What Is FEDAI?
RBI decides what forex business is allowed; FEDAI decides how banks conduct it.
FEDAI, the Foreign Exchange Dealers' Association of India, is the body that writes the operating rules for forex business between banks and between banks and their customers. RBI decides what is permitted under FEMA; FEDAI decides how the permitted business is quoted, contracted, delivered and settled.
Module 1 of CCFE opens with FEDAI because every later topic, from export bill purchase to forward contract cancellation, applies a FEDAI rule somewhere. Know the institution first and the rules make sense.
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FEDAI at a Glance
- Full form
- Foreign Exchange Dealers' Association of India.
- Set up
- 1958, as an association of banks dealing in foreign exchange in India (Authorised Dealers, or ADs).
- Legal form
- A not-for-profit company, incorporated under Section 25 of the Companies Act, 1956 (the provision now carried in Section 8 of the 2013 Act).
- Members
- Authorised Dealer Category-I banks and other persons authorised by RBI under Section 10 of FEMA who join FEDAI. Public sector, private, foreign and some co-operative banks and institutions are on the list.
- Governance
- A Managing Committee drawn from member banks, with State Bank of India currently in the chair.
- Regulatory status
- Recognised by RBI as a Self-Regulatory Organisation (SRO) for all Authorised Dealers by press release dated 14 January 2026.
What FEDAI Actually Does
FEDAI's own profile lists these functions:
- check_circleFrames guidelines and rules for forex business: the FEDAI Rules govern hours of business, export and import transactions, clean instruments, forex contracts, early delivery and cancellation, intermediaries and interbank settlement.
- check_circleTrains bank staff in foreign exchange business.
- check_circleAccredits forex brokers. Since 5 October 2018 this is limited to voice exchange brokers; electronic trading platforms need RBI authorisation instead.
- check_circleAdvises and assists member banks in settling disputes between them, for example late-delivery claims under Rule 8.
- check_circleRepresents member banks before the government, RBI and other bodies.
- check_circleAnnounces daily and periodical rates to member banks, such as month-end revaluation rates.
FEDAI, RBI and FBIL: Who Does What
RBI
Role in the forex market
Regulator. Frames FEMA regulations and issues directions to Authorised Dealers.
Example
Master Direction on Risk Management and Inter-Bank Dealings
FEDAI
Role in the forex market
Self-regulatory body of ADs. Sets operating rules and the code of conduct.
Example
Spot is deliverable on the second working day (Rule 5.2)
FBIL
Role in the forex market
Benchmark administrator. Computes and publishes reference rates.
Example
USD/INR reference rate, published by FBIL since 10 July 2018 (RBI before that)
| Body | Role in the forex market | Example |
|---|---|---|
| RBI | Regulator. Frames FEMA regulations and issues directions to Authorised Dealers. | Master Direction on Risk Management and Inter-Bank Dealings |
| FEDAI | Self-regulatory body of ADs. Sets operating rules and the code of conduct. | Spot is deliverable on the second working day (Rule 5.2) |
| FBIL | Benchmark administrator. Computes and publishes reference rates. | USD/INR reference rate, published by FBIL since 10 July 2018 (RBI before that) |
Module 1 questions on FEDAI's role and rules. No signup.
Why Banks Follow FEDAI Rules
Membership is the mechanism. Members agree to abide by the FEDAI Rules and the FEDAI Code of Conduct, and every forex contract, confirmation and advice must carry the clause "Subject to the Rules & Regulations of the Foreign Exchange Dealers' Association of India" (Rule 7.5). That clause turns the rules into contract terms between the bank and its counterparty.
Members must also collect a Statement of Commitment to the Code of Conduct from the employees concerned and confirm to FEDAI every April that they have done so. The 2026 SRO recognition gave FEDAI one year to align its governance with RBI's omnibus SRO framework and extend membership to all categories of Authorised Dealers.
How CCFE Tests This
Expect short factual MCQs: what FEDAI stands for, when it was set up, which body accredits voice brokers (FEDAI) versus electronic platforms (RBI), and which clause appears on every contract. The common trap is crediting FEDAI with RBI's job. FEDAI does not frame FEMA regulations or grant AD licences, and it no longer publishes the USD/INR reference rate; FBIL does.
FAQs
What is the full form of FEDAI?expand_more
Foreign Exchange Dealers' Association of India, the association of banks authorised to deal in foreign exchange.
Is FEDAI a regulator?expand_more
It is a self-regulatory organisation, not a statutory regulator. RBI recognised it as an SRO for all Authorised Dealers in January 2026; RBI remains the regulator under FEMA.
When was FEDAI established?expand_more
In 1958, as an association of banks dealing in foreign exchange, incorporated as a Section 25 company under the Companies Act, 1956.
Does FEDAI fix exchange rates?expand_more
No. Market rates are set by trading, the USD/INR reference rate is published by FBIL, and banks set their own merchant rates and charges. FEDAI announces certain rates to members, such as revaluation rates, and sets the rules for how rates are applied.
Next steps
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