1. Export / Import of goods.
2. Rendering professional or consultancy services.
3. Carrying out research work, in areas in which the parent company is engaged.
4. Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
5. Representing the parent company in India and acting as buying / selling agent in India.
6. Rendering services in information technology and development of software in India.
7. Rendering technical support to the products supplied by parent/group companies.
8. Foreign airline / shipping company.

79. BUYERS/SUPPLIERS CREDIT
Trade Credits refer to the credits extended by the overseas supplier, bank and financial institution for maturity up to five years for imports into India. Depending on the source of finance, such trade credits include suppliers’ credit or buyers’ credit. Suppliers’ credit relates to the credit for imports into India extended by the overseas supplier, while buyers’ credit refers to loans for payment of imports into India arranged by the importer from overseas bank or financial institution. Imports should be as permissible under the extant Foreign Trade Policy of the Director General of Foreign Trade (DGFT).
A. Routes and Amount of Trade CreditAutomatic Route: ADs are permitted to approve trade credit for import of non- capital and capital goods up to USD 20 million or equivalent per import transaction.
Approval Route: The proposals involving trade credit for import of non-capital and capital goods beyond USD 20 million or equivalent per import transaction are considered by the RBI.
B. Maturity

Maximum Maturity in case of import of non capital goods (Raw Material, Consumables, Accessories, Spares, Components, Parts etc): upto 1 year from the date of shipment or operating Cycle whichever is less.



Maximum Maturity in case of import of capital goods : upto 5 years from the date of shipment (Beyond 3 years banks are not allowed to provide Letter of Undertaking / comfort)



Incase of Capital Goods, the ab-initio (from beginning) contract period should be 6 (six) months for all trade credits.



No Rollover / Extension will be permitted beyond permissible limits


C. All-in-cost Ceilings: 6 Month Libor (respective currency of credit) + 350 bps

80. General Prohibition on making of Overseas Direct Investment (ODI):

As per the FEMA Regulations, any Indian entity can only with the prior approval of the Reserve Bank, make investment in the foreign entities engaged in the below mentioned sectors:


Real Estate;



Banking Businesses.



Any Investment in the Country of Pakistan.






81. Investment Limit under Overseas Direct Investment (ODI)


:Any Investment to be made by the eligible investors shall not exceed the limit of 400 % of the net worth of the Investor. 


However the cap of 400% shall not be applicable in case investment is made out of the funds:


Held in the Exchange Earner's Foreign Currency (EFFC) Account; or



Raised through the issue of ADRs/GDRs provided that ADRs/GDRs are issued in accordance with the Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and other guidelines issued by the government.



Further the cap limit of 400 percent shall also not be applicable in case the investment is to be made in the unincorporated entities in the oil sector by Navratna PSUs, ONGC, Videsh Limited and Oil India Limited (OIL) provided that such investment is subject to the approval of the competent authority.




82.AIRWAY BILL: The air waybill is a contract of carriage between the shipper and air carrier. It is issued by the air carrier and serves as a receipt for the shipper. When the shipper gives the cargo to a freight consolidator or forwarder for transportation, the air waybill is obtained from the consolidator or forwarder.


83. What is Multimodal Transport Bills of Lading and through Bill of Lading? 


Ans: Multimodal transport bill of lading and combined bill of lading are transport documents covering transport by more than one mode of transport.


Through Bill of Lading :  Through Bill of lading is virtually identical to the Multimodal Transport Bill of lading but with one major difference. The Multimodal Transport Bill of Lading is issued by the Multimodal Transport Operator (MTO) (generally the sea carrier) who takes responsibility of the goods (e.g. shortages, losses, damages) during the entire period of transport, thus not only for the sea passage but also for the other transport modes as well. The Through Bill of Lading is issued by the sea carrier but the carrier states on the contract of carriage that he is only responsible of the goods for that part of the carriage he takes care of, such as the sea passage only.







TYPES OF BILL OF LADING


There are various types of bill of lading depending on the requirements of the shipment:


STRAIGHT BILL OF LADING


This is used when the goods are already paid for and are directly shipped to the customer.


TO ORDER BILL OF LADING


This is used when the goods are sold on trade credit and the shipment can be either to a distributor or the customer.


CLEAN BILL OF LADING


This is used to state that the goods were in proper condition when loaded. This is a sign off from the carrier.


SOILED BILL OF LADING


This is used when the goods are marred in any way or are damaged.


INLAND BILL OF LADING


This is used to ship goods domestically through railways or roads, but not through seas.


OCEAN BILL OF LADING


This is used to ship goods through seas, both nationally and internationally.


THROUGH BILL OF LADING


This is used in complex transactions where the shipment passes through different ways of transportation and also various centers of distribution. This bill of lading requires an ocean and inland bill of lading.


MULTIMODAL/ COMBINED TRANSPORT BILL OF LADING


A type of through bill of lading where a shipment involves at least two ways of transport.


84. As per foreign Trade policy for making advance import payment for import of Aircraft and Choppers whose permission is required:


a. RBI


b. DGCA


c. Ministry of Finance


Ans:b. DGCA 


Explanation: As a sector specific measure, entities which have been permitted under the extant Foreign Trade Policy to import aircrafts and helicopters (including used / second hand aircraft and helicopters) or any other person who has been granted permission by the Directorate General of Civil Aviation (DGCA) to operate Scheduled or Non-Scheduled Air Transport Service (including Air Taxi Services), can make advance remittance without bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50 million. 


85. The entire Merchanting Trade Transactions should be completed within an overall period of ______ months and there should not be any outlay of foreign exchange beyond______  months.


a. 9 and 4


b. 9 and 9


c. 9 and 6


d.12 and 9


Ans: a. 9 and 4

86.  FATF stands for-








1) 
 
Financial Accountability Task Frame
2) 
Fiscal Accountability Trade Force
3) 
 
Fiscal Action Task Force
4) 
 
Financial Action Task Force


Ans: Financial Action Task Force





87. which is not compulsory for disbursement of PCFC to client


a. IEC


b. Underlying contract in the form of PI, PO or LC


c. ECGC policy taken by customer.


d. ECGC policy taken by bank


Ans: ECGC policy taken by customer.






88. Branch office in India Of foreign companies are allowed open FCY accounts for normal operations in India


A Yes


B No


C Its AD’s discretion


D None of above


Ans B




89. Prior approval from RBI is required for


a Remittance of USD 25000 from Proprietor’s Current account from its individual LRS eligibility


b For soliciting deposits for their foreign/overseas branches


c to open, maintain and hold foreign currency account with a bank outside India for making remittances under the LRS


d None of these


Ans B




90.The time-frame for a traveller who has returned to India to surrender foreign exchange?


A 180 days


B 365 days


C 7 days


D None of these


Ans A


91.  Resident Foreign Currency (RFC) Account with an AD will be of type


Current account

Savings

Term deposit

Any of these



Ans B



92. Regulatory limits # 2–Part Drawings/ Undrawn Balances—Limit of 10%


(i) In certain lines of export trade, it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight, quality, etc., to be ascertained after arrival and inspection, weighment or analysis of the goods. In such cases, AD Category – I banks may negotiate the bills, provided:


a) The amount of undrawn balance is considered normal in the particular line of export trade, subject to a maximum of 10 per cent of the full export value.


b) An undertaking is obtained from the exporter on the duplicate of EDF forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realization.


(ii) In cases where the exporter has not been able to arrange for repatriation of the undrawn balance in spite of best efforts, AD Category – I banks, on being satisfied with the bona fides of the case, should ensure that the exporter has realized at least the value for which the bill was initially drawn (excluding undrawn balances) or 90 per cent of the value declared on EDF form, whichever is more and a period of one year has elapsed from the date of shipment.


As per guidelines existing on 26th Nov 2016




93.Under LRS, Individuals are permitted to open and maintain foreign currency accounts




With Banks in India

With Foreign Banks in India

With banks abroad

With Offshore Banking Units ( OBU) in India



Ans c 




94.International Debit Cards can be used


a.For any current account transaction


b.For any permissible current account transaction


c.For any capital account transaction


d.For payment of call back charges


Ans b 




95. Where the amount of advance exceeds USD X or its equivalent, a guarantee from a bank of international repute situated outside India, or a guarantee from an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India, should be obtained from the overseas beneficiary. The value of X is


USD 500000

USD 5000000

USD 200000

None of these.



Ans a. As per extant guidelines on 22.11.2016




96. Recipients of foreign inward remittances are allowed to retain up to what extent in the EEFC Account


a 100%  b 50 %  c 10 %  d 25 %


Ans a




97. Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong, (10 countries) irrespective of their residential status, cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than on lease, not exceeding




5 years

3 years

7 years

None of these.



Ans: 5 years




98. PAN card need not be insisted upon for remittance made towards permissible current account transactions up to USD _______ per financial year.


a. 25000


b. 5000


c. 10000


d. none of these


Ans: 25000




99.  ECB -2 has to be filed with the RBI within _______ working days from the close of month



a. 5


b. 7


c. 6


d. none of these


Ans: 7  A.P.(DIR Series) Circular No.105


100. Bank XYZ of India send collection documents to bank of tokyo in Japan for collecting payment from japanese importer for USD 20000, Indian bank receives payment in Jp morgan chase USA Nostro, As per URC 522 - Article 3 who is the remitting bank?


a. Bank in India


b. Bank in USA


C bank in tokyo




Ans: Bank In India




Explanations: ARTICLE 3 PARTIES TO A COLLECTION a For the purposes of these Articles the "parties thereto" are: 1 the "principal" who is the party entrusting the handling of a collection to a bank; 2 the "remitting bank" which is the bank to which the principal has entrusted the handling of a collection; 3 the "collecting bank" which is any bank, other than the remitting bank, involved in processing the collection; 4 the "presenting bank" which is the collecting bank making presentation to the drawee. b The "drawee" is the one to whom presentation is to be made in accordance with the collection instruction.






101. URC 522 - Article 18 PAYMENT IN FOREIGN CURRENCY

In the case of documents payable in a currency other than that of the country of payment (foreign currency), the presenting bank must, unless otherwise instructed in the collection instruction, release the documents to the drawee against payment in the designated foreign currency only if such foreign currency can immediately be remitted in accordance with the instructions given in the collection instruction.




102. Which one is true about the UCP?



A set of general guidelines that each party to a letter of credit may comply with if they choose.



A set of rules that a bank may include in a letter of credit the bank issues if the bank wishes to, but which all parties must adhere to if so included.



A law that governs all letters of credit.



The bar code that appears on the packaging of most consumer products



Ans: A set of rules that a bank may include in a letter of credit the bank issues if the bank wishes to, but which all parties must adhere to if so included.







103.  What happens if a confirming bank fails to examine documents before the end of the fifth day following presentation?


a.  The confirmation ceases to exist and the bank must forward the documents to the issuing bank for payment.


b.  If the documents have no discrepancies, the confirming bank may owe past due interest for “wrongful dishonor,” but, if the documents do have discrepancies, nothing much happens as their obligation is only to honor compliant documents.


c.  The confirming bank must send a notice of refusal stating the reasons the bank was unable to examine the documents within the five-day time frame.


d.  The confirming bank becomes obligated to pay even if the documents contain discrepancies.


Ans: The confirming bank becomes obligated to pay even if the documents contain discrepancies.


104. If a UCP600 letter of credit calls for presentation of a multimodal transport document, which of the following is true?


The multimodal transport document must be marked “clean on board.”

The letter of credit must specify a place of dispatch, a port of loading, a port of discharge, and a final destination.

The letter of credit must specify a place of dispatch and a final destination, but must not specify a port of loading or a port of discharge.

None of the above. Ans:




105. Which of the following is true?

Under UCP600, banks no longer have to worry about documents being consistent with each other.

Bills of lading with language that calls into question the delivery of goods against surrender of an original bill of lading were acceptable under UCP500, but not under UCP600.

When talking about letters of credit, the expression “banks examine documents on their face” means that banks examine the front of documents but not the back.

Under UCP600, an issuing bank is permitted to refuse documents but then change their minds and rescind their refusal.



Ans:Under UCP600, an issuing bank is permitted to refuse documents but then change their minds and rescind their refusal.




106. A letter of credit is issued calling for shipment from Long Beach, CA, partial shipments allowed. An amendment is made, changing the port of loading to Los Angeles, CA, but curtailing the latest shipping date by a month. Which of the following is true?

The beneficiary must now ship from Los Angeles.

The beneficiary may continue to ship from Long Beach, but, if the beneficiary does so, it will be deemed to constitute rejection of the amendment.

The beneficiary may now ship from Los Angeles, but, if the beneficiary does so, it will be deemed that the beneficiary has accepted the amendment, including the earlier deadline for shipments. Ans

The beneficiary may accept the change in ports and reject the change in the latest shipping date, as long as the beneficiary does so expressly, either before or upon presentation of documents.




107.Under UCP600, if a bank is closed for unplanned reasons (force majeure), what happens to letters of credit that expire before the bank reopens?

The bank will pay for compliant documents that were presented before the day the bank closed, even though they were not examined until after the bank reopened. Ans:

The bank will accept presentation of documents within 30 calendar days after they reopen, as long as they are all dated prior to the expiration dates of the respective letters of credit.

If the beneficiary presented documents X days before the day the bank closed, they will be allowed 5-X days after the bank reopens to correct discrepancies.

All of the above.





108. When an issuing bank decides to refuse documents due to discrepancies under a letter of credit they made subject to UCP600, which of the following are the bank required to do?

Contact the applicant and see whether the applicant will grant a waiver of the discrepancies.

Notify the presenter of the documents of every discrepancy on which the refusal is based. Ans

Notify the presenter either that they are holding the documents at the disposal of the presenter or that they are returning them.

Send notice of refusal “immediately” upon deciding to refuse the documents.




 109. If packing credit is availed in foreign currency the interrest is linked to:


a. Libor


b. Mibor


C. BPLR-2%


Ans: a. LIBOR






110. One month outright forward rate for GBP/INR is 80.81/80.83 and the relevant swap points are 10/9, then the outright spot rate for GBP/INR is: