated
charging of Tax collection at 13th February 2020.
source (TCS). –
1. Calculation of Tax collection amount in multiple
Reference to Annual Budget scenarios:-Reserve Bank of India will not issue any
announced by Finance Minister instructions under the FEMA, regarding the procedure to
with regards to LRS transactions be followed in respect of deduction of tax at source while
where in effective from 1st April allowing remittances to the non-residents nor can FEDAI
2020 AD I bank where advised to guide you in the matter. Any such queries may be
charge 5% tax (TCS. at the time of directed to the tax department of your bank.
processing the LRS transaction if
the cumulative remittance amount 2. In the above regard, please refer point 14 of RBI FED
is equal to or more than INR 7 lacs Master Direction No. 7/2015-16 dated 1st January 2016
during the financial year. on Liberalised Remittance Scheme (LRS). The
individual will have to designate a branch of an AD
 AD banks do not receive the real through which all the remittances under the scheme will
time information of utilization of be made. However, the resident individual seeking to
LRS limit which may result into make the remittance should furnish Form A2 through, all
improper collection of tax from sources in India during the financial year including
customers request you to please current application should be within the overall limit of
take up the same with RBI for the LRS. Accordingly, AD banks can calculate the
exposing TO AD banks for XBRL amount of remittance & charge the TCS as envisaged in
platform for LRS reporting in the the budget guidelines.
situation real time utilization of
LRS Limit is not available, who is 3. It is mandatory for the resident individual to provide
responsible for wrong collection of his/her Permanent Account Number (PAN) to make
tax (if any. as bank will go as per remittance under the Scheme as per RBI Master
customer declaration on utilization Direction RBI/FED/ 2017-18/3FED Master Direction No.
of LRS limit. 7/2015-16 on the [Link] has already provided a
facility to A D Banks to view the utilization under LRS by
How we propose to manage the Individuals which permits AD to track the same.
TCS accounting in case LRS
remittances are returned 4. We understand that in case the remittance is not
cancelled for any bonafide reason credited to the beneficiaries account and returned
(specifically with regards to unapplied ,the TCS deducted while remitting by the AD
applicability of refund of TCS bank, can be claimed as a refund at the time of filling IT
deducted by the bank white return by the individual /customer. However, this needs
handling the Transaction. to be ascertained from a tax professional.

7 30/03/2020 The client informs us that owing to In case of contracts booked under SHF, client is allowed
the COVID-19 situation, FX the Exchange gain on cancellation but the amount is
exposures that were anticipated paid at the time of delivery of underlying cash flow.
are not being met due to a real
impact on business. In this The present relaxation in FEDAI Rule 6.4 (iv) vide
context, the client would like to FEDAI Circular SPL/2/BV/2020 dated 19 March 2020 is
cancel forward contracts booked only regarding the passing of gain even when a contract
under SHF maturing in March, and is cancelled after due date but within 3 days of maturity,
cash flow to be passed to him. which otherwise was not permitted. The relaxation does
not envisage passing on of gains where the basic nature
In light of recent RBI clarification of the contract does not permit passing of gain on
for providing relaxation of passing cancellation or passing of gain at the time of cancellation
gains from overdue contracts itself where such gain is to be paid at the time of actual
would be applicable to all live cash flow.
contracts, can this be interpreted/
extended as applicable for Accordingly, the relaxation in FEDAI Rule 6.4 (iv) can be
contracts booked? extended to contracts booked under SHF but the gain
shall be paid only at the time of actual cash flow and not
at the time of cancellation, as is the case for other
contracts.

8 30/3/2020 FEDAI rule " 2.3 Normal Transit The FEDAI Rules related to Normal Transit Period.
Period" that "No changes in due
date shall be permitted Other than the above context, due date may change on
subsequent to the purchase, account of other reasons subject to the compliance of
discounting or negotiation of guidelines laid down regarding the cause necessitating
export bill." such change in due date.

Please clarify, whether it is related

to extension of due date on
account of change in Normal
 Transit Period alone?. Whether
the bills can be extended after
purchase/ discounting/
negotiation?

9 3/4/2020 Clarification on Trade related COVID 19 are unprecedented and while RBI has given
matters in connection with relaxations in certain stipulations to ease the situation,
COVID-19 outbreak the issues raised by you have no RBI/FEDAI guidelines.
Accordingly, your bank will have to assess the situation
1. Shipments made by Export in every case and take suitable decisions and seek
solutions weighing the repercussions in each case. A
clients and the Documents
few solutions which occur to us are being given below
Purchased /Collection handled by the feasibility of which need to be examined by you
Indian AD Banks. Unable to considering the details of each case:
despatch the Documents to
Overseas bank due to non- Q 1. Shipments made by Export Clients and the
availability of courier services. Documents Purchased
This is applicable for Bills drawn /Collection handled by Indian AD Banks. Unable to
dispatch the Documents to Overseas bank due to non-
under Letter of Credit.
availability of courier services. (This is applicable for
Bills drawn under Letter of Credit.
2. Import Clients who failed to
1 A. Beneficiary bank (Nominated bank should send
receive the Documents from swift message to applicant bank informing:
Overseas Banks. As the Courier a. Non availability of courier service due to current
Services got halted ,We are scenario.
getting swift messages from b. Bill is Credit Complied (clean bill/non discrepant) &
overseas negotiating bankers submitted within the permitted period.
B. Beneficiary bank may send scan image of the export
stating that they are unable to
documents to the LC Issuance bank after obtaining
dispatch the documents due to the authorization from the beneficiary..Beneficiary bank
non-availability of courier service should also seek further instructions from LC opening
to India. bank.

3. Extension in Due Dates for the 2. Bank should follow their internal policy & guidelines of
Purchased/Negotiated/Discounted specific shipping company.
Export bills which are already
dispatched. (Sight/ Usance. Many
export clients are approaching us
with requests to extend the due
dates of
purchased/Negotiated/Discounted
Export Bills. As per revised FEDAI
guidelines , Extension in due date
of purchased bills is not permitted
once purchased/Negotiated/
3. The FEDAI Rules related to Normal Transit Period.
Discounted .
Other than the above context, due date may change on
Considering the present scenario account of other reasons subject to the compliance of
and many of the counter parties guidelines laid down regarding the cause necessitating
(Buyers. are unable to effect the such change in due date
payments on the fixed due dates .
Can the extension in due dates for
such scenarios be permitted at AD
Level based on the requests
received from Indian Exporter?
4. No, no notification has been issued to date on this
4. Interest Equalization ending by matter.
31.03.2020. Interest Equalization
 granted to eligible exporters is
getting ending by 31.03.2020.
Please inform if any further
notification received with regard to
this.

10 16/4/2020 Relaxation for LEI Renewals –On We at FEDAI appreciate the difficulties banks as well as
account of the COVID lockdown, corporates are facing in managing the risks and to keep
many corporates are unable to the markets functioning smoothly in these difficult times.
apply For renewal of their LEI
number. The constraints are on As regards renewal of LEI we are given to understand
account of the following reasons: that the process is quite simple, no additional
documents are required in majority of the cases. CCIL
[Link] to lockdown, corporates are has confirmed that turn-around time for the process,
not able to access office Systems after client has submitted online request and paid the
for renewal activity. requisite fee online, is just 1-2 days and they are able to
2. Corporates are finding it difficult
process the request even during these difficult times
to arrange for MOA/AOA/ Audited
Financial statements as required with no backlog at their end for renewal requests of
in cases for LEI renewals. Maturing LEIs. We suggest, that you may advise
We thereby request that any LEI corporates who still may be facing difficulties, to contact
expiring after February 29, 2020 concerned officials of CCIL, who are available, would be
be considered auto renewed till able to guide and can be reached at following landline
June 30, 2020. numbers 022-61546632/ 61546636/61546469.

Still, in case of any specific issue, please feel free to

write back or call us.

11 20/4/2020 FEDAI Special Circular ref. SPL As per SPL No.2/BV/2020 dated 19th March 2020
No.2 /BV/2020 dated 19th March superseded with revised SPL-04/COVID19
2020 - Temporary relaxations in Relaxations/2020 dated 15th April 2020. The relaxations
Forex regulations', we request are based on RBI advices to FEDAI and do not have any
your assistance on a few below scope for further leniency.
questions.
In light of the above, please find below clarification on
1. For a client hedge transaction the queries raised by you:-
having a maturity of less than 60
days:

a. We would request you to clarify a. As per said circular AD Banks may allow time up to
if the underlying documentation 60 days from the date of booking or date of maturity of
can be obtained from the clients contract whichever is earlier for production of underlying
maximum upto 60 days from the documents by corporates.
date of the transaction even in
such cases.
b. The gain on cancellation of the forward contract if any
b. In case of non-receipt of
may be passed on to the customer provided
documents by 15th day, the gains
documentary evidence has been submitted on or before
were not passed on to the client.
60 days or date of maturity of the contract whichever is
Can a similar position be taken by
earlier and hence where underlying documents have not
extending 15 days' timeline to upto
been provided within the permitted period, gain cannot
60 days to align the overall intent
be passed on.
of the Special Circular?
c. The requirement of underlying documents for
contracts booked under are required to provide basic
 details of the underlying transaction in a standardised
format.
2. Simplified Hedging Facility:
Whether the temporary relaxation 2. This requirement has not been waived under the
on extension of timeline for present relaxations.
obtaining underlying
documentation can be extended to
the transactional declaration (as
per FEDAI prescribed format.
obtained from the client dealing
under Simplified Hedging Facility
as well?

12 20/4/2020 Relaxations in taking delivery of FEDAI Circulars SPL No 2/BV/2020 dated 19th March
Forward contracts 2020 and SPL-04/COVID19 Relaxations/2020 dated
15th April 2020.
We refer your Spl Circular no 2 &
4 where in relaxations are allowed Considering relaxation in FEDAI Rule 6.(iv. , now the
in taking delivery in overdue market user is allowed to deliver under Fx Forward
contracts. While taking delivery of Contract on the maturity date or any day during next
Forward contract during the three good treasury days. We agree with your
overdue period Banks are observation that the AD Bank may need to go for B/s or
undertaking Swaps (B/s in case of S/b SWAP to manage their cash flow, due to such
Purchase contract and S/B in case extension. In such an event the AD Bank is free to
of Sale contract..While allowing recover the cost from the concerned client.
customer to utilize contract in
overdue period Banks have to
take into consideration the swap
cost also . As such late delivery
charges are involved in these
cases. We seek your clarification
on our view and collection of Late
delivery charges in these cases.

13 21/04/2020 Refer RBI vide AP(DIR) circular Under the present relaxations given by RBI in forex
no. 27 dated 01 April 2020 guidelines on account of the situation created on
allowing 15 months for export account of the Covid 19 pandemic, there are no
realisation, there are many request relaxations given in FEDAI Rule 6.3. Accordingly you
from exporters (MSME and are required to abide by this rule.
corporates) for extending the due
date and to roll over the forward In case any of your clients are experiencing any stress
contracts. Currently the INR being upon their cash flow management on account of the
depreciated, during roll over of implementation of this rule you may examine whether
forward contracts customer has to there is any scope for giving them any relief under the
pay MTM on the date of maturity of measures announced by RBI vide their Circular
the existing forward contracts as [Link].47/21.04.048/2019-20 dated March
per FEDAI rule 6.3. Many 27, 2020.
customers has informed that due
to the present tightness in the cash
flow, they are unable to bring the
MTM. In the given situation,
request you to kindly take up with
RBI for a solution. Suggestion as
under:
 Customer may pay/receive the
funds(MTM) on the revised
maturity date (with the export
realization and if not received on
the revised due date, the MTM to
be recovered with interest on the
revised due date)

14 24/04/20 As per RBI AP(DIR) Circular no.

29 dated 7th April 2020, we
suggest to formulate common
documentation, annual certificate
from auditor, if require for ensuring
compliance of the regulatory
guidelines.

Seek your guidance on the

following:- 1. Yes, existing FEDAI rules will also be applicable to
the contracts booked under the new hedging guidelines.
1. whether existing FEDAI Rule However, if any FEDAI rule in your view is incongruous
shall be applicable to revised with the new guidelines, we shall be glad if you advise
guidelines? us the same for us to review the position.

2. Regarding the contracts booked upto USD 10 Mio

under the facility provided by Para 2 B (ii) of Annexure
2. As per point 2 (ii) of Annexure
I (mentioned incorrectly as Annexure II in your letter) in
II of the reference circular "For
case of cancellation of such contracts in our view gains
derivative contracts involving INR,
may be passed on without insisting on cash flow.
Authorised Dealers shall allow a
However, while booking as well as cancellation of such
user to book derivative contracts
contracts, AD bank should satisfy itself that such
up to USD 10 million equivalent of
contracts are in line with the business requirements of
notional value (outstanding at any
the client.
point in time. without the need to
establish the existence of Please be guided by the above
underlying exposure.

Kindly clarify in the event of

cancellation whether profit can be
passed on without insisting for
cash flow?

15 30/4/20 RELAXATION IN FEDAI RULE Reference to your query in the trailmail, the relaxation is
NO. 6.4 (iv) Refer to Special in respect of Rule of FEDAI and accordingly AD Banks
Circular No. 2/BV/2020 dated can accept delivery up
19.3.2020 and Special Circular
No. 4/COVID19 Relaxation/2020 > to 3 working days post maturity or pass on Gains if any
dated 15.4.2020.
in case of
In this regard, kindly clarify
whether the AD Banks can accept
> cancellation of contract during the period.
delivery up to 3 working days post
maturity and pass on Gains if any
on account of cancellation during
the period.
16 4/5/2020 Annex I Section 2 B (i) Domestic Our understanding of the proviso for INR FCY swaps in
non-retail corporates having an the present guidelines differs with your understanding in
INR liability may, at their as much as we are of the view that presently the INR
discretion, convert it into a foreign FCY swaps are enabled only for Domestic Non-retail
currency liability through a corporates and not for any other entities.
currency swap.
In our reference made to RBI on the new hedging
- This point is only for companies guidelines, we have requested them to consider
with Networth above 500 cr and allowing Retail Users (NW below 500 cr. to undertake
they can enter into INR to FCY INR to FC swaps where they have economic exposures
Swaps even without a need to or natural hedges.
have a Exports or FCY receivables
All customers including Retail We will revert on hearing from RBI on the matter.
Users can do INR to FCY swaps to
Transform their INR liability if they
have Exports or FCY receivables.

17 4/5/2020 FEDAI Circular SPL-06/ COVID19 The FEDAI circular referred by you in your mail required
Relaxations/2020 dated 22nd April each bank to review the temporary relaxations in
2020 Foreign exchange regulations given on account of the
situation created by the Covid 19 pandemic in the light
As temporary relaxations provided of the relaxations in the lockdown given by the various
in forex regulations on account of state and Central government. We trust you have done
the Novel Coronavirus COVID-19. so and have reached the conclusion to continue the
We have examined the relaxations relaxations in case of your bank's clients.
given to the eligible clients vide the
above Circular. We are of the
opinion that the relaxations are still
required to be extended to all
eligible clients under the referred
circular in full till full normalcy is
restored.

18 11/05/2020 In light of recent RBI guidelines on We refer your trailmail dated 08 May 2020 which we are
Interbank and Risk Management, reading in context of the correspondence resting with
we will be able to offer hedge the our reply dated 22 October 2019 to your email dated 13
exposure of FPI based on buy September 2019. You are seeking guidance now in the
confirmation of trade for its light of the Revised forex hedging guidelines circulated
anticipated exposure. This will by RBI vide their Circular A.P.(DIR Series) Circular No.
help them to hedge their currency 29 dated April 7, 2020.
exposure on the day they entered
into buy contract. Of course, this In this connection please note that the guidelines which
will be effective from 1st June are to come in force w.e.f. 01 June 2020 are common
2020. for both residents and non-residents except where the
circular explicitly states otherwise and allow AD to offer
We request your endorsement on Derivative Contracts to users for transactions which are
our above understanding. expected to be entered into in the future under
Anticipated exposure.

As such, Non resident FPIs would now be allowed to

book derivative contracts to hedge their exchange risk
as per their classification under Anticipated exposure as
long as AD Bank is convinced about the genuineness of
the requirement and the FPI is able to fulfill all other
requirements as stated in the said notification.
19 11/05/2020 We have come across a Press Please find Notification reference no. S.O.1278(E) dated
Release dated 18/04/2020 22 April 2020 issued by Ministry of Finance,
(attached) issued by the Ministry of Government of India. The same is available on following
Commerce and Industry wherein link:
the Government has amended the [Link]
extant FDI policy for curbing
opportunistic takeovers/
acquisitions of Indian companies
due to the current COVID-19
pandemic.

As per the Press release ibid, the

above decision will take effect from
the date of FEMA notification.
Since we haven't come across any
such notification on RBI website,
we are writing this mail to your
good office for clarification as to
whether the transaction should be
undertaken under the automatic
route as per the FDI policy before
issuance of this press release or
under Government approval route
as per the above Press Release.

20 13/05/2020 With the truncated timings circular, The extended market timings announced by RBI vide
can we still allow both interbank their circular A.P. (DIR Series) Circular No. 15 and
and merchant client dealings FEDAI AR Circular No. [Link]/2020 continue to be
outside the bracket of (normal operative. Only the normal market timings have been
market hours of 10 to 2 pm) basis curtailed by RBI as from 10.00AM to 2.00PM. Banks
Bank's internal Policy or does it may continue to do Forex transactions with clients as
mean that the RBI circular well as other banks beyond these timings as per their
released for voluntary forex market own internal policies in conformity with the above
timing extension needs to be kept circulars.
in abeyance and we need to allow
forex deals only from 10 to 2
similar to practice followed prior to
the extended timings circular
(Earlier timings was 9 am to 4.30
pm for merchant / 5.00 pm for
interbank.)

21 13/12/2020 One of our customers, has It will be in order to convert the funds received in Euro
received forex earnings in EUR.. for crediting in an EEFC Account maintained in USD
following the regulations laid down in respect of credits
We seek your clarification whether to client accounts.
it is in order to convert the EUR
amount in USD as per current
market rate and then credit USD in
EEFC account as per beneficiary
instruction.

22 13/05/2020 reference to RBI circular no: A.P. Benefit of extended period of export realisation by
(DIR Series) Circular No.27 dated default does not extend the present period of one year
April 01,2020 post-shipment export credit finance. Therefore, the post
shipment finance like EBD, FOBN shall cease to be
 On the basis of above mentioned export credit beyond 12 months from date of shipment
circular, can benefit be passed on and in any case becomes an overdue export credit
in cases of the post shipment account beyond 15 months from date of shipment.
finance like EBD, FOBN etc? If
yes, then whether, it has to be The complied drawing under LC is required to be
linked with the operating cycle of honoured on due date as fixed under Credit's terms,
the customer. unless the LC Beneficiary agrees with Issuing
Bank/Confirming Bank to settle the amount due on
Further, can the above benefit of different date. However, such payment beyond the due
extension be passed on to the date will remove the transaction from the ambit of the LC
export bills under LC? and will no longer be governed by the provisions of UCP
600. Therefore, such payments beyond due date may
be allowed only in exceptional cases and with due
consideration of the risks arising from the transaction
coming outside the LC.

[Please note that RBI vide their circular dated 23 May

2020 increase the maximum permissible period of pre-
shipment and post-shipment export credit sanctioned by
banks from one year to 15 months]

23 25/05/2020 Resident Foreign Currency We have since reconsidered the guidelines issued vide
Account by RBI vide their FED Master Direction No. 14/2015-16”
dated January 1, 2016 - “Master Direction - Deposits and
As per para 3.2 of RBI Master Accounts (Updated as on January 9, 2020 and we
Directions on Deposits and concur with your view that a person who has never been
Accounts dated 01st Jan 2016 a non-resident is not eligible to open a RFC account.
However, ‘a fund inherited from or gifted by a person
Please clarify that whether, a
resident outside India’ which is the amount under
person resident in India (who has
reference in your earlier email dated 11th May 2020 is
never been an NRI. claims that he
not a eligible credit in a EEFC account and therefore
is eligible to park in RFC account
your client cannot open a EEFC account for this
the funds inherited from or gifted
purpose.
by a person resident outside India.
You may refer to the Master Direction referred to above
Our contention is that he can park and examine whether he may open a RFC (Domestic.
it only in EEFC account as he is a account if he satisfies the eligibility for opening such an
resident and not a returning NRI. account laid down therein.

We seek your guidance and

request you to share any specific
notification indicating that only
returning NRIs are eligible to open
RFC account.
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 5th March 2020

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/ Guidelines
issued by RBI/FEDAI and other authorities from time to time)

Sr.
Date of Reply Query FEDAI Response
No.
1 23/01/2020 Clarification on Export Documents - Name We consulted with Reserve Bank of India
on shipping bill where consignee / buyer which has since responded as below:
name either mentioned in short for QUOTE
(abbreviations) or as ‘To Order’. Other We advise that RBI has not prescribed any
documents like Invoice and Transport documentation for handling of shipping bill
documents have the full details of the by AD banks nor prescribed capturing not
consignee/buyer. otherwise of any data fields by A.D. banks.
You will appreciate that it is for the
respective AD Bank to comply with their
internal due diligence policy to satisfy
them- selves about bonafides of the
transaction while adhering to provisions of
FEMA 1999/ Foreign Trade Policy/
Handbook of procedure and any guidelines
issued by concerned Government
Authorities in this regard.
UNQUOTE
Considering above response of the RBI,
we are of the opinion that the AD Bank
may accept request from their customers
(exporters) recording overseas buyer's
name on Shipping Bills either in 'Short
forms (abbreviations)' or as 'To Order'; on
selective basis ensuring that such
exceptional practice does not constrain in
any way your bank from complying any
statutory or regulatory guidelines.
2 23/01/2020 Loans against FCNR Deposits - When the As per our knowledge, there is no
deposit is hedged by the Non-resident restriction by RBI on AD bank from lending
depositor by forward Contracts. against FCNR(B) Deposit to NRI Account
Holder, wherein the balances are hedged
via forward contracts.
3 24/01/2020 FEMA Declaration- We advise you to please refer FEDAI
Special Circular No. FEMA/SPL-55/2000
Kindly clarify whether one time declaration dated 19th June 2000 issued on subject
can be obtained from the regular matter 'Declaration-cum-Undertaking to be
customers on a yearly basis. If yes please obtained by Authorised Dealers'. This
provide specific format circular is also available in the FEDAI
Compendium of Circulars, which is
available on our website for member banks
after login.
4 27/01/2020 Handling of Nostro credits of FCRA under In ordinary circumstances if funds cannot
PRC Prior Reference Category which be applied by AD Bank they are to be
requires prior permission of Ministry of remitted back to the remitter according to
Home Affairs (MHA) and some of the FEDAI Rule No. 4 as well as the internal
credits are under Prior Reference Category policy of respective bank.
(PRC) Three credits are pending in Nostro However, in the instant case you have not
since 2015-16 for clearance from MHA . been able to apply inward remittances
Please advise whether to hold the credit in funds due to certain FCRA Regulations
Nostro or return the funds. and specifically not permitted to credit to
the beneficiary's account by MHA. Under
the circumstances, FEDAI is not the
right authority to advise whether you
should hold these funds or repatriate the
same and you may use your own judgment
in the matter or seek MHA advise in the
matter.
5 28/02/2020 Merchanting Trade Transactions - RBI 1. The para 2(i) of RBI AP(Dir) Circular No.
circular dated 23rd Jan 2020 20 dated January 23,2020 specifically laid
Query- in reference to point [Link] of circular down directives that the goods acquire
whether the goods can be brought into the should not enter the Domestic Tariff Area.
Domestic Tariff Area (DTA) for specific Guidelines do not provide for any
processing/ value - addition, even though relaxation in the requirement for any
the circular states (clause 2.i) that the processing/value addition.
goods shall not enter the DTA.
2)Query- in reference to point 2.v of 2. In context of the para 2(v) of RBI AP(Dir
circular whether AD bank can call for the Series) Circular No. 20 dated January 23,
originals of the documents, OR in case the 2020, we do not see the scope of query.
originals are unavailable, the non- Please elaborate your query since it is not
negotiable copies of the documents duly clear.
certified by the bank handling the
documents, OR if the original as well as
non-negotiable copy of the transport
document is unavailable, then the bank
may rely on an online verification of Bill of
Lading/ Airway Bill on the website of
International Maritime Bureau or Airline
web check?
6 30/01/2020 Query on obtaining Kimberly Process RBI guidelines lay down requirements for
Certification related to rough diamonds : Kimberley certificates in the case of
Whether it is mandatory to obtain a imports into India and exports out of India.
Kimberly Process certification before To the best of our knowledge, there are no
handling said local remittance in USD from RBI guidelines regarding the obtention or
DDA, related to rough diamonds since otherwise of the Kimberley certificates in
import of the goods has already taken domestic trade of rough diamonds. You
place in India. may check industry practice and regulatory
guidance from GJEPC (Gems and
Jewellery Export Promotion Council).
7 04/02/2020 Borrowing by an individual resident from As per the extant directives of RBI, the
overseas NRI relative : individual resident borrower in India can
.Whether the repayment can be made in repay loan availed in foreign currency and
FCY to overseas account of the lender by remit amount due to
an individual resident borrower. his NRI Relative (i.e. lender) overseas as
well as credit in NRE or FCNR Account of
such NRI Relative; provided the borrowing
was in compliance of contemporary FEMA
Directives applicable at the time of
borrowing.
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 21st January 2020

(Disclaimer: Member Banks are requested to refer to the latest Circular / Notifications / Guidelines
issued by RBI/FEDAI and other authorities from time to time)

Sr.
Date of Reply Query FEDAI’s Response
No.
th
List of documents for import payment – If, On 9 December 2019 you informed that
a company X in US are the owners of the referred transaction is related to
1 13/12/2019 goods but the goods are already available purchase of empty container directly from
in India with company(y). So the buyer will a US company by an Indian Company,
receive the goods from company (y) in accordingly we asked you to clarify :
India but FCY payment has to be done to 1) Will the Indian Buyer (Resident entity)
company (X) in US going to file the Bill of Entry for
purchasing the empty container from non
– resident entity.
2)Please collect complete information
from your client about the transaction
before referring the same to FEDAI
In the above regard we have not received
th
revert/respond till 13 December 2019,
we advise that in future please approach
this office with query giving full details of
the transaction and through the FEDAI
nodal officer identified in your bank.
Foreign Currency A/c opened by unit The AD Bank in India is expected to open
located in SEZ - Foreign currency accounts of a person
2 13/12/2019 As per Clause (D) of RBI Notification No. resident in India as per regulations laid
FEMA 10(R)/2015-RB dated January 21, down in RBI Notification No. FEMA
2016, units in Special Economic Zones 10(R)/2015-RB dated January 21, 2016.
(SEZs) cannot open or maintain EEFC
Account. Instead, units located in SEZ can The regulations stipulate the different
open a Foreign Currency Account with an categories of such accounts with different
Authorized Dealer in India subject to respective instructions governing their
certain terms and conditions as spelt out in operation. These regulations do not at any
the Notification. point make the instructions specifically
Whether the condition of conversion of issued for EEFC, DDA and RFC accounts
balances in EEFC Account as spelt out in vide RBI Circular A.P. (DIR Series)
A.P. (DIR Series) Circular No.12 dated Circular No. 12 dated 31.07.2012
31.07.2012 is applicable also to Foreign applicable to other Foreign Currency
Currency Account opened by units in SEZ? Accounts.

In the circumstances, we are unable to

understand why you are stretching the
same to be applicable to Foreign Currency
Accounts maintained by SEZs and shall be
glad to be advised the reason for your
query.
forward contracts booked for importer As per the extant directives under FEMA,
customers Party 'A' Now A is unable to Fx. Forward Contract booked by the
3 13/12/2019 take delivery of full amount of Forward specific customer with their AD Bank can
Sale Contract booked Whether the said not be used by any other person/market-
unutilised forward contract amount can be user.
used by Party 'B' against the unhedged Therefore, party other than the particular
amount subject to consent from both the customer /counter-party to existing
parties. contract can not use the Fx. Forward
Contract in a example explained in your
above referred email.
Banks are quoting rates for forex The Fx Exchange Cash Rate are offered
transactions to be settled on cash basis to by the AD Bank to their client for instant
4 16/12/2019 corporate clients. These transactions are application where the documents/papers
getting settled during the day after related to the transaction have been
submission of requisite documents by the handed over to the respective AD Bank.
clients. As these deals are marked for The AD Bank is expected to intimate their
delivery and settled on the same day customer the Fx. Exchange Cash Rate and
 Whether contract confirmation for above go ahead with the transaction received
cash deals are required. from their customer, unless the bank
receives instructions to the contrary before
processing such transaction.
In the circumstances, no need to
exchange contract confirmations for these
cash deals provided the documents
/papers relating to the underlying
transaction have already been handed
over to the AD Bank.
Clarification on ODI transaction where one The extant directive under FEMA does not
of the foreign party is from Pakistan. restrict Overseas Direct Investment by
5 16/12/2019 eligible Indian Party on the ground that one
of the investors is a resident of Pakistan, if
the investment destination is not Pakistan.
Accordingly, such investments can be
done under the automatic route subject to
the other provisions of the guidelines laid
down by Reserve Bank of India for
Overseas Direct Investment are complied
with.
Since the details regarding the transaction
given in your email are very sketchy, our
above reply to your query should be
interpreted as limited to
the specific issue mentioned in your email.
Clarification on lodgement of Export bill - The AD Bank is expected to ensure that
Invoice value is more than Shipping bill value declared on various accounts
6 18/12/2019 value. Whether bank lodge export bill as (information as received in EDPMS such
per Invoice value & issue e-BRC for the as amount of FOB Value of goods, Freight,
Invoice value? Insurance, Commission, Discount,
Deduction or Packaging Charge) must be
consistent with value declared in the
invoice, consolidated or severally.
As regards to issuing of eBRC, please be
guided by;
1. The instructions issued by DGFT in the
FAQ on eBRC as available on DGFT
Website.,
2. In specific, please also ensure
compliance of instructions as laid down
under para A.4 of DGFT Policy Circular
No.06(RE-2012)2009-14 dated 10.10.2012
and
3. Reserve Bank of India A. P. (DIR
Series) Circular No. 04 dated September
15, 2017
While responding to a query raised on LEI The matter was under reference &
by one of the member banks on October discussion with Reserve Bank of India in
7 27/12/2019 14, 2019, the following has been clarified context to the similar query from another
as minutes of meeting held on November AD Bank, which was replied by us 14
1,2019. As per the extant guidelines ,when October 2019. During course of our recent
a customer is non-compliant in meeting the discussions with RBI officials, it is clarified
regulatory requirements, clients may be that in the case of transactions where
permitted to cancel the existing deals. For further action viz. Early delivery or
eg., cancellation, either requested by
1. When the cancellation limit under PP customers or initiated by Bank due to
exceeded beyond 75% default on client's part to take delivery on
2. When a deal is cancelled even before due date, on transactions which were
submitting the underlying originated either before the onset of LEI
documents. requirements or at a time client had valid
In all the above instances, though Bank LEI may be permitted even if client doesn't
may permit the clients to cancel the deals , have LEI or LEI number has since lapsed.
the gains are put on hold or forfeited . However, any action which is equivalent to
Hence in line with the same, we are of the originating a fresh transaction viz.
view that the client may be permitted to extension of a forward contract may not be
either partially or fully cancel the deal /take permitted unless client has a LEI which is
 early delivery before the actual maturity of valid as on the date.
the deal. But the benefit of cancellation or Therefore, our clarification dated 14
the early delivery won't be passed on October 2019, which is referred in your
unless the client complies with LEI email now stands revised as per the
requirement. Please clarify. clarification given by the RBI and quoted
above.
AD bank received a LC , in which clause The information in field 41.D does not
41D (Credit Available with) has been restrict your bank from converting the pre-
8 31/12/2019 mentioned as issuing Bank name itself, shipment in to post-shipment export credit;
kindly advise where to proceeds with within the sanctioned credit facility to the
negotiating the bills submitted under the exporter.
LC, have financed Packing Credit facilities
to the exporter However, negotiation of export bill under
the letter of credit is subject to UCP 600
and considering the present case where
the LC is not made available to your bank,
it would be inappropriate on your part to
negotiate the export bill taking exposure on
LC Issuing Bank.
INCO terms 2020 whether AD banks Incoterms are a set of rules which define
should adopt the new INCO term with the responsibilities of sellers and buyers
9 09/01/2020 immediate effect for Foreign LC and for the delivery of goods under sales
Domestic LC contracts.
Though Incoterms 2020 has come in force
from 01 January 2020, contracts made
under Inco terms 2010 and any other
previous versions also continue to be valid
and parties to a contract for the sale of
goods can agree to choose any version of
the Incoterms rules.
Issuing bank are required to issue LC as
per buyer instructions mentioned in LC
application and sales contract and you
may proceed accordingly. However, the
version of Inco terms used is required to
be stated.
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee Meeting held on 11th December 2019

(Disclaimer: Member Banks are requested to refer to the latest Circulars / Notifications / Guidelines
issued by RBI/FEDAI and other authorities from time to time)

[Link]. Date of Reply Query FEDAI’s Response

1 1st Nov. 2019 Clarification on LEI - Whether the As per RBI guidelines, LEI is mandatory for all Fx
threshold of USD1 mio. needs to be OTC derivative transactions irrespective of value
monitored by the Bank before booking of transaction and non derivative OTC client Fx
of FX transactions (Cash / Tom / Spot) transactions with amount equivalent to or
or the same needs to be checked at exceeding USD 1 million. We believe your query
the time of processing of transaction/ pertains to non derivative i.e. Cash/Tom/Spot
underlying level. transaction only where transaction amount is
relevant to decide the need for LEI.
a) Client does single rate booking of
$1.5 mio for 3 different underlying/ Our views are as under:
remittances of $ 0.5 mio each. a)
Since the criteria is based on transaction
b) Client does 3 separate rate booking notional, it would be in order for AD Bank to ask
of $0.5 mio each for a single for LEI details if transaction notional is equal to or
underlying/ remittance of $1.5 mio. higher than USD 1 mio, irrespective of the fact if
the notional comprises of a single or multiple
c) Client does multiple rate bookings underlying.
throughout the day for multiple
remittances/ underlying each being b & c)
under $1 mio. but aggregating over $ However, the bank should be able either before
1mio in a single day - It would be or after the deals bookings, judge whether the
practically difficult for AD Bank to client has designed transactions with intent to
ascertain the total exposure client avoid requirement of LEI. In case Bank is of the
may be hedging over period of time view that intent to execute multiple deals of
and Bank may be guided only by the small value notional is to circumvent the
transaction notional. guidelines bank may ask for LEI Number.
2 5th Nov. 2019 There is deviation in Invoice value in We would like to invite your attention towards
BOE and remittance amount in case query answered by the RBI under Q.82 in at AD
import of Gold, Silver and Precious Bank Conference held on 17 February 2018 at
Metal, due to clearance of goods on Pune. We also suggest you to be guided by
provision value. Please clarify, if the clarification issued by the RBI vide letter [Link].
deviation to be considered as write off Trade/1230/05.53.0002019-20 dated 5th
and if yes, what is the threshold for September 2019.
such deviation in case of import of
gold/silver and precious metals.
3 18th Nov. 2019 Investment in Share warrants of an The investment under LRS by individual is
overseas entity under ODI Route stipulated only in the equity shares and
compulsorily convertible preference shares of a
Joint Venture (JV) OR Wholly Owned Subsidiary
(WOS) outside India.
The investment “warrants” cannot be Equated
with Equity, hence remittances for investment in
share Warrants cannot be permitted under LRS
4 18th Nov. 2019 Can open an LC with payment terms Article 3 of UCP 600 refers to the words “from”
”Within 90 days from BL date” and “after” to determine a maturity date
following the date of shipment for calculation of
the maturity period. The word “within” is not
used in UCP600.
However, as per para A14 b.(i.& ii) of ISBP,ICC
Publication 745, if the payment terms of the
credit is “within 90 days from bill of lading date”
 as an issuing bank you are required to honour the
complying presentation within the period
starting from the date of shipment till 90th day
from the date of shipment, if the reimbursement
is claimed by negotiating /confirming bank.
In view of the above in our opinion you may issue
LC using terms as “within 90 days from bill of
lading date”. However bank may have to
consider interest component as per RBI
guidelines while issuing such an LC.
5 27th Nov. 2019 Eligible Credits in Packing Credit Ref. para 1.1.4 of RBI Master Circular DBR
account - The customer has been [Link].14/04.02.002/2015-16 dated July 1,
granted an Input Tax Credit (ITC) 2015, Packing Credit / Pre-shipment Credit
Refund and wants the amount granted to an exporter may be liquidated out of
credited to their Running Packing proceeds of bills drawn for the exported
credit account. commodities on its purchase, discount etc.,
thereby converting pre-shipment credit into
post-shipment credit.
Some exceptions are allowed for cases where
packing credit is in excess of export value. Based
on the inputs provided vide your email the
specific case under discussions doesn't fall in that
category.
As such, we are of the opinion that, client
request is untenable. Such practices can result
into potential misuse of packing credit facility.
6 4th Dec. 2019 Clarifications related to all-in-cost for With reference to clarification sought vide your
Trade Credits. email dated 30th September 2019, we have
consulted with RBI on whether the cost to the TC
Borrower as well ECB Borrower on account of
GST is required to be considered in All-in-Cost.
The Reserve Bank has since responded in the
matter vide their email dated 27th November
2019 and clarified as follows:
Quote
With reference to the trailing e-email, we advise
that GST need not be included as a part of all in
cost.
Unquote
Further, as regards to your suggestion (i) on
excluding Guarantee Commission from all –in-
cost under a Trade Credit Transaction paid in INR
(ii) to apply the Benchmark Rate for 6 month
tenor; we would not represent the matter with
RBI without supporting contentions. We also do
not see merits in suggesting on cost reduction
related issues for borrowers, as representative
body of AD Banks.
Please be guided as above.
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 1st November 2019

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/ Guidelines
issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

no Reply

1 20/09/2019 FEDAI Rule no. 2(b)Explanation on FEDAI rule makes it mandatory for
application of TT sale Rule on banks to apply the TT selling rate for
Crystallisation and passing the exchange crystallisation of unpaid export bills
gain, if any, on crystallisation of unpaid which translates into passing on the
export bills. resultant gain or loss to the customer.

2 24/09/2019 Delayed Import payment – What process The issue which was discussed in the
should be followed when a customer FEDAI Technical Committee held on
approaches AD Bank to make overdue and subsequently referred to the
import payment without seeking extension Reserve Bank of India. RBI vide their
in due date? letter reference –
Ref..[Link]/1414/
05.31.078/2019-20 dated 16th
September 2019, advised us as under
on the captioned matter.
Quote - It is advised that the
guidelines in this regard are being
reviewed. We shall revert to you in
due course. - Unquote
Accordingly, we will advise you when
we hear from RBI in the matter.
3 26/09/2019 ODI–activities allowed to be undertaken The FED Master Direction No.
by overseas investee entities. 15/2015-16 dated January 1, 2016
lays down guidelines in respect of
Direct Investment by Residents in
Joint Venture (JV) /Wholly Owned
Subsidiary (WOS) Abroad. Please
refer to the circular.
4 26/09/2019 Reporting of transactions under LRS for Ref. Foreign Exchange current
pilgrimage to Mount Kailash – account transactions Rule 2000 and
Via Nepal, remittance in INR RBI FED email Box clarification dated
Via Tibet, remittance in USD 07th May 2018,remittance in Indian
In both cases remittance made at the Rupees to Nepal is outside the
request of a TRUST arranging the “Drawl” of Foreign Exchange. hence in
pilgrimage for residents. our opinion, not to be included in LRS.
Further in case of USD remittances, in
light of RBI’s clarification dated 07th
May 2018, AD Bank is allowed to
remit under LRS for certain individual
person at request of other entity,
provided statutory documents (such
as FEMA declaration & Form A2)
signed by the respective individual/s is
/are obtained by the bank.
5 27/09/2019 As per Notification FEMA 10R/2015-RB In light of guidelines laid down under
dated 21st January 2016 whether Re-discounting of Export Bills Abroad
proceeds of export bills discounted Scheme (EBR) vide para 6.1.5 and
without recourse to the exporter (drawn 6.1.7 of RBI Master Circular
under LC) would be a permissible credit to [Link].14/04.02. 002/2015-
EEFC account. Whether bank can 16 dated July 1, 2015, we observed
liquidate the discounted liability and that;
realise the shipping bill once the export 1. The extant directives issued by
proceeds are received from the LC RBI(DBR) refer to Discounting Without
issuing bank. Recourse from abroad under BAF or
any other facility and not applicable to
onshore Without Recourse
Discounting. Key consideration being
realisation of export proceeds from
abroad and transfer of default risk to
overseas entity. As such, intent is not
to allow credit of export proceeds to
EEFC account till the proceeds are
realised from overseas either through
non recourse discounting or factoring
and the risk of payment default moves
out of books of the AD Bank in India to
overseas Bank/FI/Import factor.
2. The list of Permissible Credits to
EEFC account listed in the extant
directives contained in FEMA (10)R
doesn't support crediting of export bill
discounted proceeds in the EEFC
Account..
6 7/10/2019 Reporting timelines and source of As advised by RBI, the required return
submitting the report to RBI for Fx. Retail as per Annexure of Circular
Platform. [Link].16/02.03.225/2018-19
dated 20.06.2019 should be submitted
by AD Banks within a week from the
end of each quarter. Source of
submitting the report, is an operational
procedure for bank to formalise and
FEDAI can’t provide guidance in the
matter.
7 14/10/2019 Who will issue Form A3 for payment As in the case of transfers from INR
under Vostro Account to another Vostro Vostro to Vostro account in respect of
Account for clean instrument towards clean instruments, in other cases viz.
settlement of OIS done by offshore the transfer from INR Vostro to Vostro
counterparty with onshore Bank account in respect of payment for
settlement or OIS also, it is the
remitting bank which will issue the A3
Form
8 14/10/2019 LEI –Clarification * since revised as below
1)If customer's LEI have expired due to The existing Fx. Hedge Contract of
annual expiry and has not been renewed the customer where the validity of LEI
or under process of renewal and have the Number of such customer is lapsed,
following post trade events for the we advise you as under:
transactions which were booked when the 1. In case of customer induced
customer had a valid LEI: transactions, AD Bank should refuse
-Early delivery to utilize the existing to carry out the requested activity on
contract the existing Fx. Hedge Contract
-Cancellation of the existing contract - unless the LEI number is renewed.
initiated by the client either before or on 2. AD Bank needs to induce the
maturity activity on the existing Fx. Hedge
-Cancellation by the bank on maturity of Contract for meeting regulatory
the contract to crystallize the exposure as compliance, it is not advisable to
 per existing FEDAI guidelines to manage violate the regulatory requirement for
contracts outstanding beyond maturity - In reason that the customer has not
case not already cancelled by the client. obtained or renewed the LEI Number.
In general, it is expected that your
bank's clients will keep a track of the
validity of their LEI and get the same
well before the expiry of the same.
*The above clarification is revised
w.e.f. 27th December 2019 in
consultation of RBI as below :
The matter was referred to Reserve
Bank of India and during course of our
recent discussions with RBI officials.
During course of our recent discussions
with RBI officials, it is clarified that in
the case of transactions where
further action viz. Early delivery or
cancellation, either requested by
customers or initiated by Bank due
to default on client's part to take
delivery on due date, on transactions
which were originated either before
the onset of LEI requirements or at a
time client had valid LEI may be
permitted even if client doesn't have
LEI or LEI number has since lapsed.

However, any action which is equivalent

to originating a fresh transaction viz.
extension of a forward contract may not
be permitted unless client has a LEI
which is valid as on the date.

Therefore, our clarification offered on

14/10/2019 stands revised as per the
clarification given by the RBI and
quoted above.
9 14/10/2019 Forward Contracts under Special The matter was reviewed in
Dispensation Scheme – Applicability of consultation with RBI and it was
Annual Statutory Auditors certificate clarified that instructions as stated
under Para B (b) of FMRD Master
Direction no.1/2016-17 as revised
from time to time, are applicable only
to contracts booked under "Contracted
Exposure" as referred to vide Para A
1) of the circular. As such, Authorised
Dealer Banks may not insist for
Annual Certificate from the Statutory
Auditors for Fx. Hedge Contracts
booked under Special Dispensation.
10 22/10/2019 Time limit for normal Import Payment For query number 1 please refer the
1)If Importer approached AD today for queries raised by AD Banks in Annual
payment of invoice raised prior to IDPMS Conferences of AD Banks, with
2)If import payment pending due to specific reference to Q.77 & Q.112 in
dispute/court case AD conference held on Feb.17’2018
3)BoE is dated 31/12/2016 delay in Query number 2 & 3 bank may follow
payment due to dispute & importer has para B.5.1 and B.5.4 FED Master
not requested for extension for payment. Direction No. 17/2016-17 dated
January 1, 2016(as updated from time
to time)
11 22/10/2019 1)For new trades, can FPI do FX Hedge Refer the guidelines on hedging
 immediately on the same day as FPI facilities for Foreign Portfolio Investors
bought the bond? (FPIs) in Section II of Part A of the
2)For substitution done on bonds with FX RBI Master Direction on Risk
hedge, do FPI need to unwind the FX Management and Interbank Dealings.
forward done on the original trade? 1. As regards to Fx. Hedge with
If so, do FPI unwind partially or in full purpose to acquiring the Indian Rupee
amount if only part of the original bond is for facilitating investment in on-shore
substituted? And will the FX hedge security market, the extant guidelines
unwind happen on the same day as FPI does not restrict AD Bank from
sell the bond? converting FCY in to INR.
As regards to Fx. Hedge for life cycle
events related to investment made by
FPI including repatriation of dividend
or interest or redemption, in under
Para 1, Section II of FMRD Master
Direction No. 1/2016-17 dated July5,
2016 are explicit enough. The AD
Bank undertaking the Fx Hedge
Transaction is expected to abide by
the valuation certificate provided by
designated AD Bank. Since the FPI is
transacting their all business with in
knowledge of designated AD Bank,
valuing the entire investment in equity
and/or debt in India by particular FPI
on a particular date is prerogative of
such designated AD Bank.

The deal (mail) confirmation of trade

as proof for bond holding in our
opinion is not sufficient proof unless
the holding is reflected in the account
of FPI with his custodian.

2. In our opinion the extant guidelines

of the RBI allow Fx. Hedge to continue
as long the exposure hedged does not
exceed in terms of amount and tenor
of underlying investment. RBI
considers the portfolio of FPI as a
dynamic position and you may
accordingly be guided by the Para (c)
of FMRD Master Direction No. 1/2016-
17 dated July 5, 2016.
12 29/10/2019 Delivery period of forward booking Refer FEDAI Rule No. 5.2 (quoted
contract below for ready reference):
QUOTE
"5.2 Option period of delivery Unless
the date of delivery is fixed and
indicated in the contract, option period
may be specified at the discretion of
the customer subject to the condition
that such option period of delivery
shall not extend beyond one
month. ......"
UNQUOTE
 Member Banks Queries with FEDAI’s Response
As presented to the Managing Committee held on 17th September 2019

(Disclaimer: Member Banks are requested to refer to the latest Circular/ Notifications/ Guidelines
issued by RBI/FEDAI and other authorities from time to time)

Sr. Date of Query FEDAI Response

No reply
1 20/8/2019 Acceptability of HAWB while RBI guidelines do not prohibit the
extending post shipment credit to purchase or discounting of a House
exporters. Airway Bill (HAWB) but lays down that
banks may negotiate HAWBs only if the
relative Letter of Credit specifically
provides for negotiation of these
documents in lieu of Airway Bills.
It is essentially AD Banks credit decision
to purchase /discount Non LC export bill.
However, bank should examine basic
difference of Master Airway Bill & House
Airway Bills (HAWBs)
2 5/09/2019 Can AD Bank act in line with We referred the matter to RBI soliciting
regulation number 7.A of RBI their advice whether it would be in order
Notification No. FEMA.3 (R) 2018-RB for an A D Bank in India to lend to OCI
dated December 17,2018 and lend in Cardholder in Indian Rupee, for meeting
Indian Rupees to PIO/OCI for meeting his/her personal requirement, even
his/her personal requirement without though the RBI Master Directions does
the corresponding provision getting not specifically state so. The Reserve
updated in the RBI FED Master Bank vide their letter [Link].
Direction No. 6/2015-16 dated ECBD.1111/03.02.153/2019-20 dated
January 1,2016. August 28, 2019 advised us as under:
QUOTE
In response to the query regarding
lending by AD banks in India to OCI card
holders, we advise that we are in the
process of issuing relevant instructions
and till then, AD Banks may continue to
follow existing instructions.
UNQUOTE
3 12/09/2019 ODI investment by Foreign Currency Any person can draw foreign exchange
notes drawn from money changer in from a money changer authorised by RBI,
India. only for certain non-trade current account
transaction purposes under FEMA.
Therefore bank can obtain specific
approval from the RBI before filling of the
referred ODI case.