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US-Dollar Cheque Collection

One of the services rendered by banks as part of their normal banking operations is collection of cheques deposited by their customers, some of which, could also be drawn or payable on banks that are outside the country. Such cheques are called foreign currency cheques and, presently, a significant part of these cheques are US-Dollar denominated payable by banks in the United States of America.

In the interest of better public awareness, the following FAQs have been prepared for cheques denominated in US-Dollars.

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1. I have received a cheque denominated in US Dollars. How does such a cheque differ from the usual Rupee cheques as an instrument of payment? +

Cheques denominated in currencies other than Indian Rupees such as Euro (€), Pound Sterling (£), US Dollar ($), Yen (¥), etc., are called foreign currency cheques. Foreign currency cheques include demand drafts, personal cheques, banker’s cheques, cashier’s cheques, traveller’s cheques, etc. Since such cheques are not payable in India they are, therefore, required to be sent to the country concerned for realization of proceeds.

1. What is Cheque Truncation? +

Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by the presenting bank en-route to the paying bank branch. In its place an electronic image of the cheque is transmitted to the paying branch through the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc. Cheque truncation thus obviates the need to move the physical instruments across bank branches, other than in exceptional circumstances for clearing purposes. This effectively eliminates the associated cost of movement of the physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing.

1. Inflation Indexed Bonds (IIBs) were issued in the name of Capital Indexed Bonds (CIBs) during 1997. How is the new product of IIBs different from earlier CIBs? +

The CIBs issued in 1997 provided inflation protection only to principal and not to interest payment.
New product of IIBs will provide inflation protection to both principal and interest payments.

Q1. What is an Infrastructure Debt Fund (IDF)? +

Ans : IDFs are investment vehicles which can be sponsored by commercial banks and NBFCs in India in which domestic/offshore institutional investors, specially insurance and pension funds can invest through units and bonds issued by the IDFs. IDFs would essentially act as vehicles for refinancing existing debt of infrastructure companies, thereby creating fresh headroom for banks to lend to fresh infrastructure projects. IDF-NBFCs would take over loans extended to infrastructure projects which are created through the Public Private Partnership (PPP) route and have successfully completed one year of commercial production. Such take-over of loans from banks would be covered by a Tripartite Agreement between the IDF, Concessionaire and the Project Authority for ensuring a compulsory buyout with termination payment in the event of default in repayment by the Concessionaire.

1. Does QA 22 Account continue under Foreign Exchange Management Act, 1999? +

No. With the introduction of Foreign Exchange Management Act, 1999, the accounts opened by foreign nationals who are resident in India are treated as resident accounts. Such accounts are at par with other resident Rupee accounts.

1. Who can undertake remittance transactions between India and Singapore through the UPI-PayNow linkage? +

Account-holders of the participating banks and financial institutions in India and Singapore can do the cross-border remittance transactions through the UPI-PayNow linkage.

Government securities offer the benefit of safety, liquidity and attractive returns to investors. With the enactment of the Government Securities Act, 2006 Government securities, including the Relief/Savings Bonds issued by the Government of India, have become more investor friendly. Investors of such bonds will particularly benefit from such changes in the Act. To create public awareness in this regard and as a customer friendly measure, the following Frequently Asked Questions (FAQs) along with the answers have been released by the Reserve Bank of India (RBI).

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1. What does one mean by Government security? +

Government security (G-Sec) means a security created and issued by the Government for the purpose of raising a public loan or any other purpose as notified by the Government in the Official Gazette and having one of the following forms.

a Government Promissory Note (GPN) payable to or to the order of a certain person; or
a bearer bond payable to a bearer; or
a stock; or
a bond held in a Bond Ledger Account (BLA).

1. ಆರ್ಟಿಜಿಎಸ್ ಎಂದರೆನು?

ಉತ್ತರ. ‘ಆರ್ಜಿಎಸ್’ ಎಂಬ ಸಂಕ್ಷಿಪ್ತ ರೂಪವು ರಿಯಲ್ ಟೈಮ್ ಗ್ರಾಸ್ ಸೆಟ್ಲಮೆಂಟ್ ಅನ್ನು ಸೂಚಿಸುತ್ತದೆ, ಇದನ್ನು ಪ್ರತ್ಯೇಕವಾಗಿ ವಹಿವಾಟಿನ ಆಧಾರದ ಮೂಲಕ [ನೆಟ್ಟಿಂಗ್ ಇಲ್ಲದೇ] ಹಣವರ್ಗಾವಣೆಗಳ ನಿರಂತರ ಹಾಗೂ ರಿಯಲ್ -ಟೈಮ್ ಸೆಟ್ಲಮೆಂಟ್ ಅನ್ನು [ವಾಸ್ತವ -ಸಮಯದ- ಹಣ ಸಂದಾಯವನ್ನು] ಹೊಂದಿರುವ ವ್ಯವಸ್ಥೆಯಾಗಿ ವಿವರಿಸಬಹುದಾಗಿದೆ. ‘ರಿಯಲ್-ಟೈಮ್’ ಅಂದರೆ ಸೂಚನೆಗಳನ್ನು ಪಡೆದ ಸಮಯದಲ್ಲಿ ಪ್ರಕ್ರಿಯೆಗೊಳಿಸುವದು; ‘ಗ್ರಾಸ್ ಸೆಟ್ಲಮೆಂಟ್’ ಅಂದರೆ ಹಣ ವರ್ಗಾವಣೆ ಸೂಚನೆಗಳ ವ್ಯವಸ್ಥೆಯು ಪ್ರತ್ಯೇಕವಾಗಿ ಸಂಭವಿಸುವುದು.

1. What is TReDS ? +

Ans. TReDS is an electronic platform for facilitating the financing / discounting of trade receivables of Micro, Small and Medium Enterprises (MSMEs) through multiple financiers. These receivables can be due from corporates and other buyers, including Government Departments and Public Sector Undertakings (PSUs).

Disclaimer:

These FAQs are for general guidance purpose only. In case of any inconsistency(ies) between FAQs and FEMA, 1999 and Rules/Regulations/Directions/Permissions issued thereunder, the latter shall prevail.

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Q1. Can a resident person undertake forex transaction? +

Answer: Resident persons are permitted to undertake forex transactions only with authorised persons and for permitted purposes, in terms of the Foreign Exchange Management Act, 1999 (FEMA).

Resident persons undertaking forex transactions with unauthorised persons and for purposes other than those permitted under FEMA shall render themselves liable for penal action under the Act.