How a bank's forex desk actually handles NRI accounts, cross-border remittances and trade payments â the accounts, the messaging network, and how exchange rates are quoted.
Forex operations cover every banking activity that involves a currency other than the Indian Rupee â from an NRI's savings account to a corporate's export proceeds. The starting point is usually the type of account used to hold or route foreign-currency funds.
| Account | Currency Held | Repatriability |
|---|---|---|
| NRE (Non-Resident External) | Rupee (funds converted from forex on deposit) | Fully repatriable â principal & interest |
| NRO (Non-Resident Ordinary) | Rupee | Repatriable up to USD 1 million/year (with conditions), for India-sourced income |
| FCNR(B) (Foreign Currency Non-Resident Bank) | Foreign currency (no exchange risk to depositor) | Fully repatriable â principal & interest |
| RFC (Resident Foreign Currency) | Foreign currency, for returning NRIs | Freely usable/repatriable |
Foreign currency received into India â NRI family support, export proceeds, or FDI. Processed via SWIFT/correspondent banking and credited after purpose-code classification and compliance checks.
Funds sent abroad â education fees, medical treatment, LRS investments, import payments â governed by FEMA's current/capital account rules and routed through an Authorised Dealer.
A special low-cost corridor, the India-Nepal Remittance Scheme, allows cross-border remittances to Nepal through the NEFT system without either party needing a bank account at the receiving end for small amounts.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the secure messaging network banks use to instruct and confirm cross-border payments and trade transactions â it does not itself move money, but carries the standardised instruction (MT103 for a customer payment, MT700 for a Letter of Credit) between the sending and receiving bank's own settlement systems.
Related: Work through direct/indirect quotes and cross-rate problems with the JAIIB Financial Maths: Forex Arithmetic calculator.
Export and import transactions are settled through instruments such as the Letter of Credit (LC) under UCPDC 600 rules, bill purchase/discounting against export documents, and Export Packing Credit for pre-shipment finance â each requiring the forex/trade desk to check documentary compliance strictly against the LC terms before funds are released, since banks deal in documents, not in the underlying goods.
Related deep-dive: See the JAIIB notes on Trade Finance Instruments for exam-focused MCQs.
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