Module: General Practice
Q7: Consider the following statements regarding Authorised Dealer (AD) Category-I Banks and their reporting obligations:
Statement 1: Authorised Dealer (AD) Category-I Banks are entities, typically commercial banks, authorized under Section 10(1) of FEMA, 1999, to deal comprehensively in foreign exchange transactions.
Statement 2: The RBI released Draft Directions on Reporting Instructions to upgrade and automate the reporting of cross-border remittance data to prevent illicit outflows.
Statement 3: The draft mandates the transition of all outward remittance reporting to the upgraded FETERS (Foreign Exchange Transactions Electronic Reporting System) platform on a strict T+1 day basis.
Statement 4: Banks failing to comply with the revised automated reporting timelines will be subjected to a baseline penalty of ₹10,000 per day of default.
Which of the above statements is/are correct?
Statement 2: The RBI released Draft Directions on Reporting Instructions to upgrade and automate the reporting of cross-border remittance data to prevent illicit outflows.
Statement 3: The draft mandates the transition of all outward remittance reporting to the upgraded FETERS (Foreign Exchange Transactions Electronic Reporting System) platform on a strict T+1 day basis.
Statement 4: Banks failing to comply with the revised automated reporting timelines will be subjected to a baseline penalty of ₹10,000 per day of default.
Which of the above statements is/are correct?
✅ Correct Answer: D
🎯 Quick Answer:
All statements are correct. (Option D)They execute and report all cross-border transactions (like imports, exports, and remittances) to ensure they comply with the Foreign Exchange Management Act (FEMA). Structural Breakdown: Forex reporting is governed by a dual structure: the physical/documentary verification done by the bank at the branch level, and the digital reporting fed into RBI's central databases (like FETERS) to track balance of payments.
Historical / Static Context: Section 10 of FEMA, 1999 empowers the RBI to authorize certain entities as ADs.
Historically, reporting was batched fortnightly, which created a lag in identifying suspicious forex drains.
The Dynamic Update (NEW) & Data: The February 2026 Draft Directions qualitatively shift reporting from a manual-batch system to a highly automated API-driven system.
The hard data tested includes the new timeline requiring reporting on a T+1 basis (Statement 3), and the strict monetary deterrence introducing a ₹10,000 per day penalty for late or erroneous reporting (Statement 4).