FOREX DIGEST

Monthly, Issue No. VI, December 2010

)))20102010)

Merry Christmas & Happy New Year

(JULY 2007) from 1st January, 2011

INCOTERMS 2010 comes into effect

INCOTERMS 2010 will take effect on January 1st, 2011. In comparison to the previous Four Groups viz. E, F, C & D, INCOTERMS will now be separated into 2 Groups those applicable to all modes of transport and those only applicable to sea and inland waterway transport. In all there will be in all a total of 11 INCOTERMS instead of earlier one having 13, with 2 new additions, DAP and DAT and 4 deletions viz. DAF, DDU, DEQ and DES. Applicable for all modes of transport: EXW : ex works FCA : free carrier CPT : carriage paid to CIP : carriage and insurance paid to DAT : delivered at terminal NEW! DAP : delivered at place NEW! DDP : delivered duty paid

IMPORTANT FINANCIAL INDICATORS As on 31.10.2008

RBI increases the Repo Rate by 25 bps to 6.25 percent and Reverse Repo Rate by 25 bps to 5.25 percent with effect from 02 Nov. 2010 SLR 24.00 percent w.e.f 18th Dec. 10 and CRR 6.00 percent w.e.f 24th Apr. 10 Bank Rate kept unchanged at 6 percent GDP growth for 2010-2011 projected at 8 percent Banks BPLR 13.25 percent w.e.f 13 Dec. 2010 Banks Base Rate revised to 9 percent w.e.f 13 Dec. 2010

Only applicable for sea and inland waterway transport: FAS : free alongside ship FOB : free on board CFR : cost and freight CIF : cost, insurance and freight When INCOTERMS 2010 Applies Existing sales contracts: INCOTERMS 2000 will continue to apply, even if performance of the contract will be made in 2011. Sales contracts entered into between September and December 2010: Either the 2000 or 2010 versions can be used. The version the parties agree to utilize, however, should be expressly stated in the sales contract. Sales contracts drafted after January 1, 2011: Any reference to INCOTERMS will be assumed to mean INCOTERMS 2010.

Academy of Excellence

Inventing Methods for Igniting Minds

An initiative of Staff College under the aegis of Wholesale Banking Department (Domestic Foreign Business), BCC, Mumbai

FOREX DIGEST
)))20102010)

Monthly, Issue No. VI, December 2010

Now, all the banks authorized to deal in Exchange are advised to discontinue the submissions of the Our Specialized Integrated Treasury Branch aforementioned statements from the (SITB) has shifted to the new premises situated calendar year 2010 onwards. on 4th and 5th Floors of Baroda Sun Tower, C-34, G Block, Bandra Kurla Complex, Mumbai 400 (A.P. DIR Series Circular No. 29 dt. December 22, 2010) 051 from 20th Dec. 2010.

NEWS YOU CAN USE

(JULY 2007) Foreign

(BCC:BR/102/347 dt. 16th Dec. 2010) Revision of Service Charges

Our Bank has revised the service charges and fees for various services provided by our Bank based on the comparative study of Service Charges in various areas of operation prevalent in other peer banks, charges and fees. With a view to prevent the system of The revised service charges have been cross border inward money tra nsfer into announced vide Circular No. HO:BR:102:208 India from all over the world under the dt. 16.12.2010 and would be effective from MTSS from being used, intentionally or unintentionally, by criminal elements for 15.01.2011. money laundering or terrorist financing Section XI states the various Service Charges activities, it is clarified that whenever for authorized branches for rendering Forex there is suspicion of money laundering or related Services. Further, the Zonal Head is terrorist financing or when other factors permitted to extend further concession of 25% give rise to a belief that the customer on the rates prescribed, subject to the merits of does not, in fact, pose a low risk, APs (Indian Agents) should carry out full the case. scale customer due diligence (CDD) The revised service charges are simple, before making payment of any competitive. All Branches are advised to use this remittance. as an USP for canvassing further Business. Use of International Debit Cards / Store value Cards / Charge Cards / Smart Cards by resident Indians while on a visit outside India These guidelines would also be applicable mutatis mutandis to all Subagents of the Indian Agents under MTSS and will be the sole responsibility of the APs (Indian Agents) to ensure that their Subagents also adhere to these guidelines.

KYC norms / AML standards / Combating the Financing of Terrorism / Obligation of APs under Prevention of Money Laundering Act, (PMLA), 2002 as amended by Prevention of Money Laundering (Amendment) Act, 2009 Cross Border Inward Remittance under Money Transfer Service Scheme (MTSS)

AD Banks are required to submit a statement as on December 31, each year in case the aggregate forex utilization by the (A.P.DIR Series Circular No. 19 and A.P .
International Debit Card holders exceed USD 100,000 in a calendar year.

(FL Series) Circular No. 02 dt. 25th Nov. 2010)

Academy of Excellence

Inventing Methods for Igniting Minds

An initiative of Staff College under the aegis of Wholesale Banking Department (Domestic Foreign Business), BCC, Mumbai

FOREX DIGEST
)))20102010)

Monthly, Issue No. VI, December 2010

Some useful Terminologies

Automated Forex Trading: A method of trading foreign currencies with a computer program that is based on a set of analyses that helps determine whether to buy or sell a currency pair at any one time. Automated forex trading uses a computer program that the trader "teaches" to make decisions based on a set of signals derived from technical analysis charting tools. The signals create a buy or sell Currency Basket: decision when they point in the same direction. A selected group of currencies in which Base Currency: the weighted average is used as a measure of The first currency quoted in a currency pair on the value or the amount of an obligation. A forex. It is also typically considered the currency basket functions as a benchmark for domestic currency or accounting currency. For regional currency movements - its composition accounting purposes, a firm may use the base and weighting depends on its purpose. currency to represent all profits and losses. Exotic Currency: Big Figure: A foreign exchange term for a thinly traded The stem, or whole dollar price, of a quote, currency. Exotic currencies are illiquid, lack often used in reference to foreign currencies or market depth and trade at low volumes. money markets. For example, if a foreign Trading an exotic currency can be expensive, currency was trading at 108.3457 and a money as the bid-ask spread is usually large. market security was trading at 108.6666, both would have big figures of 108. Traders will often Forex Mini Account: not mention the big figure when quoting a A type of brokerage account that is used by security, assuming that other traders know this beginner traders looking to enter the foreign number. In the U.S., the big figure is often exchange market. This account allows the referred to as the handle. investor to take a smaller position in a currency Bank For International Settlements: than if they were to trade the standard lots An international organization fostering the used by those with a regular account. cooperation of central banks and international Generally, a mini account allows the trader to monetary policy makers. Established in 1930, it trade contract sizes of 10,000 units rather than is the oldest international financial organization, the standard 100,000. and was created to administer the transaction of monies according to the Treaty of Leads and Lags: Versailles. Among others, its main goals are to The alteration of normal payment or receipts in promote information sharing and to be a key a FEX transaction because of an expected change in exchange rates. An expected center for economic research. increase in exchange rates is likely to speed up Soft Currency: payments, while an expected decrease in A currency with a value that fluctuates as a exchange rates will probably slow them down. result of the country's political or economic uncertainty. As a result of the of this Mine and Yours: currency's instability, foreign exchange Terms used by floor traders to signify buying dealers tend to avoid it. It is also known as a and selling. Mainly used in forex transactions. "weak currency".

(JULY 2007) A financial institution

Correspondent Bank: that provides services on behalf of another, equal or unequal, financial institution. It can conduct business transactions, accept deposits and gather documents on behalf of the other financial institution. They are more likely to be used to conduct business in foreign countries, and act as a domestic bank's agent abroad.

Academy of Excellence

Inventing Methods for Igniting Minds

An initiative of Staff College under the aegis of Wholesale Banking Department (Domestic Foreign Business), BCC, Mumbai

FOREX DIGEST
)))20102010)

Monthly, Issue No. VI, December 2010

Launching of Rupee Linked Foreign Currency Deposit (RLFCD) Scheme

The Rupee Linked Foreign Currency Deposit (RLFCD) Scheme is launched looking to the opportunity in the prevalent forward exchange market and with a view to maximize the returns to NRI thereby to augment business for the bank. This scheme is in effect from 10th Dec., 2010. Identified Branches are the Category B Branches in India. C Category Branches to contact B Category Branches for placement / transaction.

(JULY 2007) Bank / Term Deposit & FCNR Savings

Deposit for NRIs/PIOs

Launching of Special Campaign: NRE

Our Bank is to participate in the three day event Bhartiya Parvasi Divas to be held at Pargati Maidan, New Delhi from 07/01/2011 to 09/01/2011. Simultaneously, Bank has launched a Special NRE Savings Bank Deposit / FCNR Deposit Campaign during the period from 24/12/2010 to 31/12/2010 with a deposit growth targeted at 27% in NRE deposit segment. With this, Bank proposes to canvass new 7000 NRE Accounts and a deposit target of Request / undertaking to be obtained from the 755 Crores during the Campaign period. NRI customer as per format in Annexure-I of Unique Selling Points: Circular Debit NRE (INR) account, and report to SITB Our Large Intl. presence to facilitate smooth Mumbai for conversion of INR in any of the banking to NRIs whilst their stay abroad. denominated foreign currencies e.g. USD, GBP, All Braches in India & abroad are CBS EUR, Japanese Yen, AUD and CAD as per enabled. customer preference. Minimum USD 10,000 or Fast & convenient remittance facility Rapid funds 2 India. Instant credit to Beneficiary its equivalent account if both remitter & beneficiary having Converted foreign currency as above or fresh account with our Bank. In other case, remittance in foreign currency received from Beneficiary receiving remittance within 48 NRI customer shall be placed under new deposit hours from the instructions received from the Scheme code TD 808 for a period of 12 months. remitter through NEFT / RTGS. The rate of interest payable on such deposit NRI may choose to remit from his desk thru shall be as applicable under our existing FCNR Remit Xpress from USA, UK & Europe. scheme for 12 months Free remittance from cross border if the Book a forward contract with SITB for remitter & beneficiary maintain account with converting of principal foreign currency amount our Bank. in INR for delivery on maturity date of the Free Baroda Connect facility to view and deposit transact in the account even when NRI is Report to SITB the interest amount accrued stationed abroad. and due in foreign currency on the deposit as a Free International Debit Card. separate transaction on due date of deposit for Large ATM net work in India and facility to draw from VISA enabled ATMs of other banks conversion in INR at spot rate Credit the maturity proceeds of the deposit in India & abroad. (comprising principal amount plus interest Facility to obtain Home loan and Loan against earned) in INR in NRE saving account of the deposit, Loan against property to RIs/PIOs depositor on due date. Deposit receipt is to be from branches across India. issued on the usual FCNR security paper and to (BCC:BR:102:343 dt. 14th Dec. 2010) be inscribed as Issued under RLFCD We solicit comments, suggestions and (BCC:BR:102:337 dt. 6th Dec. 2010)
contribution from readers for improving the digest

Academy of Excellence

Inventing Methods for Igniting Minds

An initiative of Staff College under the aegis of Wholesale Banking Department (Domestic Foreign Business), BCC, Mumbai