Foreign Exchange business in India was confined to few foreign banks only till the period 1959. The said
group banks were known as Exchange Banks. They had formed an Association, which was known as the "Exchange Banks' Association".
It was mainly covering the areas of activities within Bombay (now Mumbai), Calcutta (now Kolkata), Madras (now Chennai),
Delhi and Amristsar. On introduction of the exchange control in India during 1939, the said Association was functioning
within rules framed by RBI. The rules and regulations - introduced and practiced were also covered by RBI approval. On account
of expansion in the foreign trade, and business, RBI allowed schedule commercial banks also to undertake foreign exchange
transactions. Those banks which were allowed and permitted by RBI to deal in foreign exchange transactions. The banks are
known as AD - Authorized Dealers. The FEDAI - Foreign Exchange Dealers' Association of India was formed with approval of
RBI during August 1958. It was under ECM-RBI directives under reference ECS / 298 / 86 / 58-Gen.20 dated 16th August, 1958,
whereupon, Ads, i.e. authorized banks were granted with open permission to handle foreign exchange business. The body, known
as EXCHANGE BANKS ASSOCIATION, was changed to be known as FOREIGN EXCHANGE DEALERS ASSOCIATION OF INDIA.
All Public sector banks, foreign banks, private sector and co-operative banks and certain Financial institutions are the
members of FEDAI. FEDAI is a non-profit making Association and relative expenses are shared by all its member banks.
FEDAI acts as a facilitating body and in consultation with Reserve Bank of India, frames rules / regulations for ADs in
India for conduct of the foreign exchange business related transactions.
FEDAI is the Association of the member Banks. Naturally, the guidelines and rules prepared were of interest of the member
Banks. However, on account of liberalization and reforms introduced during 1991 to boost the foreign trade to and fro India,
it becomes imperative by FEDAI to review Rules and Guidelines. FEDAI has also taken due care of the interest of both Importers
and Exporters while revising rules and guidelines. The present revised rules are effective 1st September, 2004.
[amendments are periodically being made to suit both, banks and EXIM communities, also reading with RBI directives whenever