IIBF Forex for Individuals key terms

The simultaneous purchase of one currency against the sale of another at an agreed rate, used by individuals for travel, education, medical treatment, emigration, or remittance purposes.

India's Foreign Exchange Management Act, which regulates dealings in foreign exchange, current and capital account transactions, holding of foreign currency, and enforcement of contraventions by residents and non-residents.

A transaction that does not alter the assets or liabilities outside India of the person undertaking it, such as travel, medical expenses, education, family maintenance, or payment of trade-related dues.

A transaction that changes the assets or liabilities outside India of the person undertaking it, including investment in foreign securities, property abroad, loans, and repatriation of assets.

A facility allowing resident individuals to remit up to a prescribed annual limit in foreign exchange for permitted current and capital account purposes, subject to purpose codes and reporting.

A bank authorised by the Reserve Bank of India to deal in foreign exchange and to handle retail forex transactions for individuals, including sale of currency, remittances, and documentation checks.

A non-bank entity licensed to buy and sell foreign currency notes and coins, and to sell foreign exchange for private and business travel, but not authorised to handle remittances abroad.

The price of one currency expressed in units of another currency, quoted by the dealer as a buying or selling rate for the customer's transaction.

The wholesale rate at which banks deal with each other in the market, forming the base to which retail margins and charges are added before quoting a customer.

The retail exchange rate displayed by an authorised dealer or money changer for buying and selling foreign currency, inclusive of the dealer's margin over the market rate.

An exchange rate between two currencies derived from their individual rates against a common base currency, used when no direct quote exists in the market.

The difference between the rate at which a dealer buys a currency and the rate at which it sells it, which compensates the dealer for market risk and operating costs.

A fee levied by the bank or money changer over and above the exchange rate for handling a forex transaction, often expressed as a percentage with a stated minimum.

The goods and services tax charged on the service component of a foreign exchange transaction, such as the dealer's margin or handling fee, at the applicable rate.

Physical foreign currency notes and coins supplied to a customer for travel or other permitted purposes, distinct from balances held in a foreign currency account.

A pre-printed, signed payment instrument denominated in a foreign currency, encashable by the holder, used as a safer alternative to carrying cash while travelling abroad.

A prepaid card loaded with a foreign currency that allows the holder to spend or withdraw cash abroad within the loaded limit, subject to card scheme and issuer rules.

Use of an international debit, credit, or forex card at an overseas ATM or counter to obtain foreign currency cash, which attracts separate charges and limits.

A transfer of foreign exchange from a resident individual in India to a beneficiary abroad, made through an authorised dealer for a permitted purpose and supported by the prescribed form.

Foreign exchange received in India from a person abroad, credited to the recipient's account or paid in rupees, subject to purpose declaration and reporting requirements.

The prescribed application form submitted by a resident individual for an outward remittance of foreign exchange, declaring the purpose, amount, and details of the transaction.

A standardised code assigned to each foreign exchange transaction indicating its underlying purpose, used by banks for regulatory reporting and monitoring of remittances.

The process by which a bank or money changer verifies the identity and address of a customer through prescribed documents before permitting forex transactions.

The permanent account number issued by the income tax department, commonly required as identity proof and for tax reporting on foreign exchange transactions above prescribed thresholds.

A unique identity number issued to residents, accepted as officially valid identity and address proof for KYC purposes in forex transactions, subject to masking and consent rules.

The natural person who ultimately owns or controls a customer or the funds involved in a transaction, whose identity must be established under anti-money laundering rules.

The set of laws, rules, and internal controls requiring forex dealers to detect, report, and prevent the use of foreign exchange services for laundering illicit funds.

A confidential report filed by a reporting entity with the financial intelligence unit when a transaction appears unusual or potentially linked to money laundering or terrorist financing.

Tax collected at source by the remitting bank on certain outward remittances under the liberalised remittance scheme, at the prescribed rate and threshold, creditable against income tax.

The global messaging network used by banks to instruct and confirm cross-border payments, carrying payment details between the remitting and receiving institutions.

A bank in another country that holds accounts and provides payment services for the remitting bank, enabling settlement of cross-border transfers through the correspondent relationship.

The date on which the funds of a foreign exchange transaction become available to the beneficiary or are debited to the customer, used to determine settlement and interest.

The final discharge of a foreign exchange obligation through debit and credit of the respective accounts, completing the transaction between the customer and the dealer.

The process of cancelling an unexecuted or executed forex contract and entering a fresh contract at the prevailing rate, usually attracting charges or rate differences.

The bringing back of foreign exchange or foreign assets into India by a resident, or the return of funds to the country of origin, subject to FEMA and LRS conditions.

An Indian citizen residing outside India, whose forex transactions are governed by separate rules distinguishing them from resident individuals under FEMA.

A person treated as resident under FEMA based on stay in India or intention to reside, determining which forex facilities and limits apply to their transactions.

An outward remittance made to meet tuition, living, or other education-related expenses abroad, supported by admission or fee documents and reported under the appropriate purpose code.