Roles and Functions Of Foreign Exchange Dealers Association of IndiaSubmitted to: Prof. Murlidharan By Anand Iyer-17 Amogh Garde-29 Ghanshyam Gulecha-30 Nikhil Jain-35 Anju Jnagid-38 The Association has been holding periodic Managing Committee andTechnical Sub-Committee meetings both on policy and on operational matters. Rules of FEDAI also include announcement of daily and periodical rates to its member banks. . Forex Markets b. Training of bank personnel in the areas of Foreign Exchange Business. The foreign exchange market determines the relative values of different currencies. Guidance Committee e. Renovation Committee f. The role and responsibilities of FEDAI are as follows: • • • • • • Formulations of FEDAI guidelines and FEDAI rules for Forex business.ADs) as a self regulatory body and is incorporated under Section 25 of The Companies Act. It's major activities include framing of rules governing the conduct of inter-bank foreign exchange business among banks vis-à-vis public and liaison with RBI for reforms and development of Forex market. Represent member banks on Government/Reserve Bank of India and other bodies. Advisory Committee d.Foreign Exchange Dealers Association of India (FEDAI) was set up in 1958 as an Association of banks dealing in foreign exchange in India (typically called Authorised Dealers . Special Committee The foreign exchange market (forex. 1956. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock. The number of meetings held during the year is as under: Technical Sub-Committees a. FX. Advising/Assisting member banks in settling issues/matters in their dealings. Trade & other transactions c. with the exception of weekends. or currency market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Accreditation of Forex Brokers. other organizations like Fixed Income Money Market and Derivatives Association (FIMMDA). the Forex Association of India and various other market participants. by allowing businesses to convert one currency to another currency. Chief Executive attended the meeting and discussed the current development in the market. and facilitates the carry trade. even though the business's income is in US dollars. FEDAI guidelines play an important role in the functioning of the markets and work in close coordination with Reserve Bank of India (RBI).The primary purpose of the foreign exchange market is to assist international trade and investment. The following is the outcome of the unanimous election: • Indian Overseas Bank • Indian Bank • State Bank of India • Central Bank of India • UCO Bank • Punjab National Bank • HDFC Bank Limited • Standard Chartered Bank FEDAI continues to receive valuable inputs and suggestions from the. Chennai. RBI REPORT FOR THE YEAR APRIL 2008 – MARCH 2009 RBI holds periodic consultations with FEDAI on various issues relating to forex market. It also supports speculation. and which (it has been claimed) may lead to loss of competitiveness in some countries. Chennai for the year 2008-2009. it permits a US business to import British goods and pay Pound Sterling. The Chief Executive had also conducted the election of the FEDAI Local Committee. FEDAI Local Committee Meetings FEDAI Local Committee. For example. in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies. duly discussed at the Local Committee meetings. Local Committees on various guidelines of Reserve Bank of India and other agencies. Brief details of . The Annual General Meeting of FEDAI Local Committee at Chennai was held on Saturday the 14th February 2009. trade related transactions and remittances. e) Working Group on Term Money Market RBI has set up a Working Group on Term Money Market with representatives from banks. Association of Mutual Funds in India. attended the meetings convened by RBI. January 2009 and April 2009. Shri Shivaji Sen. d) Pre-Policy Consultation Meeting convened by Reserve Bank of India (RBI) Pre-Policy Consultation Meeting convened by RBI in respect of Mid-Term review was attended by the Chairman. The Chief Executive has been appointed as a member of the reconstituted Technical Advisory Committee (TAC) of RBI on Money. FEDAI. RBI is the convener of this Working Group. Vice Chairman and Chief Executive in July 2008.2009 The Chairman. by invitation. nonbanking institutions. there is a need to update . Representatives from FIMMDA and PDAI were also invited by RBI for these meetings. Deputy Chief Executive. Fixed Income Money Market and Derivatives Association of India. Chief General Manager. Securities and Exchange Board of India.Chandan Sinha. Shri. as a member of the Working Group. Foreign Exchange and Government Securities Markets. b) Technical Advisory Committee Meeting (TAC) constituted by RBI. September 2008. and Primary Dealers Association of India to review the development of the Term Money Market in India and to identify reasons inhibiting its growth. Additional Vice Chairman and the Chief Executive participated. in the meetings convened by Reserve Bank of India on the eve of the announcement of Governor’s Annual Policy Statement and subsequent reviews. f) Internal Control Guidelines over Foreign Exchange Business (ICG) – Formation of Group for updatation Reserve Bank of India have advised us that. c) RBI User Consultative Group As a member of the RBI’s User Consultative Group.some of the major issues discussed are given below: a) Review of the Annual Policy Statement for the year 2008. in view of the developments in the markets over the years and international developments. Vice Chairman. and to suggest measures for creating an active term money and term repo market. the Deputy Chief Executive attended from time to time the meetings of the Group convened by RBI. which generally discuss operational issues on various types of forex businesses and products. The FAQs prepared jointly by FEDAI and FIMMDA have been forwarded to Reserve Bank of India during February 2009 Banking Sub-Group (BSG) under Indo-Bangladesh Joint Business Council (IBJBC) 7th Meeting of the Banking Sub-Group (BSG) under Indo-Bangladesh Joint Business Council (IBJBC) took place on 7th January 2009 at Mumbai. General Manager (Marketing). as the Group Head. BSG (India) apprised the members that IBJBC was a Standing forum for addressing largely the problems and issues surfacing in the conduct of cross border trade between the two countries. FEDAI jointly with FIMMDA organised two meetings of a few member banks who are active in the derivative markets and finalised the draft of FAQs. this category ofbanks has also been included in the scheme. intricacies and inherent risks related to forex derivative contracts. on the basis of which our recommendations to Reserve Bank of India have since been submitted. . FED. We are happy to state that in the budgetproposed by the Honourable Finance Minister for 2009-10. in consultation with the Ministry of Finance (MoF) intend to educate the users of forex derivative contracts through publication of FAQs and conducting of seminars. The Chief Executive. Banks in the scheme. FEDAI subsequently held a few meetings with member banks. At the request of our Co-operative Bank members. FEDAI and FIMMDA to update the ICG. Efforts to educate the users of forex derivative contracts Reserve Bank of India (RBI). The Chief Executive and Mr S G S Manian. OSD attended the meeting. Shri K Venkataraman. The Group is headed by Shri D Mishra. (our Chairman). FEDAI was requested by Reserve Bank of India (RBI) to prepare jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA). your associationtook up strongly with Reserve Bank of India as well as with IBA for inclusion ofCo-op. Reserve Bank of India has formed a Group consisting of representatives from select banks. represents FEDAI in the Group. The BSG deliberated on the problems of delay and non-payment of claims and strategies for speedier settlement of issues. material on “Frequently Asked Questions (FAQs)” on derivatives covering various provisions. Chief General Manager.and capture latest developments in the ICG. g) Rupee Export Credit Interest Rates – Interest Rate Subvention This scheme was originally confined to scheduled commercial banks. State Bank of India. Business. Private sector banks such as ICICI Bank. risk management systems. Foreign Banks such as Bank of America. bench marking against international standards on accounting. FEDAI also maximizes the benefits derived from synergies of member banks through innovation in areas like new customized products. The membership includes Nationalized Banks such as State Bank of India. market practices. etc. • • dealings. ICICI Prudential Life Insurance Company. its associate banks and other nationalized banks. IDBI Bank. EXIM Bank.Fixed Income Money Market and Derivatives Association (FIMMDA) FIMMDA has members representing all major institutional segments of the market. the role of self-regulatory organizations like FEDAI has also transformed. HDFC Bank. ABN Amro. the Forex Association of India and various market participants. Financial institutions such as IDFC. Training of Bank Personnel in the areas of Foreign Exchange Accreditation of Forex Brokers Advising/Assisting member banks in settling issues/matters in their Represent member banks on Government/Reserve Bank of India/Other Announcement of daily and periodical rates to member banks. Citibank. other organizations like FIMMDA. • Due to continuing integration of the global financial markets and increased pace of de-regulation. NABARD. Birla Sun Life Insurance Company and all Primary Dealers. . • Bodies. FEDAI plays a catalytic role for smooth functioning of the markets through closer co-ordination with the RBI. Presently some of the functions are as follows: • • Guidelines and Rules for Forex Business. In such an environment. Insurance Companies like Life Insurance Corporation of India (LIC).