RBI has raised the exposure limit under ETCD trading for residents and foreign portfolio investors (FPIs) to USD 100 million across all currency pairs involving the Indian rupee. What is the meaning of D in ETCD?

BANKING GENERAL KNOWLEDGE

Please wait while the activity loads.
If this activity does not load, try refreshing your browser. Also, this page requires javascript. Please visit using a browser with javascript enabled.

If loading fails, click here to try again

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

RBI has raised the exposure limit under ETCD trading for residents and foreign portfolio investors (FPIs) to USD 100 million across all currency pairs involving the Indian rupee. What is the meaning of “D” in ETCD?

A	District
B	Distance
C	Development
D	Derivatives

Explanation:

Detailed explanation-1: -Investment Limits for the financial year (FY) 2022-23: The limits for FPI investment in Government securities (G-secs), State Development Loans (SDLs) and corporate bonds shall remain unchanged at 6%, 2% and 15% respectively, of outstanding stocks of securities for FY 2022-23.

Detailed explanation-2: -You can indefinitely retain foreign exchange upto US$ 2, 000, in the form of foreign currency notes or travellers’ cheques (TCs) for future use. Any foreign exchange in cash in excess of this sum, is required to be surrendered to a bank within 90 days and TCs within 180 days of return.

Detailed explanation-3: -Under the Reserve Bank of India’s Liberalized Remittance Scheme (LRS), Indians are allowed to freely remit up to $250, 000 (around Rs 1.80 crore) per financial year for any permissible transactions. How much cash can you carry? Travellers are allowed to purchase foreign currency notes / coins only up to $3000 per visit.

Detailed explanation-4: -The bank is required to calculate the total potential loss to the entity from Unhedged Foreign Currency Exposure. It shall be determined by using the data published by FEDAI on the annual volatility rate in the USD-INR exchange rate for the last 10 years and multiplying it with the UFCE of an entity.

There is 1 question to complete.