What is the full form of FEDAI?

Introduction

Foreign Exchange Dealers Association of India (FEDAI) is a self-regulatory organisation of banks that deal in foreign exchange in India. It was established in 1958 and operates under the guidance of the Reserve Bank of India (RBI).

FEDAI's main objective is to promote and develop the foreign exchange market in India by laying down rules and regulations governing various aspects of foreign exchange transactions undertaken by banks. It also provides guidance and assistance to its member banks on matters related to foreign exchange and acts as a forum for them to exchange ideas and information.

FEDAI's functions include setting standards for forex transactions, promoting fair practices, providing training to member banks, and representing the interests of its members with regulatory authorities.

Objectives of FEDAI

The Foreign Exchange Dealers Association of India (FEDAI) has several objectives, which include −

• Developing and promoting the foreign exchange market in India by creating a transparent, efficient, and competitive marketplace for forex transactions.

• Laying down rules, regulations, and guidelines for forex transactions, with the aim of promoting fair and ethical practices among member banks.

• Providing training and education to member banks on various aspects of foreign exchange transactions, such as risk management, compliance, and regulatory issues.

• Representing the interests of its members with regulatory authorities and other stakeholders, and acting as a forum for member banks to exchange ideas and information.

• Promoting innovation and best practices in the foreign exchange market, with the aim of improving efficiency and reducing risk.

• Ensuring compliance with regulatory requirements and promoting a culture of compliance among member banks.

Overall, FEDAI's objectives are aimed at promoting the growth and development of the foreign exchange market in India while ensuring that member banks operate in a fair, transparent, and compliant manner.

Services provided by FEDAI

The Foreign Exchange Dealers Association of India (FEDAI) provides several services to its member banks, which include −

• Standardisation of forex transactions − FEDAI standardised various aspects of forex transactions, such as documentation, payment methods, and settlement procedures. This helps to promote transparency and efficiency in the forex market.

• Dissemination of information − FEDAI provides information to its member banks on various aspects of the forex market, such as regulatory requirements, market trends, and best practices.

• Training and education − FEDAI offers training and education programs to member banks on various aspects of forex transactions, such as risk management, compliance, and regulatory issues.

• Dispute resolution − FEDAI offers a dispute resolution mechanism for member banks to resolve disputes related to forex transactions. This helps to promote fairness and ethical practices in the forex market.

• Representation and advocacy − FEDAI represents the interests of its member banks with regulatory authorities and other stakeholders. It also advocates for policies and practices that promote the growth and development of the forex market.

Overall, FEDAI's services are aimed at promoting a fair, transparent, and efficient forex market in India, while ensuring that member banks operate in compliance with regulatory requirements and best practices.

Membership and Governance of FEDAI

Membership of the Foreign Exchange Dealers Association of India (FEDAI) is open to banks that deal in foreign exchange in India. As of September 2021, FEDAI has over 90 members, including public sector banks, private sector banks, foreign banks, and cooperative banks.

The governance structure of FEDAI is based on a Board of Directors, which is responsible for the overall management and direction of the organisation. The Board of Directors is composed of representatives from member banks, and they are elected by the members of FEDAI.

FEDAI also has various committees that are responsible for specific areas of activity, such as the Standing Committee on Compliance and the Standing Committee on Market Practices. These committees are composed of representatives from member banks, and they provide guidance and recommendations on matters related to their respective areas of activity.

FEDAI is registered under the Societies Registration Act, and it operates under the guidance of the Reserve Bank of India (RBI). The RBI is represented on the Board of Directors of FEDAI as an ex-officio member.

Overall, the membership and governance of FEDAI are designed to promote transparency, fairness, and ethical practices among member banks, while ensuring compliance with regulatory requirements and best practices.

FAQs

1. What is FEDAI?

Ans: The Foreign Exchange Dealers Association of India (FEDAI) is a self-regulatory organisation of banks that deal in foreign exchange in India. FEDAI lays down the rules and regulations governing various aspects of foreign exchange dealings undertaken by banks in India. It also provides guidance and assistance to its members on matters related to foreign exchange, and acts as a forum for them to exchange ideas and information.

2. What are the functions of FEDAI?

Ans: FEDAI's functions are aimed at promoting a fair, transparent, and efficient forex market in India, while ensuring that member banks operate in compliance with regulatory requirements and best practices.

3. Who governs the FEDAI?

Ans: The Foreign Exchange Dealers Association of India (FEDAI) is governed by its Board of Directors, which is responsible for the overall management and direction of the organization. The Board of Directors is composed of representatives from member banks, who are elected by the members of FEDAI.