Which rate to be used for conversion of foreign currency loans at closing date sbi tt sell or bill sell rate
Querist : Anonymous
during the audit the auditee's finance deptt converted loan o/s in $ @ the sbi's billssell rate & book the erv accordingly. is it right step or should be booked at ttsell rate. Secondly the other department book the foreign consultancy income at ttbuy rate of sbi.
pls guide me ty & regards
Querist : Anonymous
Why TTS?
The TTS rate reflects the rate at which the bank sells foreign currency for outward remittances or loans. Since the company owes the amount (liability), the TTS rate is more appropriate for conversion of foreign currency loan balances at the balance sheet date.
Bill Selling Rate is usually used for export bills and similar transactions, not for loans.
Regarding foreign consultancy income, it should be converted at the SBI TT Buying Rate (TTB), because it’s income received in foreign currency — so you convert foreign currency coming into your books at the rate the bank buys the currency.
Summary:
Transaction Type Rate to Use
Foreign currency loan (liability) SBI TT Selling Rate (TTS)
Foreign consultancy income (receipt) SBI TT Buying Rate (TTB)
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