Corporate hold on bank treasury

Corporate hold on bank treasury

06 Apr 2018 06:06 PM


An auto manufacturing company with import and export turnover of more than 500 crs. They are actively managing their forex exposure following sound risk management practices, they are also having some irregular ODI (Overseas direct investment) payments.

Myforexeye Value Addition

They were having one ODI outward payment on 27th march 2018 of around Euro 3.65 million. They are banking with a private bank in the process of negotiating exchange rate for the above transaction with the bank they were facing some challenges. The bank at first quoted directly in EURINR ignoring the dollar cash spot of around 6.5 paisa and over charging 3 paisa from the EURINR spot rate. They asked bank to quote dollar and euro leg separately. In the process they were off-quoting dollar by 1 paisa that was negotiated at 64.9950 spot (market rate) at around 4:15 p.m. The bank still was off quoting Euro crosses by 8 pips, after negotiating with the bank to get the spot rate euro was negotiated at 1.2410. The payment was done at net rate 80.68 including 2 paisa margin.

In the above transaction bank didn’t gave the cash spot saying the transaction was done after market hours, we informed corporate that the cash post should be considered as well in this transaction. They provided a valid proof of the transaction and conveyed that it was done at 4:15 hence the cash spot is payable. Acting on instructions of the corporate the bank reversed them 8 paisa on this transaction, through our intervention in this transaction corporate saved net (INR 2, 92,000) in cash spot reversal. The corporate exercised their right and asked for the reversal of cash spot as the transaction value was very huge.

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