FEDAI Rules-8 Early Delivery Extension and Cancellation of Forward
Outlay and inflow of funds
RULE 8-Early Delivery, Extension and Cancellation of Forward
At the request of the customer, unless stated to the contrary in the provisions of the Exchange Control Manual, it is optional for a bank to –
Accept or give early delivery;
Extend the contract;
It is the responsibility of the customer to effect delivery or to request the bank for extension/ cancellation as the case may be on or before the maturity date of the contract.
Banks will levy a minimum charge of Rs. 100/- for every request from a cancellation of a contract.
Merchant Foreign Exchange Contracts booked prior to 31st December, 1998 and delivery of which is effected after 1st January, 1999 wherein one of the currencies is EMU member country currency- the delivery of the said currency can be in the euro or in the currency of contract, at the option of the bank customer.
If a bank accept or gives early delivery, the bank shall recover/ pay swap difference, if any.
Forward contract, either short term or long term contracts where extension is sought by the customers (or are rolled over) shall be cancelled (at T.T. Selling or Buying Rate as on the date of cancellation) and rebooked only at current rate of exchange. The difference between the contracted rate and the rate at which the contract is cancelled should be recovered from/ paid to the customer at the time of extension. Such request for extension should be made on or before the maturity date of the contract.
In the case of cancellation of a contract at the request of the customer, the bank shall recover/ pay, as the case may be, the difference between the contacted rate and the rate at which the cancellation is effected.
Rate at which cancellation is to be effected:
Purchase contracts shall be cancelled at the contracting bank’s spot T.T. selling rate current on the date of cancellation.
Sale contracts shall be cancelled at the contracting bank’s spot T.T. buying rate current on the date of cancellation.
Where the contract is cancelled before maturity, the appropriate forward T.T. rate shall be applied.
Exchange difference not exceeding Rs. 50/- shall be ignored by the contracting bank.
In case a purchase contract becomes overdue, due to the bank’s inability to accept the bills tendered as approved bills and the exporter takes up the contract by tendering other approved bills or cancels the contract within a reasonable time, such cancellations shall be governed by IV (a), (b) and (c) above.
Notwithstanding the fact that the exchange contract between the customer and the bank becomes impossible of performance, for whatever reason, including Government prohibitory order, the exchange contract shall not be deemed to have become void and the customer shall forthwith apply to the bank for cancellation subject to provisions of paras IV (a), (b) and (c) above.
In the absence of any instructions from the customer, vide para a(b) contracts which have matured shall on the 15th day from the date of maturity be automatically cancelled. In case the 15th day falls on a Saturday or holiday, the contract will be cancelled on the next succeeding working day.
The customer cannot effect delivery extend or cancel the contract after the maturity date and the procedure for automatic cancellation on the 15th day from maturity date should be adhered to in all cases of default by the customer.
Swap cost, if any, shall be recovered from the customer under advice to him.
In case, the contract is ultimately cancelled, the customer will not be entitled to the exchange difference, if any, in his favour, since the contract is cancelled on account of his default.
In case of delivery subsequent to automatic cancellation the approapriate current rate prevailing on such delivery date shall be applied.
Swap cost to be recovered from customers. In all cases of early delivery of purchase or sale contracts, swap cost shall be recovered from customers irrespective of whether an actual swap is made or not. Such recoveries should be made either back-ended or frontended in the discretion of banks.
Payment of swap gain to the customer will normally be made at the end of the swap period.
Outlay and inflow of funds
Interest at not below the prime lending rate of the respective bank on outlay of funds by the bank for the purpose of arranging the swap shall be recovered in addition to the swap cost in case of early delivery of purchase or sale contracts and early realization of export bills negotiated. The amounts of funds outlayed shall be arrived at by taking the difference between the original contract rate and the rate at which the swap could be arranged.
If such a swap leads to inflow of funds, the amount shall be arrived at as above and interest shall be paid in the discretion of banks to the customer at the appropriate rate applicable for term deposits for the period for which the funds remained with the bankdeposits for 180 days (presently 8% per
Fields marked with an asterisk
Send enquiry to
MD - Rakesh Saraf
Describe your requirements*
Follow us on
What is New?
Customs Notification No 32/2014 (NT)
Rate of exchange of conversion of each of the foreign currency with effect from 17th April, 2014
RBI/2013-14/566 A.P. (DIR Series) Circular No. 123
Foreign Direct Investment (FDI) in Limited Liability Partnership (LLP)
DGFT Public Notice No.58/(RE 2013)/2009-14
Amendment in the date of effect for implementation of Self-certification regarding compliance of bar-coding requirements on secondary and tertiary level packaging on export consignment of pharmaceuticals and drugs.
Customs Notification No 31/2014 (NT)
Amends Notification No. 36/2001-Customs (N.T.), dated the 3rd August, 2001
Customs Notification No. 15/2014-Customs (ADD
Seeks to levy provisional anti-dumping duty on imports of cast aluminium alloy wheels or alloy road wheels used in motor vehicles when imported into India from People’s Republic of China, Korea RP and Thailand for a period of 6 months
RBI/2013-14/560 A.P. (DIR Series) Circular No.121
External Commercial Borrowing (ECB) Policy – Review of all-in-cost ceiling
RBI/2013-14/561 A.P. (DIR Series) Circular No.122
Trade Credits for Imports into India – Review of all-in-cost ceiling
RBI/2013-14/559 A.P. (DIR Series) Circular No.120
Rupee Drawing Arrangement – ‘Direct to Account’ Facility
DGFT Public Notice No.57/(RE 2013)/2009-14
Procedure for export of pulses to Republic of Maldives
Manual filing and processing of Bills of Entry / Shipping Bills – stringent checks required to prevent misuse
Crisil pegs average growth at 6.5 pc over the next 5 fiscals
Convert India's gold rush into a vibrant industry
Sugar export sop same
PAPs' threat holds up Boeing taxiway work
Indian rupee opens flat at 60.30 per dollar
Urgent drill to counter US trade threat
India oil imports from Iran rise 43% in Q1 2014
Man held with gold worth Rs 21 lakh
Traders want LS candidates to take up Indo-Pak trade issues
India's forex reserves rise by $2.79 billion to $309.44 billion
Copyright © 1999-2014 Exim Guru . All Rights Reserved.
The information presented on the site is believed to be accurate. However,
takes no legal responsibilities for the validity of the information.
Please read our
before you use this
Print this page
Refer a Friend
Bookmark this Page
Indian Customs Duty
Customs Exchange Rate
Anti Dumping Duty
Duty Drawback Rates
Key To Budget
India Trade Data
New Exim Policy
New Exim Procedure
Input Output Norms
Central Excise Manual
Central Excise Notifications
Service Tax Notification
Service Tax Circular
Service Tax Rules
Service Tax Forms
RBI Master Circular
RBI A.P.D. Series Notifications
Un Offices in India