BTL 924 - Classification of Authorised Dealers (ADs)

 

The Banking Tutor’s Lessons

BTL 924                                                                                30-07-2026

Classification of Authorised Dealers (ADs)

Authorised dealers in foreign exchange under the Foreign Exchange Management Act (FEMA) in India are classified into Authorised Dealer Category-I Banks, Authorised Dealers Category-II, and Authorised Dealers Category-III. These entities are approved by the Reserve Bank of India (RBI) to manage foreign currency and transactions.

Authorised Dealer Category-I (AD Category-I)

• Entities: Commercial banks (public, private, and foreign), state cooperative banks, and urban cooperative banks.
• 
  
• Permissions: Handle all permitted current account and capital account transactions, international trade payments, and general forex business.

Authorised Dealer Category-II (AD Category-II)

• Entities: Upgraded Full-Fledged Money Changers (FFMCs), select cooperative banks, and regional rural banks.
• 
  
• Permissions: Undertake specified non-trade current account transactions (like medical treatment, education, and travel remittances) and money-changing activities.

Authorised Dealer Category-III (AD Category-III)

• Entities: Select financial and specialized institutions.
• 
  
• Permissions: Carry out specific, limited foreign exchange transactions  that are directly incidental to their distinct business or institutional activities.

Full-Fledged Money Changers (FFMCs)

• Entities: Registered companies and urban cooperative banks separate from major banks.
• 
  
• Permissions: Purchase foreign exchange from residents and non-residents, and sell foreign currency specifically for private and business travel abroad. 

Sekhar Pariti

+91 9440641014

 

DBC 2511 - Immigration

 

The Banking Tutor

  Daily Banking Concept 

No. 2511                                            30-07-2026 

Immigration 

Immigrate means “the act of coming to live permanently in a foreign country.” Immigrants are people looking to begin a better life outside their country of origin.

DBC 2510 - Emigration

 

The Banking Tutor 

                       Daily Banking Concept 

No. 2510                                            29-07-2026 

Emigration 

Emigration is the act of permanently leaving One’s home country to settle and live in a different nation.

DCB 2509 - Capital Account

 

The Banking Tutor 

                       Daily Banking Concept 

No. 2509                                            28-07-2026 

Capital Account 

The capital account is a record of the inflows and outflows of capital that directly affect a nation’s foreign assets and liabilities. It is mainly concerned with the transactions which are a part of international trade. It is also a part of the balance of payments.

BTL 923 - Financial Kiting (Check Kiting or Kite Flying)

 

The Banking Tutor’s Lessons

BTL 923                                                                                27-07-2026

Financial Kiting (Check Kiting or Kite Flying)

Financial kiting (commonly called check kiting) is an illegal financial fraud scheme that exploits the processing delay (float time) between when a check is deposited and when it physically clears across different banks. It creates a false illusion of money using empty accounts.

Working of the Scheme

• Account A and B: The person opens accounts at two or more different banks.
• Writing the Bad Check: They write a check from Account A (which has no money) and deposit it into Account B.
• Withdrawing Early: Before Bank B realizes the check from Account A is bad, they withdraw or spend the money.
• The Cycle: They must keep writing more bad checks between accounts to cover the previous gaps, meaning the money is backed by "thin air".

Why People Do It

• False Balances: To make a bank account look larger than it is.
• Hiding Shortfalls: To fool auditors or lenders into thinking a business has more cash on hand than it actually does.
• Free Credit: To get short-term money when no real funds exist. 

Prevention and Detection

• Faster Clearing: Modern digital banking and electronic processing have shortened float times, making kiting much harder to pull off today.
• Bank Alerts: Banks use automated computer software and AI to watch for circular fund transfers and unusual withdrawal patterns.
• Legal Penalties: Check kiting is a serious crime that leads to heavy fines and prison time.

Sekhar Pariti

+91 9440641014

 

DBC 2508 - Current account (in Global Trade)

 

The Banking Tutor 

                       Daily Banking Concept 

No. 2508                                            27-07-2026 

Current account (in Global Trade) 

The current account records a nation’s global transactions such as imports and exports of goods and services, payments to and from investments abroad, and transfers such as foreign aid and remittances. Together the current account and the capital account make up a nation’s balance of payments.

DBC 2507 - Current Account (in Banking)

 

The Banking Tutor 

                       Daily Banking Concept 

No. 2507                                            26-07-2026 

Current Account (in Banking) 

A current account is a type of bank account designed primarily for businesses, traders, and professionals who handle frequent, high-volume transactions. It allows for unlimited daily deposits and withdrawals but does not earn interest.