Types of Selling Rates Similar to buying rates. There are two types of selling rates.
1. TT Selling Rate. This is the rate to be used for all transactions which do not involve handling of documents by the bank. Examples of sales for which this rate can be quoted are issue of demand drafts, mail transfer, telegraphic transfer, etc. The TT selling rate is calculated on the basis of inter- bank selling rate. The rate to the customer is calculated by deducting exchange margin from the inter-bank rate.
The exchange margin allowed by FEDAI on TT selling rate is 0.150%.
2. Bills Selling Rate. This rate is to be used for all trans.actions handling of documents by the bank, for example, payments against import bills.
The bill selling rule is calculated by deducting exchange margin from the TT selling rate. That means the exchange margin enters into the bill selling once on the inter-bank rate and again on the TT selling rate. The rate of margin allowed by FEDAI on bill selling rate is 0.175% to 0.200%.
SELLING RATES (TT and Bills Selling)
Inter-bank spot selling rate for foreign currency=Rs. xxx
Add: Exchange margin for TT selling rate TT Selling rate = Rs. xxx
=TT selling rate = Rs. xxx
Add: Exchange margin for Bill selling rate Rs. xxx
=Bill Selling Rate = Rs. xxx
* Round off to nearest paise and quote to the customer.
Fineness of Quotation: The exchange rate is quoted in two decimal places. i.e., so many rupees paise. The quotation is for one unit of foreign currenc except in the case Japanese Yen, Belgian Franc, Italian Lira, Indonesian Rupiah. Kenyan Shilling. Spanish Peseta and Asian Clearing Union currencies BDT Taka, Burmese Kyat, Iranian Riyal, Pakistani Rupee and Sri Lankan Rupee) for which currencies the quotation is per 100 units of the foreign currency concerned.
Examples of quotations are:
USD 1= Rs. 69
GBP 1 = Rs. 78
DEM 1 = Rs. 30.00
JPY 100 = Rs. 39.23
While computing the merchant rates, the calculations can be made up to 4 decimal places and rounded off to the nearest second decimal.
The rupee paid to or received from a customer on account of exchange transaction should he rounded off to the nearest rupee, up to 49 paise should be ignored 50 to 99 paise should be rounded off to higher rupee. (Rule 7 of FEDAI).
Note: In the interbank market the quotation is in four decimals, the last two decimals being multiple 25. For a customer too, if the bank wishes to offer a special rate, it may round of to four decimals as in the case of interbank deal.