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A STUDY ON FOREIGN EXCHAGE AND ITS RISK MANAGEMENT
WRT SBI BANK
ABSTRACT
Indian economy in the post-liberalization era has witnessed increasing awareness of the
need for introduction of various risk management products to enable hedging against market
risk in a cost-effective way. This industry-wide, cross-sectional study concentrates on recent
foreign exchange risk management practices and derivatives product usage by large non-
banking Indian-based firms. The study is exploratory in nature and aims at an understanding
the risk appetite and FERM (Foreign Exchange Risk Management) practices of Indian
corporate enterprises. This study focuses on the activity of end-users of financial derivatives
and is confined to 501 non-banking corporate enterprises. A combination of simple random
and judgment sampling was used for selecting the corporate enterprises and the major
statistical tools used were Correlation and Factor analysis. The study finds wide usage of
derivative products for risk management and the prime reason of hedging is reduction in
volatility of cash flows. VAR (Value-at-Risk) technique was found to be the preferred
method of risk evaluation by maximum number of Indian corporate. Further, in terms of the
external techniques for risk hedging, the preference is mostly in favor of forward contracts,
followed by swaps and cross-currency options This article throws light on various concerns
of Indian firms regarding derivative usage and reasons for non-usage, apart form techniques
of risk hedging, risk evaluation methods adopted, risk management policy and types of
derivatives used.
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TABLE OF CONTENTS PAGE NO
CHAPTER I 3
INTRODUCTION
NEED OF THE STUDY
SCOPE OF THE STUDY
OBJECTIVES OF THE STUDY
RESEARCH METHODOLOGY
LIMITATIONS OF THE STUDY
CHAPTER II 13
REVIEW OF THE LITERATURE
CHAPTER III 25
INDUSTRY & COMPANY PROFILE
CHAPTER IV 43
DATA ANALYSIS & INTERPRETATION
CHAPTER V 60
FINDINGS
SUGGESTIONS
CONCLUSION
BIBILOGRAPHY
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CHAPTER-I
INTRODUCTION
INTRODUCTION
3
The world nations are increasingly becoming more interrelated global trade, and global
investment. These international result in cross country flow of world nations. Countries hold
currencies of other countries and that a market, dealing of foreign exchange results.
Foreign exchange means reserves of foreign currencies. More aptly, foreign exchange refers
to claim to foreign money balances. Foreign exchange gives resident of one country a
financial claim on other country or countries. All deposits, credits and balances payable in
foreign currency and any drafts, travelers’ cheques, letters of credit and bills of exchange
payable in foreign currency constitute foreign exchange. Foreign exchange market is the
market where money denominated in one currency is bought and sold with money
denominated in another currency. Transactions in currencies of countries, parties to these
transactions, rates at which one currency is exchanged for other or others, ramificataion in
these rates, derivatives to the currencies and dealing in them and related aspects constitute
the foreign exchange (in short, forex) market.
Foreign exchange transactions take place whenever a country imports goods and services,
people of a country undertake visits to other counties, citizens of a country remit money
abroad for whatever purpose, business units set up foreign subsidiaries and so on. In all
these cases the nation concerned buys relevant and required foreign exchange, in exchange
of its currency, or draws from foreign exchange reserves built. On the other hand, when a
country exports goods and services to another country, when people of other countries visit
the country, when citizens of the country settled abroad remit money homewards, when
foreign citizens, firms and institutions invest in the country and when the country or its
business community raises funds from abroad, the country’s currency is bought by others,
giving foreign exchange, in exchange.
Multinational firms operate in more than one country and their operations involve multiple
foreign currencies. Their operations are influenced by politics and the laws of the counties
where they operate. Thus, they face higher degree of risk as compared to domestic firms. A
matter of great concern for the international firms is to analyze the implications of the
changes in interest rates, inflation rates and exchange rates on their decisions and minimize
the foreign exchange risk.
The importance of the study is to know the features of foreign exchange and the factors
creating risk in foreign exchange transactions and the techniques used for managing that
risk.
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NEED OF THE STUDY
5
The importance of the study is to know the features of foreign exchange and the factors
creating risk in foreign exchange transactions and the techniques used for managing that
risk. The world nations are increasingly becoming more interrelated global trade, and global
investment. These international result in cross country flow of world nations. Countries hold
currencies of other countries and that a market, dealing of foreign exchange results.
Foreign exchange transactions take place whenever a country imports goods and services,
people of a country undertake visits to other counties, citizens of a country remit money
abroad for whatever purpose, business units set up foreign subsidiaries and so on. In all
these cases the nation concerned buys relevant and required foreign exchange, in exchange
of its currency, or draws from foreign exchange reserves built. On the other hand, when a
country exports goods and services to another country, when people of other countries visit
the country, when citizens of the country settled abroad remit money homewards, when
foreign citizens, firms and institutions invest in the country and when the country or its
business community raises funds from abroad, the country’s currency is bought by others,
giving foreign exchange, in exchange. Foreign exchange means reserves of foreign
currencies. More aptly, foreign exchange refers to claim to foreign money balances. Foreign
exchange gives resident of one country a financial claim on other country or countries. All
deposits, credits and balances payable in foreign currency and any drafts, travelers’ cheques,
letters of credit and bills of exchange payable in foreign currency constitute foreign
exchange. Foreign exchange market is the market where money denominated in one
currency is bought and sold with money denominated in another currency. Transactions in
currencies of countries, parties to these transactions, rates at which one currency is
exchanged for other or others, ratificataion in these rates, derivatives to the currencies and
dealing in them and related aspects constitute the foreign exchange (in short, forex) market.
SCOPE OF THE STUDY
6
1. There is a further scope to carry out the research by focusing on single derivative
tool and critically analyzing various facets thereof in managing the currency risk by
corporates
2. The Decision Support System so developed can be converted into a software
programme, so as to avoid the possibility of human error that may creep in
compilation and processing of the data.
3. There is also scope to work on foreign exchange derivative market in developed
nations in comparison with Indian foreign exchange derivative market.
OBJECTIVES OF THE STUDY
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 To study and understand the foreign exchange.
 To study and analyze the revenues of the company when the exchange rates
fluctuate.
 To analyze income statement and find out the revenues when the dollars are
converted into Indian rupees.
 To study the different types of foreign exchange exposure including risk and risk
management techniques which the company is used to minimize the risk.
 To present the findings and conclusions of the company in respect of foreign
exchange risk management
RESEARCH AND METHODOLOGY
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SAMPLING SIZE
In this study the sample size is taken in the form of income statement of company for the
year march 2016-17.
SOURCES OF DATA
The data has been collected from various secondary sources like books and internet.
The data has been collected in line with the objectives of the study.
The presentation of study provides an insight in knowing the foreign exchange risk policies
adopted by them. This data has been collected from the 2017-18 annual reports of the
companies.
Conclusions have been drawn after the detailed study of the risk management policies of the
company as to know what are the most widely used hedging instruments for minimizing
foreign exchange risk.
METHODOLOGY
 The total revenues of the income statements are converted from USA $ to Indian
rupee.
 The revenues of the companies are divided into 40:60.
 The rates which are used for the study are taken as mid value i.e., is Rs.61 and it
is compared with minimum & maximum exchange rates.
LIMITATIONS
9
 The study is confined just to the foreign exchange risk but not the total risk.
 The analysis of this study is mainly done on the income statements.

 This study is limited for the year 2017-18.
 It does not take into consideration all Indian companies foreign exchange risk.
 The hedging techniques are studied only which the company adopted to minimize
foreign exchange risk
ASSUMPTIONS
 The total revenues are assumed 40% as domestic & 60% as foreign revenues.
 The exchange rates are taken averagely.
 The information collected from various websites are assumed to be accurate and
true.
 Risk management is an integral part of an organization policy and is inevitable.
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CHAPTER-II
LITERATURE REVIEW
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LITERATURE REVIEW
Definition of International Trade:

International trade refers to trade between the residents of two different countries. Each
country functions as a sovereign state with its own set of regulations and currency. The
difference in the nationality of the export and the importer presents certain peculiar problem
in the conduct of international trade and settlement of the transactions arising there from.
Important among such problems are:
a) Different countries have different monetary units;
b) Restrictions imposed by counties on import and export of goods:
c) Restrictions imposed by nations on payments from and into their countries;
d) Different in legal practices in different countries.
The existing of national monetary units poses a problem in the settlement of
international transactions. The exporter would like to get the payment in the currency of
own country. For instance, if American exporter of New York exports machinery to
Indian rupee will not serve their purpose because Indian rupee cannot be used as
currency inn rupees. Thus the exporter requires payment in the importer’s country. A
need, therefore, arises for conversion of the currency of the importer’s country into that
of the exporter’s country.
Foreign exchange: Foreign exchange is the mechanism by which the currency of one
country gets converted into the currency of another country. The conversion is done by
banks who deal in foreign exchange. These banks maintain stocks of foreign currencies
in the form of balances with banks abroad. For instance, Indian Bank may maintain an
account with Bank of America, New York, in which dollar are held. In the earlier
example, if Indian importers pay the equivalent rupee to Indian bank, it would arrange to
pay American export at New York in dolor from the dollar balances held by it with Bank
of America.
Exchange rate:
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The rate at which one currency is converted into another currency is the rate of exchange
between the currencies concerned. The rate of exchange for a currency is known from
the quotation in the foreign exchange market.
In the illustration, if Indian bank exchanged us for Indian rupee at Rs.60 a dollar, the
exchange rate between rupee and dollar can be expressed as
USD 1=Rs.60.
The banks operating at a financial center, and dealing in foreign exchange, constitute the
foreign exchange market. As in any commodity or market, the rates in the foreign
exchange market are determined by the interaction of the forces of demand and supply
of the commodity dealt, viz., foreign exchange. Since the demand and supply are
affected by a number of factors, both fundamental and transitory, the rates keep on
changing frequently, and violently too.
Some of the important factors which affect exchange rates are:
 Balance of payments
 Inflation
 Interest rates
 Money Supply
 National Income
 Resource Discoveries
 Capital Movements
 Political Factors
 Psychological Factors and Speculation
 Technical and Market Factors
Balance of payment: It represents the demand for and supply of foreign exchange which
ultimately determine the value of the currency. Exporters from the country demand for the
currency of the country in the forex market. The exporters would offer to the market the
foreign currencies have acquired and demand in exchange the local currency. Conversely,
imports into the country will increase the supply of currency of the country in the forex
market. When the BOP of a country is continuously at deficit, it implies that demand for the
currency of the country is lesser than the supply. Therefore, its value in the market declines.
If the BPO is surplus, continuously, it shows the demand for the currency is higher than its
supply and therefore the currency gains in value.
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Inflation: inflation in the country would increase the domestic prices of the commodities.
With increase in prizes exports may dwindle because the price may not be competitive.
With the decrease in export the demand for the currency would also decline; this it in turn
would result in the decline of external value of the currency. It should be noted that it is the
relative rate of inflation in the two counties that cause changes in the exchange rates.
Interest rates: The interest rate has a great influence on the short-term movement of capital.
When the interest rate at a center rises, it attracts short term funds from other centers. This
would increase the demand for the currency at the center and hence its value. Rising of
interest rate may be adopted by a country due to money conditions or as a deliberate attempt
to attract foreign investment.
Money supply: An increase in money supply in the country will affect the exchange rates
through causing inflation in the country. It can also affect the exchange rate directly.
National income: An increase in national income reflects increase in the income of the
residents of the country. The increase in the income increases the demand for goods in the
country. If there is underutilized production capacity in the country, this would lead to
increase in production. There is a change for growth in exports too. Where the production
does not increase in sympathy with income rises, it leads to increased imports and increased
supply of the currency of the country in the foreign exchange market. The result is similar to
that of inflation viz., and decline in the value of the currency. Thus an increase in national
income will lead to an increase in investment or in the consumption, and accordingly, its
effect on the exchange rate will change.
Resource discoveries: When the country is able to discover key resources, its currency gains
in value.
Capital Movements: There are many factors that influence movement of capital from one
country to another. Short term movement of capital may be influenced by the offer of higher
interest in a country. If interest rate in a country rises due to increase in bank rate or
otherwise, there will be a flow of short-term funds into the country and the exchange rate of
the country will rise. Reserves will happen in case of fall in interest rates.
Bright investment climate and political stability may encourage portfolio investment in the
country. This leads to higher demand for the currency and upward trend in its rate. Poor
economic outlook may mean repatriation of the investments leading to decreased demand
and lower exchange value for the currency of the country.
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Movement of capital is also caused by external borrowings and assistance. Large-scale
external borrowings will increase the supply of foreign exchange in the market. This will
have a favorable effect on the exchange rate of the currency of the country. When a
repatriation of principal and interest starts the rata may be adversely affected.
Other factors include political factors, Psychological factors and Speculation, Technical and
Market factors.
ADMINISTRATION FRAME WORK FOR FOREIGN EXCHANGE IN INDIA
The Central Government has been empowered under Section 46 of the Foreign Exchange
Management Act to make rules to carry out the provisions of the Act. Similarly, Section 47
empowers the Reserve Bank to make regulations to carry out the provisions of the Act and
the rules made there under.
The Foreign Contribution (Regulation) Act, 1976 is to regulate the acceptance and
utilization of foreign contribution/ donation or foreign hospitality by certain persons or
associations, with a view to ensuring that Parliamentary institutions, political associations
and academic and other voluntary organizations as well as individuals working in the
important areas of national life may function in a manner consistent with the values of a
sovereign democratic republic.
It is basically an act to ensure that the integrity of Indian institutions and persons is
maintained and that they are not unduly influenced by foreign donations to the prejudice of
India’s interests.
The Foreign Exchange Management Act (FEMA) is a law to replace the draconian Foreign
Exchange Regulation Act, 1973. Any offense under FERA was a criminal offense liable to
imprisonment, Whereas FEMA seeks to make offenses relating to foreign exchange civil
offenses. Unlike other laws where everything is permitted unless specifically prohibited,
under FERA nothing was permitted unless specifically permitted. Hence the tenor and tone
of the Act was very drastic. It provided for imprisonment of even a very minor offense.
Under FERA, a person is presumed innocent unless he is proven guilty. With liberalization,
a need was felt to remove the drastic measure of FERA and replace them by a set of liberal
foreign exchange management regulations. Therefore FEMA was enacted to replace
FERA.
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FEMA extends to the whole of India. It applies to all Branches, offences and agencies
outside India owned or controlled by a person resident in India and also to any
contravention there under committed outside India by any person to whom this Act applies.
FEMA contains definitions of certain terms which have been used throughout the Act. The
meaning of these terms may differ under other laws or common language. But for the
purpose of FEMA, the terms will signify the meaning as defined there under.
Authorized persons:
With the Reserve Bank has the authority to administer foreign exchange in India, it is
recognized that it cannot do so by itself. Foreign exchange is received or required by a large
number of exports and imports in the country spread over a vast geographical area. It would
be impossible for the reserve Bank to deal with them individually. Therefore, provisions has
been made in the Act, enabling the Reserve Bank to authority any person to be known as
authority person to deal in the foreign exchange or foreign securities, as an authorized
dealer, money changer or offshore banking unit or any other manner as it deems fit.
Authorized dealers:
A major portion of actual dealing in foreign exchange from the customers (importers,
exporters and others receiving or making personal remittance) is dealt with by such of the
banks in India which have been authorized by Reserve
Bank to deal in foreign exchange. Such of the banks and selected financial institutions who
have been authorized Dealer
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Fig: ADMINISTRATION OF FOREIGN EXCHANGE IN INDIA
FOREIGN EXCHANGE MANAGEMENT ACT
CENTRAL GOVERNMENT
RESERVE BANK OF INDIA
AUTHORISED PERSONS
FOREIGN EXCHANGE DEALER

ASSOCIATION OF INDIA
AUTHORISED MONEY ATHORISED DEALERS

CHANGERS
FULL FLEDGE RESTRICTED
FOREIGN EXCHANGE DEALER’S ASSOCIATION OF

INDIA (FEDAI)
FEDAI was establishing in 1958 as an association of all authorized dealers in India. The
principal functions of FEDAI are:
To frame rules for the conduct of foreign exchange business in India. These rules cover
various aspects like hours of business, charges for foreign exchange transactions, quotation
17
of rates to customer, interbank dealings, etc. All authorized dealers have given undertaking
to the Reserve Bank to abide these rules.
To coordinate with Reserve Bank of India in Proper administration of exchange control
To control information likely to be of interest to its members
Thus, FEDAI provides a vital link in the administrative set-up of foreign exchange in India.
AUTHORIZED MONEY CHANGERS

To provide facilities for encashment of foreign currency for tourists, etc., Reserve Bank has
granted limited licenses to certain established firms, hotels and other organizations
permitting them to deal in foreign currency notes, coins and travelers’ cheques subject to
directions issued to them from time to time. These firms and organizations are called
‘Authorized Money Changers’. An authorized money changer may be a full fledged money
changer or a restricted money changer. A full fledged money changer is authorized to
undertake both purchase and sale transactions with the public. A restricted money changer is
authorized only to purchase foreign currency notes, coins and travelers’ cheques subject to
the condition that all such collections are surrendered by him in turn to authorized dealer in
foreign exchange. The current thinking of the Reserve Bank is to authorize more
establishments as authorized money changers in order to facilitate easy conversion facilities.
THE FOREIGN EXCHANGE MARKET

The Foreign exchange market is the market where in which currencies are bought and sold
against each other. It is the largest market in the world. It is to be distinguished from a
financial market where currencies are borrowed and lent.
Foreign exchange market facilitates the conversion of one currency to another for various
purposes like trade, payment for services, development projects, speculation etc. Since the
number of participants in the market s has increased over the years have become highly
competitive and efficient.
With improvement in trade between countries, there was a pressing need to have some
mechanism to facilitate easy conversion of currencies. This has been made possible by the
foreign exchange markets.
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Considering international trade, a country would prefer to import goods for which it does
not have a competitive advantage, while exporting goods for which it has a competitive
advantage over others.
Thus trade between countries is important for common good but nations are separated by
distance, which that there is a lot of time between placing an order and its actual delivery.
No supplier would be willing to wait until actual delivery for receiving payments. Hence,
credit is very important at every stage of the transaction. The much needed credit servicing
and conversion of the currency is facilitated by the foreign exchange market.
Also the exchange rates are subject to wide fluctuations. There is therefore, a constant risk
associated exchange markets cover the arising out of the fluctuations in exchange rates
through “hedging”.
Forex market is not exactly a place and that there is no physical meeting but meeting is
affected by mail or over phone.
FOREIGN EXHANGE TRANSACTIONS

Foreign exchange transactions taking place in foreign exchange markets can be broadly
classified into Interbank transactions and Merchant transactions. The foreign exchange
transactions taking place among banks are known as interbank transactions and the rates
quoted are known as interbank rates. The foreign exchange transactions that take place
between a bank and its customer known as’ Merchant transactions’ and the rates quoted are
known as merchant rates.
Merchant transactions take place when as exporter approaches his bank to convert his sale
proceeds to home currency or when an importer approaches his banker to convert domestic
currency into foreign currency to pay his dues on import or when a resident approaches his
bank to convert foreign currency received by him into home currency or vice versa. When a
bank buys foreign exchange from a customer it sells the same in the interbank market at a
higher rate and books profit. Similarly, when a bank sells foreign exchange to a customer, it
buys from the interbank market, loads its margin and thus makes a profit in the deal.
The modes of foreign exchange remittances
Foreign exchange transactions involve flow of foreign exchange into the country or out of
the country depending upon the nature of transactions. A purchase transaction results in
inflow of foreign exchange while a sale transaction result in inflow of foreign exchange.
The former is known as inward remittance and the latter is known as outward remittance.
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Remittance could take place through various modes. Some of them are:
 Demand draft
 Mail transfer
 Telegraphic transfer
 Personal cheques
Types of buying rates:
 TT buying rate and
 Bill buying rate
TT buying rate is the rate applied when the transaction does not involve any delay in the
realization of the foreign exchange by the bank. In other words, the Nastro account of the
bank would already have been credited. This rate is calculated by deducting from the
interbank buying rate the exchange margin as determined by the bank.
Bill buying rate: This is the rate to be applied when foreign bill is purchased. When a bill is
purchased, the rupee equivalent of the bill values is paid to the exporter immediately.
However, the proceeds will be realized by the bank after the bill is presented at the overseas
centre.
Types of selling rates:
 TT selling rates
 Bill selling rates
TT Selling rate: All sale transactions which do not handling documents are put through at
TT selling rates.
Bill Selling rates: This is the rate applied for all sale transactions with public which involve
handling of documents by the bank.
Inter Bank transactions:
The exchange rates quoted by banks to their customer are based on the rates prevalent in the
Inter Bank market. The big banks in the market are known as market makers, as they are
willing to pay or sell foreign currencies at the rates quoted by them up to any extent.
Depending upon its resources, a bank may be a market in one or few major currencies.
When a banker approaches the market maker, it would not reveal its intention to buy or sell
the currency. This is done in order to get a fair price from the market maker.
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Two way quotations
Typically, then quotation in the Inter Bank market is a two- way quotation. It means, the
rate quoted by the market maker will indicate two prices, one which it is willing to buy the
foreign currency and the other at which it is willing to sell the foreign currency. For
example, a Mumbai bank may quote its rate for US dollars as under.
USD 1= Rs.41.16255/1750
More often, the rate would be quoted as 1625/1750 since the players in the market are
expected to know the ‘big number’ i.e., Rs.41. in the above quotation, once rate us
Rs.41.1625 per dollar and the other rate is Rs.41.1750 per dollar.
Direct quotation
It will be obvious that the quotation bank will be to buy dollars at 41.1625 and sell dollars at
Rs41.1750. if once dollar bought and sold, the bank makes a profit of 0.0135.
In a foreign exchange quotation, the foreign currency is the commodity that is being bought
and sold. The exchange quotation which gives the price for the foreign v\currency in term of
the domestic currency is known as direct quotation. In a direct quotation, the quoting bank
will apply the rule: “buy low’ sell high”.
Indirect quotation
There is another way of quoting in the foreign exchange market. The Mumbai bank quote
the rate for dollar as:
Rs.100=USD 1.66/67
This type of quotation which gives the quality of foreign currency per unit of domestic
currency is known as indirect quotation. In this case, the quoting bank will receive USD
1.67 per Rs.100 while buying dollars and give away USD 1.67 per Rs.100 while selling
dollars In other words, “Buy high, sell low” is applied.
This buying rate is also known as the ‘bid’ rate and the selling rate as the ‘offer’ rate. The
difference between these rates is the gross profit for the bank and known as the ‘Spread’.
Spot and forward transactions
The transactions in the Inter Bank market May place for settlement-
 On the same day; or
 Two days later;
 Some day late; say after a month
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Where the agreement to buy and sell is agreed upon and executed on the same date, the
transaction is known as cash or ready transaction. It is also known as value today.
The transaction where the exchange of currencies takes place after the date of contract is
known as the Spot Transaction. For instance if the contract is made on Monday, the delivery
should take place on Wednesday. If Wednesday is a holiday, the delivery will take place on
the next day, i.e., Thursday. Rupee payment is also made on the same day the foreign
exchange is received.
The transaction in which the exchange of currencies takes place at a specified future date,
subsequent to the spot rate, is known as a forward transaction. The forwards transaction can
be for delivery one month or two months or three months, etc. A forward contract for
delivery one month means the exchange of currencies will take place after one month from
the date of contract. A forwards contract for delivery two months means the exchange of
currencies will take place after two months and so on.
Spot and Forwards rates
Spot rate of exchange is the rate for immediate delivery of foreign exchange. It is prevailing
at a particular point of time. In a forward rate, the quoted is for delivery at a future date,
which is usually 30, 60, 90 or 180 days later. The forward rate may be at premium or
discount to the spot rate, Premium rate, i.e., forward rate is higher than the spot rate, implies
that the foreign currency is to appreciate its value in the future. May be due to larger
demand for goods and services of the country of that currency. The percentage of
annualized discount or premium in a forward quote, in relation to the spot rate, is computed
by the following.
Forward Premium = Forward rate-spot rate * 13
(discount) Spot rate No. of months forward
If the spot rate is higher than the forward rate, there is forward discount and if the forward
rate higher than the spot rate there is forward premium rate.
Forward margin/Swap points
Forward rate may be the same as the spot rate for the currency. Then it is said to be ‘at par’
with the spot rate. But this rarely happens. More often the forward rate for a currency may
be costlier or cheaper than its spot rate. The difference between the forward rate and the spot
rate is known as the ‘Forward margin’ or ‘Swap Points’. The forward margin may be at a
premium or at discount. If the forward margin is at premium, the foreign currency will be
22
costlier under forward rate than under the spot rate. If the forward margin is at discount, the
foreign currency will be cheaper for forward delivery than for spot delivery.
Under direct quotation, premium is added to the spot rate to arrive at the forward rate. This
is done for both purchase and sale transactions. Discount is deducted from spot rate to arrive
at the forward rates.
Other rates
Buying rate and selling refers to the rate at which a dealer in forex is willing to buy the
forex and sell the forex. In theory, there should not be difference in these rates. But in
practices, the selling rate is higher than the buying rate. The forex dealer, while buying the
forex pay less rupees, but gets more when he sells the forex. After adjusting for operating
expenses, the dealer books a profit through the ‘buy and sell’ rates differences.
Transactions in exchange market consist of purchases and sales of currencies between
dealers and customers and between dealers and dealers. The dealers buy forex in the form of
bills, drafts and with foreign banks, from customer to enable them to receive payments from
abroad.
The resulting accumulated currency balances with dealers are disposed of by selling
instruments to customers who need forex to make payment to foreigners. The selling price
for a currency quoted by the dealer (a bank) is slightly higher than the purchase price to give
the bank small profit in the business. Each dealer gives a two-way quote in forex.
Single Rate refers to the practices of adopting just rate between the two currencies. A rate
for exports, other for imports, other for transaction with preferred area, etc, if adopted by a
country, that situation is known as multiple rates.
Fixed rate refers to that rate which is fixed in terms of gold or is pegged to another currency
which has a fixed value in terms of gold. Flexible rate keeps the exchange rate fixed over a
short period, but allows the same to vary in the long term in view of the changes and shifts
in another as conditioned by the free of market forces. The rate is allowed to freely float at
all times.
Current rate: Current rate of exchange between two currencies fluctuate from day to day or
even minute to minute, due to changes in demand and supply. But these movements take
place around a rate which may be called the ‘normal rate’ or the par of exchange or the true
rate. International payments are made by different instruments, which differ in their time to
maturity.
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A Telegraphic Transfer (TT) is the quickest means of effecting payments. A T.T rate is
therefore, higher than that of any other kind of bill. A sum can be transferred from a bank in
one country to a bank in another part of the world by cable or telex. It is thus, the quickest
method of transmitting funds from one center to another.
Slight rates applicable in the case of bill instrument with attending delay in maturity and
possible loss of instrument in transit, are lower than most other rates.
Similarly, there are other clusters of rates, such as, one month’s rate, 3month’s rate. Longer
the duration, lower the price (of the foreign currency in terms of domestic).
The exchange rate between two given currencies may be obtained from the rates of these
two currencies in terms of a third currency. The resulting rate is called the Cross rate.
Arbitrage in the foreign exchange market refers to buying a foreign currency in a market
where it is selling lower and selling the same in a market where it is bought higher.
Arbitrage involves no risk as rates are known in advance. Further, there is no investment
required, as the purchase of one currency is financed by the sale of other currency.
Arbitrageurs gain in the process of arbitraging.
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CHAPTER-III
INDUSTRY & COMPANY PROFILE
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INDUSTRY PROFILE
A bank is a financial institution that accepts deposits and channels those deposits into
lending activities. Banks primarily provide financial services to customers while enriching
investors. Government restrictions on financial activities by banks vary over time and
location. Banks are important players in financial markets and offer services such as
investment funds and loans. In some countries such as Germany, banks have historically
owned major stakes in industrial corporations while in other countries such as the United
States banks are prohibited from owning non-financial companies. In Japan, banks are
usually the nexus of a cross-share holding entity known as the keiretsu. In France, bank
assurance is prevalent, as most banks offer insurance services (and now real estate services)
to their clients. The level of government regulation of the banking industry varies widely,
with countries such as Iceland, having relatively light regulation of the banking sector, and
countries such as China having a wide variety of regulations but no systematic process that
can be followed typical of a communist system.
The oldest bank still in existence is Monte deiPaschi di Siena, headquartered in Siena, Italy,
which has been operating continuously since 1572.
HISTORY
Origin of the word:
The name bank derives from the Italian word banco "desk/bench", used during the
Renaissance by Jewish Florentine bankers, who used to make their transactions above a
desk covered by a green tablecloth. However, there are traces of banking activity even in
ancient times, which indicates that the word 'bank' might not necessarily come from the
word 'banco'.
In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders
would set up their stalls in the middle of enclosed courtyards called macella on a long bench
called a bancu, from which the words banco and bank are derived. As a moneychanger, the
merchant at the bancu did not so much invest money as merely convert the foreign currency
into the only legal tender in Rome—that of the Imperial Mint.
26
The earliest evidence of money-changing activity is depicted on a silver drachm coin from
ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325 BC,
presented in the British Museum in London. The coin shows a banker's table (trapeza) laden
with coins, a pun on the name of the city.
In fact, even today in Modern Greek the word Trapeza (Τράπεζα) means both a table and a
bank.
Traditional banking activities
Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, EFTPOS, and ATM.
Banks borrow money by accepting funds deposited on current accounts, by accepting term
deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by
making advances to customers on current accounts, by making installment loans, and by
investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered indispensable
by most businesses, individuals and governments. Non-banks that provide payment services
such as remittance companies are not normally considered an adequate substitute for having
a bank account.
Banks borrow most funds from households and non-financial businesses, and lend most
funds to households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market funds,
cash management trusts and other non-bank financial institutions in many cases provide an
adequate substitute to banks for lending savings to.
Entry regulation
Currently in most jurisdictions commercial banks are regulated by government entities and
require a special bank licence to operate.
27
Usually the definition of the business of banking for the purposes of regulation is extended
to include acceptance of deposits, even if they are not repayable to the customer's order—
although money lending, by itself, is generally not included in the definition.
Unlike most other regulated industries, the regulator is typically also a participant in the
market, i.e. a government-owned (central) bank. Central banks also typically have a
monopoly on the business of issuing banknotes. However, in some countries this is not the
case. In the UK, for example, the Financial Services Authoritylicences banks, and some
commercial banks (such as the Bank of Scotland) issue their own banknotes in addition to
those issued by the Bank of England, the UK government's central bank.
Definition
The definition of a bank varies from country to country.
Under English common law, a banker is defined as a person who carries on the business of
banking, which is specified as:
 conducting current accounts for his customers

 paying cheques drawn on him, and
 collecting cheques for his customers.
In most English common law jurisdictions there is a Bills of Exchange Act that codifies the
law in relation to negotiable instruments, including cheques, and this Act contains a
statutory definition of the term banker: banker includes a body of persons, whether
incorporated or not, who carry on the business of banking' (Section 2, Interpretation).
Although this definition seems circular, it is actually functional, because it ensures that the
legal basis for bank transactions such as cheques do not depend on how the bank is
organized or regulated.
The business of banking is in many English common law countries not defined by statute
but by common law, the definition above. In other English common law jurisdictions there
are statutory definitions of the business of banking or banking business. When looking at
these definitions it is important to keep in mind that they are defining the business of
banking for the purposes of the legislation, and not necessarily in general. In particular,
most of the definitions are from legislation that has the purposes of entry regulating and
28
supervising banks rather than regulating the actual business of banking. However, in many
cases the statutory definition closely mirrors the common law one. Examples of statutory
definitions:
 "banking business" means the business of receiving money on current or deposit

account, paying and collecting cheques drawn by or paid in by customers, the
making of advances to customers, and includes such other business as the Authority
may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2,
Interpretation).
 "banking business" means the business of either or both of the following:
1. receiving from the general public money on current, deposit, savings or other similar
account repayable on demand or within less than [3 months] ... or with a period of
call or notice of less than that period;
2. paying or collecting cheques drawn by or paid in by customers[6]
Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit,
direct debit and internet banking, the cheque has lost its primacy in most banking systems as
a payment instrument. This has led legal theorists to suggest that the cheque based definition
should be broadened to include financial institutions that conduct current accounts for
customers and enable customers to pay and be paid by third parties, even if they do not pay
and collect cheques.
Accounting for bank accounts
Bank statements are accounting records produced by banks under the various accounting
standards of the world. Under GAAP and IFRS there are two kinds of accounts: debit and
credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and
Expenses. This means you credit a credit account to increase its balance, and you debit a
debit account to decrease its balance.
This also means you debit your savings account every time you deposit money into it (and
the account is normally in deficit), while you credit your credit card account every time you
spend money from it (and the account is normally in credit).
29
However, if you read your bank statement, it will say the opposite—that you credit your
account when you deposit money, and you debit it when you withdraw funds. If you have
cash in your account, you have a positive (or credit) balance; if you are overdrawn, you have
a negative (or deficit) balance.
The reason for this is that the bank, and not you, has produced the bank statement. Your
savings might be your assets, but the bank's liability, so they are credit accounts (which
should have a positive balance). Conversely, your loans are your liabilities but the bank's
assets, so they are debit accounts (which should also have a positive balance).
Where bank transactions, balances, credits and debits are discussed below, they are done so
from the viewpoint of the account holder—which is traditionally what most people are used
to seeing.
Economic functions
1. Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because
they are negotiable and/or repayable on demand, and hence valued at par. They are
effectively transferable by mere delivery, in the case of banknotes, or by drawing a
cheque that the payee may bank or cash.
2. Netting and settlement of payments – banks act as both collection and paying agents
for customers, participating in interbank clearing and settlement systems to collect,
present, be presented with, and pay payment instruments. This enables banks to
economize on reserves held for settlement of payments, since inward and outward
payments offset each other. It also enables the offsetting of payment flows between
geographical areas, reducing the cost of settlement between them.
3. Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.
4. Credit quality improvement – banks lend money to ordinary commercial and
personal borrowers (ordinary credit quality), but are high quality borrowers. The
improvement comes from diversification of the bank's assets and capital which
provides a buffer to absorb losses without defaulting on its obligations. However,
banknotes and deposits are generally unsecured; if the bank gets into difficulty and
30
pledges assets as security, to raise the funding it needs to continue to operate, this
puts the note holders and depositors in an economically subordinated position.
5. Maturity transformation – banks borrow more on demand debt and short term debt,
but provide more long term loans. In other words, they borrow short and lend long.
With a stronger credit quality than most other borrowers, banks can do this by
aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions
(e.g. withdrawals and redemptions of banknotes), maintaining reserves of cash,
investing in marketable securities that can be readily converted to cash if needed,
and raising replacement funding as needed from various sources (e.g. wholesale cash
markets and securities markets).
Law of banking
Banking law is based on a contractual analysis of the relationship between the bank (defined
above) and the customer—defined as any entity for which the bank agrees to conduct an
account.
The law implies rights and obligations into this relationship as follows:
1. The bank account balance is the financial position between the bank and the
customer: when the account is in credit, the bank owes the balance to the customer;
when the account is overdrawn, the customer owes the balance to the bank.
2. The bank agrees to pay the customer's cheques up to the amount standing to the
credit of the customer's account, plus any agreed overdraft limit.
3. The bank may not pay from the customer's account without a mandate from the
customer, e.g. a cheque drawn by the customer.
4. The bank agrees to promptly collect the cheques deposited to the customer's account
as the customer's agent, and to credit the proceeds to the customer's account.
5. The bank has a right to combine the customer's accounts, since each account is just
an aspect of the same credit relationship.
6. The bank has a lien on cheques deposited to the customer's account, to the extent that
the customer is indebted to the bank.
7. The bank must not disclose details of transactions through the customer's account—
unless the customer consents, there is a public duty to disclose, the bank's interests
require it, or the law demands it.
31
8. The bank must not close a customer's account without reasonable notice, since
cheques are outstanding in the ordinary course of business for several days.
These implied contractual terms may be modified by express agreement between the
customer and the bank. The statutes and regulations in force within a particular jurisdiction
may also modify the above terms and/or create new rights, obligations or limitations
relevant to the bank-customer relationship.
Some types of financial institution, such as building societies and credit unions, may be
partly or wholly exempt from bank licence requirements, and therefore regulated under
separate rules.
The requirements for the issue of a bank licence vary between jurisdictions but typically
include:
1. Minimum capital
2. Minimum capital ratio
3. 'Fit and Proper' requirements for the bank's controllers, owners, directors, and/or
senior officers
4. Approval of the bank's business plan as being sufficiently prudent and plausible.
Types of banks
Banks' activities can be divided into retail banking, dealing directly with individuals and
small businesses; business banking, providing services to mid-market business; corporate
banking, directed at large business entities; private banking, providing wealth management
services to high net worth individuals and families; and investment banking, relating to
activities on the financial markets. Most banks are profit-making, private enterprises.
However, some are owned by government, or are non-profit organizations.
Central banks are normally government-owned and charged with quasi-regulatory

responsibilities, such as supervising commercial banks, or controlling the cash interest rate.
They generally provide liquidity to the banking system and act as the lender of last resort in
event of a crisis.
32
Types of retail banks
 Commercial bank: the term used for a normal bank to distinguish it from an
investment bank. After the Great Depression, the U.S. Congress required that banks
only engage in banking activities, whereas investment banks were limited to capital
market activities. Since the two no longer have to be under separate ownership, some
use the term "commercial bank" to refer to a bank or a division of a bank that mostly
deals with deposits and loans from corporations or large businesses.
 Community Banks: locally operated financial institutions that empower employees
to make local decisions to serve their customers and the partners.
 Community development banks: regulated banks that provide financial services and
credit to under-served markets or populations.
 Postal savings banks: savings banks associated with national postal systems.
 Private banks: banks that manage the assets of high net worth individuals.
 Offshore banks: banks located in jurisdictions with low taxation and regulation.
Many offshore banks are essentially private banks.
 Savings bank: in Europe, savings banks take their roots in the 19th or sometimes
even 18th century. Their original objective was to provide easily accessible savings
products to all strata of the population. In some countries, savings banks were
created on public initiative; in others, socially committed individuals created
foundations to put in place the necessary infrastructure. Nowadays, European
savings banks have kept their focus on retail banking: payments, savings products,
credits and insurances for individuals or small and medium-sized enterprises. Apart
from this retail focus, they also differ from commercial banks by their broadly
decentralised distribution network, providing local and regional outreach—and by
their socially responsible approach to business and society.
 Building societies and Lands banks: institutions that conduct retail banking.
 Ethical banks: banks that prioritize the transparency of all operations and make only
what they consider to be socially-responsible investments.
33
Types of investment banks
 Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade
for their own accounts, make markets, and advise corporations on capital market
activities such as mergers and acquisitions.
 Merchant banks were traditionally banks which engaged in trade finance. The
modern definition, however, refers to banks which provide capital to firms in the
form of shares rather than loans. Unlike venture capital firms, they tend not to invest
in new companies.
 Both combined
 Universal banks, more commonly known as financial services companies, engage in

several of these activities. These big banks are very diversified groups that, among
other services, also distribute insurance— hence the term bancassurance, a
portmanteau word combining "banque or bank" and "assurance", signifying that both
banking and insurance are provided by the same corporate entity.
Other types of banks
 Islamic banks adhere to the concepts of Islamic law. This form of banking revolves
around several well-established principles based on Islamic canons. All banking
activities must avoid interest, a concept that is forbidden in Islam. Instead, the bank
earns profit (markup) and fees on the financing facilities that it extends to customers.
34
COMPANY PROFILE
State Bank of India (SBI) is an Indian multinational, public sector banking and financial

services company. It is a government-owned corporation with its headquarters in Mumbai,
Maharashtra. On 1st April, 2018, State Bank of India, which is India's largest Bank merged
with five of its Associate Banks (State Bank of Bikaner & Jaipur, State Bank of Hyderabad,
State Bank of Mysore, State Bank of Patiala and State Bank of Travancore) and Bharatiya
Mahila Bank with itself. This is the first ever large scale consolidation in the Indian Banking
Industry. With the merger, State Bank of India will enter the league of top 50 global banks
with a balance sheet size of 33 trillion, 278,000 employees, 420 million customers, and
more than 24,000 branches and 59,000 ATMs. SBI's market share will increase to 22
percent from 18 per cent. It has 198 offices in 37 countries. 301 correspondents in 72
countries. The company is ranked 232nd on the Fortune Global 500 list of the world's
biggest corporations as of 2017.
The bank traces its ancestry to British India, through the Imperial Bank of India, to the
founding, in 1806, of the Bank of Calcutta, making it the oldest commercial bank in
the Indian subcontinent. Bank of Madras merged into the other two "presidency banks" in
British India, Bank of Calcutta and Bank of Bombay, to form the Imperial Bank of India,
which in turn became the State Bank of India in 1955. Government of India owned the
Imperial Bank of India in 1955, with Reserve Bank of India (India's Central Bank) taking a
60% stake, and renamed it the State Bank of India. In 2008, the government took over the
stake held by the Reserve Bank of India.
State Bank of India is a banking behemoth and has 20% market share in deposits and loans
among Indian commercial banks.
HISTORY
The roots of the State Bank of India lie in the first decade of the 19th century, when
the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806.
The Bank of Bengal was one of three Presidency banks, the other two being the Bank of
Bombay (incorporated on 16 April 1840) and the Bank of Madras (incorporated on 1 July
1843). All three Presidency banks were incorporated as joint stock companies and were the
result of royal charters. These three banks received the exclusive right to issue paper
currency till 1861 when, with the Paper Currency Act, the right was taken over by the
35
Government of India. The Presidency banks amalgamated on 27 January 1921, and the re-
organised banking entity took as its name Imperial Bank of India. The Imperial Bank of
India remained a joint stock company but without Government participation.
Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of
India, which is India's central bank, acquired a controlling interest in the Imperial Bank of
India. On 1 July 1955, the imperial Bank of India became the State Bank of India. In 2008,
the Government of India acquired the Reserve Bank of India's stake in SBI so as to remove
any conflict of interest because the RBI is the country's banking regulatory authority.
In 1959, the government passed the State Bank of India (Subsidiary Banks) Act. This made
SBI subsidiaries of eight that had belonged to princely states prior to their nationalization
and operatonal takeover between September 1959 and October 1960, which made eight state
banks associates of SBI. This une with the first Five Year Plan, which prioritised the
development of rural India. The government integrated these banks into the State Bank of
India system to expand its rural outreach. In 1963 SBI merged State Bank of Jaipur (est.
1943) and State Bank of Bikaner (est.1944).
SBI has acquired local banks in rescues. The first was the Bank of Bihar (est. 1911), which
SBI acquired in 1969, together with its 28 branches. The next year SBI acquired National
Bank of Lahore (est. 1942), which had 24 branches. Five years later, in 1975, SBI acquired
Krishnaram Baldeo Bank, which had been established in 1917 in Gwalior State, under the
patronage of Maharaja Madho Rao Scindia. The bank had been the Dukan Pichadi, a small
moneylender, owned by the Maharaja. The new bank's first manager was Jall N. Broacha, a
Parsi. In 1985, SBI acquired the Bank of Cochin in Kerala, which had 130 branches. SBI
was the acquirer as its affiliate, the State Bank of Travancore, already had an extensive
network in Kerala.
There has been a proposal to merge all the associate banks into SBI to create a "mega bank"
and streamline the group's operations
The first step towards unification occurred on 14 August 2008 when State Bank of
Saurashtra merged with SBI, reducing the number of associate state banks from seven to six.
On 19 June 2009, the SBI board approved the absorption of State Bank of Indore. SBI holds
98.3% in State Bank of Indore. (Individuals who held the shares prior to its takeover by the
government hold the balance of 1.7%)
The acquisition of State Bank of Indore added 470 branches to SBI's existing network of
branches. Also, following the acquisition, SBI's total assets will approach 10 trillion. The
36
total assets of SBI and the State Bank of Indore were 9,981,190 million as of March 2009.
The process of merging of State Bank of Indore was completed by April 2010, and the SBI
Indore branches started functioning as SBI branches on 26 August 2010.
On 7 October 2014, Arundhati Bhattacharya became the first woman to be appointed
Chairperson of the bank. Mrs. Bhattacharya received an extension of two years of service to
merge into SBI the five remaining associated banks.
Associate banks
Main Branch of SBI in Mumbai

SBI acquired the control of seven associate banks in 1960. They were the seven regional
banks of former Indian princely states, all of them which were renamed with the prefix
'State Bank'. These seven banks were State Bank of Bikaner and Jaipur (SBBJ), State Bank
of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank
of Travancore (SBT), State Bank of Saurashtra(SBS) and State Bank of Indore (SBI -
Indore). All these banks used the same logo as its parent bank.
The plans for making SBI a mega bank with trillion dollar business by merging associate
banks started in 2008, and in September the same year, SBS merged with SBI. The very
next year, SBI-Indore also merged. In the same year, another subsidiary named Bharatiya
Mahila Bank was formed. The negotiations for merging of 6 associate banks (State Bank of
Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of
Patiala and State Bank of Travancore and Bharatiya Mahila Bank) by acquire their
businesses including assets and liabilities with SBI started in 2017. The merger of these six
subsidiaries was approved by Union Cabinet on 16 June 2017. The State Bank of India and
all its associate banks use the same blue keyhole logo. The State Bank of
India wordmark usually has one standard typeface, but also utilises other typefaces.
On 16 February 2018, the Union Cabinet approved the merger of five associate banks with
SBI. What was overlooked, however, were different pension liability provisions and
accounting policies for bad loans, based on regional risks.
37
State Bank of India Mumbai LHO
The State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State
Bank of Patiala and State Bank of Travancore, and Bharatiya Mahila Bank were merged
with State Bank of India with effect from 1 April 2018.
Non-banking subsidiaries
Apart from its five associate banks, SBI also has the following non-banking subsidiaries:
 SBI Capital Markets Ltd
 SBI Funds Management Pvt Ltd
 SBI Factors & Commercial Services Pvt Ltd
 SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)
 SBI DFHI Ltd
 SBI Life Insurance Company Limited
 SBI General Insurance
In March 2001, SBI (with 74% of the total capital), joined with BNP Paribas (with 26% of
the remaining capital), to form a joint venture life insurance company named SBI Life
Insurance company Ltd. In 2004, SBI DFHI (Discount and Finance House of India) was
founded with its headquarters in Mumbai.
Other SBI service points
As of 31 March 2018, SBI group (including associate banks) has 59,291 ATMs.
Listings and shareholding
As on 31 March 2018, Government of India held around 61.23% equity shares in SBI. Life
Insurance Corporation of India is the largest non-promoter shareholder in the company with
8.82% shareholding.[26]
Shareholders Shareholding
Promoters: Government of
61.23%
India
FIIs/GDRs/OCBs/NRIs 11.18%
38
Banks & Insurance Companies 10.00%
Mutual Funds & UTI 8.29%
Others 9.31%
Total 100.0%
The equity shares of SBI are listed on the Bombay Stock Exchange, where it is a constituent
of the BSE SENSEX index, and the National Stock Exchange of India, where it is a
constituent of the CNX Nifty. Its Global Depository Receipts (GDRs) are listed on
the London Stock Exchange.
Employees
State Bank Learning Centre in Machilipatnam

SBI is one of the largest employers in the country with 209,567 employees as on 31 March
2018, out of which there were 23% female employees and 3,189 (1.5%) employees with
disabilities. On the same date, SBI had 37,875 Scheduled Castes (18%), 18,069 Scheduled
Tribes (8.1%) and 39,709 Other Backward Classes (18.9%) employees. The percentage of
Officers, Associates and Sub-staff was 38.6%, 44.3% and 17.9% respectively on the same
date. Around 14,000 employees have joined the Bank in FY 2017-18. Each employee
contributed a net profit of 511,000 (US$8,000) during FY 2017-18.
Recent awards and recognition
 SBI was ranked as the top bank in India based on tier 1 capital by The
Banker magazine in a 2015 ranking.
 SBI was ranked 232nd in the Fortune Global 500 rankings of the world's biggest
corporations for the year 2017.
39
 SBI was named the 29th most reputed company in the world according
to Forbes 2009 rankings
 SBI was 50th Most Trusted brand in India as per the Brand Trust Report 2014, an
annual study conducted by Trust Research Advisory, a brand analytics company and
subsequently, in the Brand Trust Report 2015, SBI finished as India's 19th Most Trusted
Brand in India.
Major competitors
Some of the major competitors for SBI in the banking sector are large other public sector
banks, Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India. And large
private sector banks SBI Bank, HDFC Bank, Axis Bank, IndusInd Bank. And However, in
terms of average. market share, SBI is by far the largest player in the market.
 List of largest banks

 John Mathai
References
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Financial Statement & Accounts". www.moneycontrol.com. Retrieved 2018-06-26.
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& Accounts". www.moneycontrol.com. Retrieved 2018-06-26.
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5. "One unified entity" (jpg). SBI.
6. SBI website: https://www.sbi.co.in/portal/web/international/international
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December 2010.
11. Business Standard (21 June 2010). "Approvals for State Bank of Indore
merger by July: SBI".
40
12. Economic Times (26 August 2010). "State Bank of Indore branches to
become SBI units from Aug 26 : SBI". The Times of India.
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in 2005". Accessmylibrary.com. 8 October 2005. Retrieved 21 December 2010.
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July 2017 – via The Hindu.
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50 bank". Retrieved 1 July 2017.
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list". Mumbai: Financial Express. 17 June 2017. Retrieved 17 June 2017.
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Economic Times. Retrieved 18 February 2018.
24. Pension liability provisions and accounting policies for bad loans.[1][2][3]
25. "Reserve Bank of India List of ATM's and POS".
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2017-02-16. Retrieved 2018-03-28.
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October 2014.
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October 2014.
41
31. "SBID State Bank of India GDR (Each Rep 2 SHS INR10)". London Stock
Exchange. 11 October 1996. Retrieved 11 October 2014.
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April 2015.
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Rankings". Forbes. Retrieved 20 August 2010.
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37. "Competitors of SBI in India - Equitymaster"
Sl.No Name Designation

1. Shri Rajnish Kumar Chairman
2. Shri P.K. Gupta Managing Director
3. Shri Dinesh Kumar Khara Managing Director
4. Shri Arijit Basu Managing Director
5. Smt Anshula Kant Managing Director
6. Shri Sanjiv Malhotra Director
7. Shri Bhaskar Pramanik Director
8. Shri Basant Seth Director
9. Shri B. Venugopal Director
10. Shri Girish K. Ahuja Director
11. Dr. Pushpendra Rai Director
12. Dr.Purnima Gupta Director
13. Shri Rajiv Kumar Director
14. Shri Chandan Sinha Director
VISION STATEMENT
42
"Become the undisputed market leader in providing housing related and general financial
needs, to realize the dream of all"
MISSION STATEMENT
To our shareholders, our mission is to optimize returns.

To our customers, our mission is to provide a caring service by anticipating their
requirements and innovatively satisfying them beyond their expectations.
To our staff, our mission is to identify their multi-faceted talents, develop, motivate,

recognize and reward them towards fulfillment of the institutional and national housing
vision.
To the national economy and the industry regulator, we are the key driver and thought
leader, shaping and financing the national housing policy.
To our natural environment, we enforce sustainable practices across all our activities.
43
CHAPTER-IV
DATA ANLAYSIS AND INTREPRETATION
DATA ANALYSIS
Table:1 CURRENCY EXCHANGE BETWEEN TWO RATES
44
PROFIT&LOSS A/C FOR THE YEAR ENDED MARCH 2018
Particulars (Rs.in crores) Income and Expenses@ 60% from foreign (In
dollars)
Average If the
Exchange rate If the Exchange Exchange
@Rs.61 rate@61 rate@60
INCOME
Net operating Income 3768.62 2261.18 2261.18 2206.02
EXPENSES
Material consumption 0 0.00 0.00 0.00
Manufacturing expenses 577.24 346.34 346.34 337.89
Personal expenses 1422.59 793.55 793.55 774.20
Selling Expenses 18.82 10.69 10.69 10.43
Administrative Expenses 914.89 365.55 365.55 356.63
Capitalized Expenses 0 0.00 0.00 0.00
Cost of Sales 2831.54 1617.15 1617.15 1579.17
Reported PBDIT 937.08 745.03 745.03 726.86
Other recurring income 17.07 9.64 9.40
Adjusted PBDIT 953.16 754.67 736.26
Depreciation 188.21 106.93 104.31
Other write offs 0 0.00 0.00
Adjusted PBIT 774.94 647.75 631.95
Financial expenses 20.6 13.36 13.06
Adjusted PBT 754.34 635.39 619.89
Tax Charges 75.87 45.52 44.41
Adjusted PAT 678.47 589.87 584.26
Non recurring-items 423.35 254.01 247.81
Other non cash Adjustments 0 0.00 0.00
Reported PAT 1101.82 843.88 823.30
GRAPH: 1
45
2500
2000
1500
If the Exchange rate@61
1000
500
0
1 3 5 7 9 11 13 15 17 19 21 23
INTERPRETATION:
This graph showing total revenues are alteration together, total revenues are decreased
Rs.2261.18 crores to 2206.02, and gross profit also decreased Rs.745.03 to
726.86.simultaneously all these values are changing the net income. If the Exchange rate
had fixed @ Rs.61, the revenues would have been same.
DATA ANALYSIS
46
Particulars (Rs.in crores) Income and Expenses@ 60% from foreign (In
dollars)
Average If the
Exchange rate If the Exchange Exchange
INCOME
EXPENSES
Cost of Sales 2831.54 1617.15 1617.15 1584.99
Reported PBDIT 937.08 745.03 745.03 708.69
Adjusted PBDIT 953.16 754.67 718.86
Depreciation 188.21 106.93 101.71
Adjusted PBIT 774.94 647.75 617.16
Adjusted PBT 754.34 635.39 604.40
Tax Charges 75.87 45.52 43.30
Adjusted PAT 678.47 589.87 561.10
Reported PAT 1101.82 843.88 802.72
GRAPH: 2
47
2500
2000
1500
1000
500
0
1 3 5 7 9 11 13 15 17 19 21 23
INTERPRETATION:
This graph showing total revenues are alteration together, total revenues are decreased
Rs.2261.18 to 2160.87, and gross profit also decreased Rs.745.03 to 708.69.simultaneously
all these values are changing the net income. If the Exchange rate had fixed @ Rs.61, the
revenues would have been same.
48
DATA ANALYSIS
Particulars (Rs.in crores) Income and Expenses@ 60% from foreign

(In dollars)
Average If the If the
Exchange rate Exchange Exchange
INCOME
EXPENSES
Cost of Sales 2831.54 1617.15 1617.15 1653.13
Reported PBDIT 937.08 745.03 745.03 763.20
Adjusted PBDIT 953.16 754.67 773.08
Depreciation 188.21 106.93 109.54
Adjusted PBIT 774.94 647.75 663.55
Adjusted PBT 754.34 635.39 650.89
Tax Charges 75.87 45.52 46.63
Adjusted PAT 678.47 589.87 24774.71
Reported PAT 1101.82 843.88 864.46
GRAPH: 3
49
2500
2000
1500
1000
500
0
1 3 5 7 9 11 13 15 17 19 21 23
INTERPRETATION:
This graph showing total revenues are alteration together, total revenues are increased
DATA ANALYSIS
50
Particulars (Rs.in crores) Income and Expenses@ 60% from foreign

(In dollars)
If the
Average If the Exchang
Exchange rate Exchange e
INCOME
EXPENSES
Cost of Sales 2831.54 1617.15 1617.15 1690.10
Reported PBDIT 937.08 745.03 745.03 781.37
Adjusted PBDIT 953.16 754.67 791.48
Depreciation 188.21 106.93 113.16
Adjusted PBIT 774.94 647.75 679.35
Adjusted PBT 754.34 635.39 666.38
Tax Charges 75.87 45.52 47.74
Adjusted PAT 678.47 589.87 618.64
Reported PAT 1101.82 843.88 885.04
GRAPH: 4
51
2500
2000
1500
1000
500
0
1 3 5 7 9 11 13 15 17 19 21 23
INTERPRETATION:
This graph showing total revenues are alteration together, total revenues are increased
The rupee-dollar Exchange rates over the last five years
52
Rates
59
58
57
56
55
Rates
54
53
52
51
50
2013 2014 2015 2016 2017 2018
EXPORT FINANCE
Export through SBI Bank Ltd. for the year 2016 and 2017 is Tk.85418.00
million and Tk. 87500.00 million respectively. In spite of Global Financial Crisis
the growth chart in export through SBI Bank Ltd. remains upwards due to our
timely steps regarding credit facilities and services packages. We have already
re-fixed our schedule of exchange at a reduced rate the loan pricing is more
competitive. With the credit lines our experts have introduce the following new
products:
Cash Credit: Working capital facility to dyeing unit and packaging unit.
Mid term Loan: For procurement of machinery, space parts, boiler, generator,
vehicles etc. to export oriented industrial unit.
Packing Credit: Working capital facility to pay wages salary utility bills etc.
LTR, FC: Short term credit for procurement of capital machinery from abroad.
Term Loan: For (Export oriented) Ship Building.
Export Project BMRE: Loan for factory building construction. Expansion,
development and Maintenance, construction of factory godown, purchase of
machineries from local and foreign markets, covered van, generator and establish
ETP.
INTRODUCTION TO THE FOREIGN EXCHANGE RISK MANAGEMENT
53
Risk:
Risk is the possibility that the actual result from an action will deviate from the expected
levels of result. The greater the magnitude of deviation and greater the probability of its
occurrence, the greater is the risk.
A business has to take step to minimize the risk by adopting appropriate technique or
policies. Risk management focuses on identifying and implementing these technique or
policies, lest the business should be left exposed to uncertain outcomes.
Risk management:
Risk management is a process to identify loss exposure faced by an organization and to
select the most appropriate technique such exposures.
Risk management tools measure potential loss and potential gain. It enables us to stay with
varying degree of certainty and confidence levels, that our potential loss will not exceed a
certain amount if we adopt a particular strategy. Risk management enables us to confront
uncertainty head on, acknowledge its existence, try to measure its extent and finally control
it.
Risk management makes sense for two reasons. One, a business entity generally wishes to
reduce risks to acceptable levels. Two, a business entity is generally keen on avoiding
particularly kind of risks, for it may be too great for the business to bear. For each situation
where one wishes to avoid a risk- a loss by fire, for example- three is, perhaps, a counter
party who may be willing such risk. For risk reduction, a business entity can adopt the
following methods.
Hedging:
Hedging is a technique that enables one party to minimize the effect of adverse outcomes, in
a given situation. Parties come together to minimize the effect of which risk of one party
gets cancelled by the risk of another. IT is not that risk minimization is the only strategy. An
entity may even choose to remain exposed, in anticipation of reaping profits from its risk
taking positions.
FOREIGN EXCHANGE EXPOSURE
54
Exposure:
Exposure is defined as the possibility of a change in the assets or liabilities or both of a
company as a result in the exchange rate. Foreign exchange exposure thus refers to the
possibility of loss or gain to a company that arises due to exchange rate fluctuations.
The value of a firm’s assets, liabilities and operating income vary continually in response to
changes in a myriad economic and financial variable such as exchange rates, interest rates,
inflation rates, relative price and so forth. We can these uncertainties as macroeconomic
environment risks. These risks affect all firms in the economy. However, the extent and
nature of impact of even macroeconomic risks crucially depend upon the nature of firm’s
business. For instance, fluctuations of exchange rate will affect net importers and exporters
quite differently. The impact of interest rate fluctuations will be very different from that on a
manufacturing firm.
The nature of macroeconomic uncertainty can be illustrated by a number of commonly
encountered situations. An appreciation of value of a foreign currency(or equivalently, a
depreciation of the domestic currency), increase the domestic currency value of a firm’s
assets and liabilities denominated in the foreign currency-foreign currency receivables and
payables, banks deposits and loans, etc. It will also change domestic currency cash flows
from exports and imports. An increase in interest rates reduces the market value of a
portfolio of fixed-rate in the rate of inflation may increase value of unsold stocks, the
revenue from future sales as well as the future costs of production. Thus the firms exposed
to uncertain changes in a numbers of variable in its environment. These variables are
sometimes called Risk Factors.
The nature of Exposure and Risk
Exposure are a measure of the sensitivity of the value of a financial items (assets, liabilities
or cash flow) to changes in the relevant risk factor while risk is a measurable of the
variability of the item attributable to the risk factor.
Corporate treasurers have become increasingly concerned about exchange rate and interest
rate exposure and risk during the last ten to fifteen years or so. In the case of exchange rate
risk, The increased awareness is firstly due to tremendous increase in the volume of cross
border financial transactions (which create exposure) and secondly due to the significant
increase in the degree of volatility in exchange rates(which, given the exposure, creates risk)
Classification of foreign exchange exposure and risk
55
Since the advent of floating exchange rates in 1973, firms around the world have become
acutely aware of the fact that fluctuations in exchange rates expose their revenues, costs,
operating cash flows and thence their market value to substantial fluctuations. Firms which
have cross-border transactions-exports and imports of goods and services, foreign
borrowings and lending, foreign portfolio and direst investment etc, are directly exposed:
but even purely domestic firms which have absolutely no cross border transactions are also
exposed because their customers, suppliers and competition are exposed. Considerably
effort has since been devoted to identifying and categorizing currency exposure and
developing more and more sophisticated methods to quantify it.
Foreign exchange exposure can be classified into three broad categories:
 Transaction exposure
 Translation exposure
 Operating exposure
Of these, the first and third together are sometimes called “Cash Flow Exposure” while the
second is referred to as “Accounting Exposure” or Balance sheet Exposure”.
Transaction exposure
When a firm has a payable or receivable denominated in a foreign currency, a change in the
exchange rate will alter the amount of local currency receivable or paid. Such a risk or
exposure is referred to as transaction exposure.
For example , if an Indian exporter has a receivable of $100,100 due three months hence and
if in the meanwhile the dollar depreciates relative to the rupee a cash loss occurs.
Conversely, if the dollar appreciates relative to the rupee, a cash gain occurs. In the case of
payable, the outcome is of an opposite kind: a depreciation of the dollar relative to the rupee
results in a gain, where as an appreciation of the dollar relative to the rupee result in a loss.
Translation exposure
Many multinational companies require that their accounts of foreign subsidiaries and
branches get consolidated with those of it. For such consolidation, assets and liabilities
expressed in foreign currencies have to be translated into domestic currencies at the
exchange rate prevailing on the consolidation dates. If the values of foreign currencies
change between a two or successive consolidation dates, translation exposure will arise.
Operating exposure
56
Operating exposure, like translation exposure involve an actual or potential gain or loss.
While the former is specific to the transaction, the latter relates to entire investment. The
essence of this operating exposure is that exchange rate changes significantly and alter the
cost of firm’s inputs along with price of it output and thereby influence its competitive
position substantially.
Eg: Volkwagon had ahighly successful export market for its ‘beetle’ model in the US before
1970. With the breakdown of Bretten-woods of fixes exchanged rates, the deuschemark
appreciated significantly against the dollar. This created problem for Volkswagan as its
expenses were mainly in deuschemark but its revenue in dollars. However, in a highly price-
sensitive US market, such an action caused a sharp decreased in sales volume-from 600,000
vehicles in 1968 to 200,000 in 1976.(Incidentally, Volkswagen’s 1973 losses were the
highest, as of that year, suffered by any company anywhere in the world.
TOOLS AND TECHNIQUES FOR THE MANAGEMENT OF FOREIGN

EXCHANGE RISK
Hedging exposures, sometimes called risk management, is widely resorted to by financial
directors, corporate treasurers and portfolio managers.
The practice of covering exposure is designed to reduce the volatility of a firm’s profits
and/or cash management and it presumably follows that this will reduce the volatility of the
value of the firm.
There are a wide range of methods available to minimize foreign exchange risk which are
classified as internal and external techniques of exposure management.
Internal techniques
Internal techniques of exposure management help to resolve exposure risks through
regulating the firms’ financial position. Thereby, they ensure that the firm is not endangered
through exposures. The fundamental stress minimizing of not complete elimination of
exchange losses, that are likely to accrue as a result of exposure.
They use methods of exposure management which are a part of a firm’s regulatory financial
management and do not resort to special contractual relationship outside the group of
companies concerned. They aim at reducing exposed position or preventing them from
arising. They embrace netting, matching, leading and lagging, pricing policies and
asset/liability management.
57
Internal techniques of exposure management do not rely on 3 rd party contracts to manage
exposed positions. Rather, it depends on internal financial management.
External techniques
These refer to the use of contractual relationship outside the group of companies so as to
minimize the risk of foreign exchange losses. They insure against the possibility the
exchange losses will result from an exposed position which internal measures have not been
able to eliminate. They include forward contracts, borrowing short term, discounting bills
receivable, factoring, Government exchange risk guarantees currency options.
External techniques of foreign exchange exposure management use contractual relationships
outside the group to reduce risk of exchange rate changes. Several external techniques are
available for foreign exchange management. The firm can make a choice of that technique
which is most suitable to it.
TOOLS FOR FOREIGN EXCHANGE RISK MANAGEMNT
Forward exchange contract
A forward exchange contract is a mechanism by which one can ensure the value of one
currency against another by fixing the rate of exchange in advance for a transaction
expected to take place at a future date.
Forward exchange rate is a tool to protect the exporters and importers against exchange risk
under foreign exchange contract, two parties one being a banker compulsorily in India, enter
into a contract to buy or sell a fixed amount of foreign currency on a specific future date or
future period at a predetermined rate. The forward exchange contracts are entered into
between a banker and a customer or between two bankers.
Indian exporter, for instance instead of grouping in the dark or making a wild guess about
what the future rate would be, enter into a contract with his banker immediately. He agrees
to sell foreign exchange of specified amount and currency at a specified future date. The
banker on his part agrees to buy this at a specified rate of exchange is thus assured of his
price in the local currency. For example, an exporter may enter into a forward contract with
the bank for 3 months deliver at Rs.49.50. This rate, as on the date of contract, is known as 3
month forward rate. When the exporter submits his bill under the contract, the banker would
purchase it at the rate of Rs.49.50 irrespective of the spot rate then prevailing.
When rupee was devaluated by about 18% in July 1991, many importers found their
liabilities had increased overnight. The devaluation of the rupee had effect of appreciation of
58
foreign currency in terms of rupees. The importers who had booked forward contracts to
cover their imports were a happy lot.
Date of delivery
According to Rule 7 of FEDAI, a forward contract is deliverable at a future date, duration of
the contract being computed from the spot value date of the transaction. Thus, if a 3 months
forward contract is booked on 13th February, the period of two months should commence
from 15th February and contract will fall on 15th April.
Fixed and option forward contracts
The forward contract under which the delivery of foreign exchange should take place on a
specified future date is known as ‘Fixed Forward Contract’.
For instance, if on 5th March a customer enters into a three months forward contract with his
bank to sell GBP 10,000, it means the customer would be presenting a bill or any other
instrument on 7th June to the bank for GBP 10,000. He cannot deliver foreign exchange prior
to or later than the determined date.
Forward exchange is a device by which the customer tries to cover the exchange risk. The
purpose will be defeated if he is unable to deliver foreign exchange exactly on the due date.
In real situations, it is not possible for any exporter to determine in advance the precise date.
On which he is able to complete shipment and present document to the bank. At the most,
the exporter can only estimate the probably date around which he would able to complete
his commitment.
With a view to eliminate the difficulty in fixing the exact date of delivery of foreign
exchange, the customer may be given a choice of delivery the foreign exchange during a
given period of days.
An arrangement whereby the customer can sell or buy from the bank foreign exchange on
any day during a given period of time at a predetermined rate of exchange is known as
‘Option Forward Contract’. The rate at which the deal takes place is the option forward sale
contract with the bank with option over November. It means the customer can sell foreign
exchange to the bank on any day between 1 s to 30th November is known as the ‘Option
Period’.
Forward contract is an effective ad easily available tool for covering exchange risk. New
instruments like options, futures and swaps can also be used to cover exchange risks. These
instruments are called financial derivatives as their value is derived from the value of some
other financial contract or asset. When there instrument are bought or sold for covering
59
exchange risk they are used for ‘hedging’ the exchange risk. When they are dealt in with a
view to derive profit from unexpected movements in their prices or other changes in the
exchange market, they are being used for speculative purposes. The scope of using these
instruments for speculative purposes is very much limited in India.
Some other Strategies may also be adapted to avoid exchange risk. These consist in deciding
on the currency of invoicing, maintaining in foreign currency and deciding on the setting the
debt.
60
CHAPTER-V
FINDINGS
SUGGESTIONS
CONCLUSION
FINDINGS
61
The company has to hammer out its approach to risk management taking into account its
specific circumstances.
Here is brief description of company in India have fashioned its strategy towards foreign
exchange risk management.
As its operations in many countries, the company is exposed to currency risk. Here is the
description:
1. They transact a major portion of their business in USD and the lesser extent other
currencies and is thus exposed to currency risk, The company manages risk on
account of foreign currency fluctuations through treasury operations.
2. To mitigate the risk of changes in foreign exchange rates on cash flows
denominated in USD, SBI bank purchases foreign exchange forward contracts
and the company does not speculate the currency exchange.
3. Foreign exchange transactions of their revenues were generally in USD. The
average exchange rate of INR to USD in fiscal 2017 was Rs.61 against Rs.60 in
fiscal 2018.
The above description of risk management in Halcyon is based on the information
provided in the annual report of the bank for the year 2017-18
62
SUGGESTIONS
 The problem of viability will be solved only when the exporters breakeven moves
down to Rs.61 per dollar. By contrast, an inefficient exporter that is viable at Rs.60
per dollar can take advantage of the hedge.
 The implicit dollar method will significantly preserve the dollar profitability
exporters. The employees and managers of exporting firms will be paid implicitly in
dollars. The cost to the company will be in dollars. But the payout will be in rupees
and at the prevailing exchange rates. If the dollar weakens, the dollar costs of
employees and managers will be paid out in rupees at say, RS.59, if the dollar
strengthens the cost of employees and managers will be paid out in rupees at say,
Rs.63.
 To overcome these problems exporters should make good governance by making
available superior human, social and business infrastructure even if the tax rates are
high. Good governance lower the costs of operations and lowers the aggregate costs
of doing business.
63
CONCLUSIONS
 Despite market expansion the profit generation is still a question mark, so companies
have to search for areas of next generation like value added services, software
enhancement and development other than just BPO services to survive in the market.
 In the present day economies are globalized and the stabilities of them is really at
stake, the only rescue for the software companies is to improve their responsiveness
to the changing scenarios.
 Companies have to develop their services to the bench mark level or global
standards so that they can have acceptance all over the world.
 The troubles of many exporters are not a result of the volatility of the rupee but the
unfavourably high-cost structure. Exporters are viable only when foreign exchange
earnings get converted into more and more rupees. To improve rupee viability and
preserve profits, exporters need to be efficient and productive and bring down
aggregate rupee cost.
 Poor viability will not be resolved by hedging. Considering an inefficient exporter, it
requires a breakeven exchange rate of Rs.45 dollar to show profit. It will dazzle at a
rate above Rs.65. It will fizzle at any exchange rate below Rs.65.
 In case of forward contract. The forward contract locks in the exporter conversion of
dollar revenues to rupee revenues at Rs.61, the market forward price per dollar. The
market will surely not buy the exporters dollars at Rs.61 will be wholly ineffective
exporters will be in serious trouble despite the perfect hedge.
64
BIBLIOGRAPHY
65
WEBSITES
www.google.com
www.mecklai.com
www.wipro.com
www.infosys.com
www.sbibank.com
BOOKS
1. Foreign Exchange Arithmetic-M.jeevanandam

2. International financial management-Prasanna Chandra
3. International financial management-P.G.Apte
NEWS PARERS
The Economic Times

Business Line
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A STUDY ON FOREIGN EXCHAGE AND ITS RISK MANAGEMENT

WRT SBI BANK

SCOPE OF THE STUDY

OBJECTIVES OF THE STUDY

RESEARCH AND METHODOLOGY

 The analysis of this study is mainly done on the income statements.

Definition of International Trade:

ADMINISTRATION FRAME WORK FOR FOREIGN EXCHANGE IN INDIA

FOREIGN EXCHANGE MANAGEMENT ACT

RESERVE BANK OF INDIA

FOREIGN EXCHANGE DEALER

AUTHORISED MONEY ATHORISED DEALERS

FULL FLEDGE RESTRICTED

FOREIGN EXCHANGE DEALER’S ASSOCIATION OF

AUTHORIZED MONEY CHANGERS

THE FOREIGN EXCHANGE MARKET

FOREIGN EXHANGE TRANSACTIONS

Origin of the word:

Traditional banking activities

The definition of a bank varies from country to country.

 conducting current accounts for his customers

 "banking business" means the business of receiving money on current or deposit

 "banking business" means the business of either or both of the following:

Accounting for bank accounts

Central banks are normally government-owned and charged with quasi-regulatory

 Universal banks, more commonly known as financial services companies, engage in

Other types of banks

State Bank of India (SBI) is an Indian multinational, public sector banking and financial

Main Branch of SBI in Mumbai

State Bank Learning Centre in Machilipatnam

 List of largest banks

Sl.No Name Designation

To our shareholders, our mission is to optimize returns.

To our staff, our mission is to identify their multi-faceted talents, develop, motivate,

Net operating Income 3768.62 2261.18 2261.18 2206.02

Net operating Income 3768.62 2261.18 2261.18 2160.87

Table:3 CURRENCY EXCHANGE BETWEEN TWO RATES

PROFIT&LOSS A/C FOR THE YEAR ENDED MARCH 2018

Particulars (Rs.in crores) Income and Expenses@ 60% from foreign

Net operating Income 3768.62 2261.18 2261.18 2317.32

Particulars (Rs.in crores) Income and Expenses@ 60% from foreign

Net operating Income 3768.62 2261.18 2261.18 2371.47

The rupee-dollar Exchange rates over the last five years

INTRODUCTION TO THE FOREIGN EXCHANGE RISK MANAGEMENT

FOREIGN EXCHANGE EXPOSURE

TOOLS AND TECHNIQUES FOR THE MANAGEMENT OF FOREIGN

1. Foreign Exchange Arithmetic-M.jeevanandam

The Economic Times

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