In case the buyer bank lodges the claim after a period of 30 days, interest shall be payable for a maximum period of 60 days only or the actual overdue period, whichever is less.
In case of late payment of rupee funds, the buyer bank is liable to pay interest for the overdue period at the rate announced by FEDAI from time to time based on the prime lending rate of few select member banks. If the claim by the seller bank is made after 15 days, interest is payable for a maximum period of 30 days.
As already observed, the dealings in the interbank take place over telephone and the functioning of the market depends upon the mutual trust of the dealers of the bank concerned. Each dealer should be a symbol of integrity keeping up the word always and not gaining by the obvious mistakes that the other dealer may make. For instance, if the other dealer makes a quite out-of-turn rate compared to the current market rate, he brings this to the notice of the dealer quoting the rate. Besides, the conversation should be quite clear, shorn of all ambiguities.
At the end of the day, all the deals concluded are confirmed by exchange of written contracts.
Dealings with Reserve Bank.
As the central bank of the country, Reserve Bank is entrusted with the obligation of maintaining the external value of the rupee. The Reserve Bank used to buy from authorized dealers, both spot and forward, major currencies like US dollars (upto 12 months), pound-sterling (upto 9 months), Japanese Yen (upto 6 months) and Deutsche marks (upto 6 months). It sold spot and forward for three months and six months US dollar, and for spot delivery pound sterling.
Consequent to the introduction of convertibility of rupee, the exchange rate in the market is determined by the market forces. The earlier condition that the exchange rate quoted by banks to customers should not be worse than the rates derived from Reserve Bank rates in no more applicable.