Limited trading is also done in terms of other foreign currencies such as Dollar/Mark and Cable.
The banks that are allowed to do foreign exchange business under the exchange control regulations are known as "Authorized Dealers". Authorized dealers may exercise powers within the parameters laid down by the "Exchange Control Manual" and circulars issued by RBI from time to time. They are also governed by the rules of the FEDAI, which has been formed with the objective of regulating foreign exchange dealings by framing rules from time to time, with the prior approval of the RBI.
The business transacted by authorized dealers consists of deals with customers (called merchant dealing), other banks (called interbank dealings), banks in other countries, and with RBI. There are a number of Authorized Dealers in the market. Most of them however only does customer cover operations. The major trading banks are State Bank of India, Canara Bank, Syndicate Bank, Hongkong Bank, City Bank, American Bank and Standard Chartered Bank.
In order to provide facilities for the encashment of foreign currency to visitors from abroad, the RBI has also granted license to certain established firms, hotels and other organizations, permitting them to deal in foreign currency note, coins and traveller's cheques. These entities called "Authorized Money Changers". It is further divided into two categories viz., "Full fledged money changers", who are authorized to undertake both purchase and sale transactions with the public; and "Restricted Money Changers", who are authorized only to purchase foreign currency notes, coins and traveller's cheques but on a condition that these be surrendered to an authorized dealer. All other entities, including exporters, importers, and foreign currency borrowers who need to buy or sell foreign exchange have to compulsorily deal with "Authorized Dealers" or "Authorized Money Changers" only.
