Module: | MODULE A: INTERNATIONAL BANKING
Q23: An Indian software exporter based in Hyderabad receives a clean inward electronic remittance of 2,50,000 US Dollars for services rendered. The Authorized Dealer bank verifies that its Nostro account in New York has already been fully credited with the funds. The ongoing interbank spot market is quoting the US Dollar to Indian Rupee rate as 83.20 Bid and 83.35 Ask. The bank internal policy requires the deduction of an exchange margin of 0.08 Indian Rupees per US Dollar for such premier clients. Calculate the exact final amount in Indian Rupees that will be credited to the exporter current account today.
✅ Correct Answer: A
🎯 Quick Answer:
The bank will credit exactly 2,07,80,000 Indian Rupees to the exporter.Structural Breakdown: 1. Identify the transaction.
The bank is receiving US Dollars from the exporter.
Therefore, the bank is buying US Dollars.
2. Select the base rate.
In a two-way quote of 83.20 Bid and 83.35 Ask, the bank always buys at the lower Bid rate.
The base rate is 83.20.
3. Determine the correct rate type.
Since the Nostro account is already credited with zero transit delay, the bank uses the Telegraphic Transfer Buying Rate.
4. Apply the exchange margin.
The golden rule is Buy Low.
To make the buying rate lower, the bank must deduct its margin from the base rate.
Telegraphic Transfer Buying Rate equals 83.20 minus 0.08 equals 83.12 Indian Rupees per US Dollar.
5. Final Calculation.
2,50,000 US Dollars multiplied by the final rate of 83.12 equals an exact payout of 2,07,80,000 Indian Rupees.
This is read as Two Crores, Seven Lakhs, and Eighty Thousand Rupees.