Finalist
35929 Points
Joined September 2009
6. What is the procedure for settlement of transactions?
i. Large part of the transactions as possible are settled directly through the accounts maintained by authorised dealers with banks in the other participating countries and vice versa; only the spill-overs in either direction are required to be settled by the Central Banks in the countries concerned through the Clearing Union.
ii. Authorised dealers are permitted to settle commercial and other eligible transactions in much the same manner as other normal foreign exchange transactions. The procedures for opening letters of credit, negotiation of documents, etc., in respect of trade in convertible currencies are applicable for trade routed through the ACU mechanism.
iii. To facilitate settlement of transactions through the ACU in this manner, authorised dealers may freely open with their branches/correspondents ‘ACU dollar accounts’. These must be kept distinct from U.S. dollar accounts, if any, maintained for settlement of transactions taking place outside the Clearing Union. The term ACU dollar is specifically being used in order to identify the use of U.S. dollar in relation to ACU transactions. Otherwise there is no distinction value-wise between ACU dollar and the U.S. Dollar.
iv. Authorised dealers should ensure that at all times the balances maintained in the ACU dollar accounts are commensurate with the requirements of their normal exchange business and funds rendered surplus should be repatriated to India regularly.