Client is an exporter of medical equipments based in Hyderabad with exports worth INR 250 crores annually with exposures in USD and EUR. Client was dealing with a large private bank and didn’t avail any credit limits from the bank. The client maintains EEFC balances of around USD 4 - 5 mio round the year, books export forwards upto 1 year maturity as well as long term forwards (LTFX) and does cash conversions.
Myforexeye Value Addition:
Myforexeye did an analysis and found that the client lost INR 4 crores in 5 years by keeping large EEFC balances with bank. On conducting forex audit, we found client was paying 5-8 paise in excess of agreed margins on cash conversions, 8-12 paise per foreign currency on forwards upto 1 year maturity and 35-110 paise per foreign currency on LTFX.
After noting these slippages, client approached the bank to reduce the margins but the bank defended and refused to lower them. Since the client was unsuspecting, he was paying over INR 1 crore per annum on Fx margins.
Myforexeye then got his account opened with an MNC bank with acceptance from bank to allow Myforexeye dealers to book rates on behalf of client ensuring complete transparency and with the margin on all forex transactions reduced to a fixed margin of 3 paise per foreign currency thereby saving INR 2 crore annually. Client signed up for Portfolio Management Services for managing forex risks and Fx operations.
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