Module: | MODULE A: INTERNATIONAL BANKING
Q21: Read the following statements differentiating the Telegraphic Transfer Selling Rate from the Bill Selling Rate in Indian banking operations. Identify the correct combination.
Statement 1. An Authorized Dealer will apply the Telegraphic Transfer Selling Rate when an Indian resident requests a direct outward wire transfer to pay for their child university tuition fees abroad.
Statement 2. The Bill Selling Rate is specifically mandated when the Authorized Dealer handles physical import documents and executes a remittance against a foreign import bill.
Statement 3. The final Rupee cost charged to the customer under the Bill Selling Rate is generally higher than the Telegraphic Transfer Selling Rate because the bank adds a higher exchange margin to compensate for the operational risk of handling physical trade documents.
Statement 2. The Bill Selling Rate is specifically mandated when the Authorized Dealer handles physical import documents and executes a remittance against a foreign import bill.
Statement 3. The final Rupee cost charged to the customer under the Bill Selling Rate is generally higher than the Telegraphic Transfer Selling Rate because the bank adds a higher exchange margin to compensate for the operational risk of handling physical trade documents.
✅ Correct Answer: D
🎯 Quick Answer:
Option D is correct as all three statements precisely describe the application and pricing logic of the two selling rates.They are categorized based on whether physical trade documents are involved.
Structural Breakdown: Statement I is correct.
The Telegraphic Transfer Selling Rate is used for all clean outward remittances where the bank simply sends a wire transfer message to debit its Nostro account without handling any trade documents.
Statement II is correct.
The Bill Selling Rate is exclusively used for import transactions where the bank receives, verifies, and processes bills of exchange, bills of lading, and other shipping documents on behalf of the importer.
Statement III is correct.
Handling physical import documents requires specialized trade finance staff, secure courier services, and regulatory scrutiny.
To cover these administrative overheads, the bank adds a higher profit margin to the base rate, making the Bill Selling Rate more expensive for the importer than a simple Telegraphic Transfer wire transfer.