I am an Indian. I would like to know about how foreign transactions work.

I have paid my GRE $185 fees through my SBI credit card. I was charged something around 11k rupees.

How is the dollar rate determined for the above transaction? Is it set by RBI or bank? Will this dollar rate remain constant throughout the day or does it fluctuate every minute?

How do I find out what fees were charged by SBI? Apart from the bank fees, will there be forex charges or exchange charges?

Besides these, will the dollar rate (as used above for paying) remains the same when I am receiving dollars into my SBI bank account? How is this rate determined, if it's different?

3 Answers 3


A lot of questions, but all it boils down to is: .

Banks usually perform T+1 net settlements, also called Global Netting, as opposed to real-time gross settlements. That means they promise the counterparty the money at some point in the future (within the next few business days, see delivery versus payment) and collect all transactions of that kind.

For this example say, they will have a net outflow of 10M USD. The next day they will purchase 10M USD on the FX market and hand it over to the global netter. Note that this might be more than one transaction, especially because the sums are usually larger.

Another Indian bank might have a 10M USD inflow, they too will use the FX market, selling 10M USD for INR, probably picking a different time to the first bank. So the rates will most likely differ (apart from the obvious bid/ask difference).

The dollar rate they charge you is an average of their rate achieved when buying the USD, plus some commission for their forex brokerage, plus probably some fee for the service (accessing the global netting system isn't free).

The fees should be clearly (and separately) stated on your bank statement, and so should be the FX rate.

Back to the second example: Obviously since it's a different bank handing over INRs or USDs (or if it was your own bank, they would have internally netted the incoming USDs with the outgoing USDs) the rate will be different, but it's still a once a day transaction. From the INRs you get they will subtract the average FX achieved rate, the FX commissions and again the service fee for the global netting. The fees alone mean that the USD/INR sell rate is different from the buy rate.


On Credit Cards [I am assuming you have a Visa or Master card], the RBI does not decide the rate. The rate is decided by Visa or Master. The standard Sheet rate for the day is used. Additionally SBI would mark it up by few paise [FX mark-up spread]. This is shown as mark-up fee.

The rate of USD Vs INR changes frequently. On large value [say 1 million] trades even a paise off makes a huge difference and hence the rate is constantly changing [going up or down].

The rates offered to individuals are constant through out the day. They change from day to day and can go up for down. Recently in the past 6 months if you read the papers, Rupee has been going down and is at historic low.

On a give day there are 2 rates;
- Bank Buy Rate, ie the rate at which Bank will BUY USD from you. Say 61. So it will buy 100 USD and give you Rupees 6100.
- Bank Sell rate, ie the rate at which Bank will SELL USD to you. Say 62. So if you want 100 USD, you need to give Bank 6200.

The difference between this is the profit to bank.


In addition to the SELL rate on the statement transaction day, currency conversion fees of 0 - 3% is applied, depending on the card issuing bank.

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