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Students Corner

 

FOREIGN EXCHANGE

In hotels Forex means foreign currency. This currency includes all coins, currency notes, bank drafts, travelers’ cheque etc. of foreign countries. The Forex regulation act (FERA) 1973 provides the basis for exchange control which operated by R.B.I. through banks, Travel Agencies, Hotels, etc. which are allowed to deal in FOREX. It applies to whole of India as well as to all citizens of India residing in abroad (NRI) and branches or agencies outside India but registered in India. Any bank or hotel or travel agents who like to deal in Forex has to obtain license from the R.B.I. The licenses are of two categories:

  1. Authorized dealer in Forex

  2. Restricted Money Changer

Banks are issued the first category of license; they are the Authorized dealers in FOREX. They can buy and sell the foreign currency at the current rate. Hotels are issued restricted money changer license (RLM). The hotels which obtains this license can purchase Forex from customer and sell it to those who are authorized dealers in Forex i.e. Banks. Such approved hotels are entitled to use certain percentage of Forex earned by them for the purpose of their publicity abroad, promotion tours of their officer or agent abroad, for import of goods or equipments. Subject to the approval of Department of Tourism (DOT) every money changer has a minimum limit of dealing of foreign currency. If the dealing is less than this limit then its license is canceled.

The hotels which are license holder have to fulfill following conditions:

  1. FOREX to be accepted from Foreign Customers on a/c of payment of their bills.

  2. When the foreigners pay their bill in foreign currency the balance can be returned in Indian Currency. If in case the guest requests the hotel that the balance can be returned to him in foreign currency then the hotel may advise the guest that he can use Indian currency for meeting petty expenses like Taxi fare, or buying something from the shop, etc and balance of Indian currency can be exchanged at the airport.

  3. The rate of purchase of foreign currency should be displayed near the cash counters where money exchange business undergoes.

  4. Foreign currency has to be sold to authorized dealers in forex i.e. banks (on next working day)

  5. Foreign currency should be accepted not at the lower rate then the rates offered by the bank.

  6. All purchase or sale of foreign currency will be at the risk of the hotel.

  7. Monthly statement of foreign currency purchased from the guest and sold to the bank should be submitted to R.B.I. not later then 10th of the following month in the prescribed Performa.

There is a legal restriction on the amount of foreign currency or traveler cheque that a tourist may bring into India provided he makes a declaration in the currency declaration form given to him on arrival in India. This will enable the foreigner not only to exchange the foreign currency brought in by him but also to take back the unspent currency out of India on departure foreign guest are required to pay hotel bills in Forex, but some foreign customers are exempted to pay in foreign currency. Therefore, guest can be divided into two categories:

1. EXEMPTED GUEST: following guest are exempted to pay there bills in forex, they can pay in Indian currency
(a) Foreign nationals employed in India earning Indian Currency
(b) Diplomatic and official guest of diplomatic institutions and officers of United Nations and other international organizations.
(c) Nationals of those countries with which India has Rupee agreement. You can pay or receive the money from those countries. The names of these countries are Nepal, Bhutan etc.
(d) Employees of shipping company, Airline and the crew members
(e) Foreign nationals on a visit to India on the invitation of central Govt. or state Govt.
(f) Foreign students studying in India on govt. of India scholarship
(g) Foreign nationals on a visit to India on the invitation of any person resident in India.
(h) Foreign guest of exporters enjoying banking permit facility granted by R.B.I.

2. NON EXEMPTED GUEST : Other foreign guest who do not come under exempted category have to make payment of the hotel bill in FOREX, payment made can be accepted from the foreign guest in one of the under mentioned permitted currencies:

  1. Australian Dollar 10. Bahrain Dinar

  2. Belgium Franc 11. Canadian Dollar

  3. Danish Krone 12. German Mark

  4. French Franc 13. Italian Lira

  5. Japanese Yen 14. Kuwait Dinar

  6. Malaysian Dollar 15. Singapore Dollar

  7. U.K. Pound 16. U.S. Dollar

  8. Saudi Riyal 17. U.A.E. Durham

  9. Chinese Yuan 18. Bangladeshi Taka

It is necessary to make clear to foreign guest that the payment of apartment (accommodation) charge has to be made in forex. If he takes meals in the restaurant of the hotel then he can make the payment either in foreign currency or India Currency – it is the responsibility of the hotel to make this point clear to the foreign guest through registration form, welcome slip, tariff card etc. when a foreign guest makes a payment in forex the hotel has to give ENCASHMENT CERTIFICATE to the guest whether he asks or not. This certificate should be serially numbered and issued on the official letter head of the hotel by the holding restricted money changer license. A duplicate copy of it should be kept within book form for production to R.B.I. as and when required.

The hotel has to maintain a summery book recording the Forex done within a day in the form of foreign currency notes, travelers cheque and coins, known as RLM book.

 

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