Rates, Charges, Settlement and Customer Service in Retail Forex
How retail rates are built
Banks quote TT buying and selling, card rates, cash rates and bill rates. The RBI reference rate is a market benchmark, not a customer price. Cash rates are wider because of handling, insurance and inventory risk; card and TT rates are narrower. Cross rates are derived through USD unless a direct quote exists. Charges and GST are disclosed separately.
Settlement and service
- Outward remittances settle through correspondent banks; charges may be deducted en route.
- Cancellation and refund terms depend on whether the SWIFT message has been sent.
- Rates must be displayed and customers should receive a clear charge sheet.
- Complaints escalate from branch to nodal officer and then to the RBI Integrated Ombudsman Scheme, 2021.
Worked example
A bank sells USD cash at 83.40 and USD by TT at 83.10. A customer buying USD 1,000 in cash pays ₹83,400; by TT, ₹83,100 - a ₹300 difference. If selling USD 1,000, the bank’s cash buying rate, say 82.70, is lower than TT buying at 82.90, so the customer receives less for cash. The spread compensates the dealer for risk and handling.
Traps
- Quoting the RBI reference rate as the customer rate.
- Comparing a cash rate with a TT rate as if they were the same product.
- Ignoring correspondent and SWIFT charges.
- Forgetting that a cancelled remittance may not be fully refundable.
- Assuming all authorised dealers quote identical rates.