Your Export Payment Arrived… Then the Bank Quietly Took a Cut: A Real-World Guide to FX Conversion, MT103, FIRC, and RBI Banking Ombudsman
You ship the goods. You do the hard part.
Your buyer pays on time in USD. You finally breathe.
And then, two days later, you check your bank credit… and something feels off.
The amount is in INR (not USD). The exchange rate looks lower than what you saw online. You didn’t approve anything. No one called. No email. No message. Just: “INR credited.”
If you’ve ever felt that sinking feeling—this blog is for you.
This isn’t theory. This is exactly how many exporters lose money quietly: not because the buyer didn’t pay, but because the conversion happened without clarity.
The story exporters keep repeating (and the one we’re discussing here)
In this case, an exporter received export proceeds from a buyer in Saudi Arabia:
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The buyer remitted money in USD
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Through international SWIFT transfer
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The remittance purpose: Buying goods (Export)
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Charges: OUR (meaning the sender pays transfer charges)
Two payments came:
But the exporter’s bank credited INR using exchange rates that were significantly lower than reference rates, creating an estimated loss of ?1,15,312.
The exporter’s frustration wasn’t only about the rate. It was deeper:
“I didn’t even get a chance to approve the rate. I didn’t ask you to convert it immediately. Why did you decide it for me—and why at such a poor rate?”
That question is the heart of this issue.
First, let’s fix a common confusion: RTGS didn’t come from the buyer
Many exporters see “RTGS” in the credit trail and assume:
“The buyer paid via RTGS.”
That’s not possible.
RTGS is an India-only INR settlement rail.
Your foreign buyer cannot send RTGS from abroad.
What actually happened is this:
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Buyer sent money via SWIFT (international transfer)
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Your Indian bank received the foreign currency in its network (often via its correspondent/nostro arrangement)
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The bank converted USD → INR
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Then credited your account in INR using RTGS/NEFT (domestic settlement)
So RTGS is not the crime.
The real issue is the conversion decision and rate transparency.
The real problem: “Treasury card rate + margin” happens quietly
When a bank converts your export USD into INR, it typically uses:
1) Treasury/Card Rate (base)
This is the bank’s internal base rate (not Google). It moves through the day and is controlled by the bank’s treasury.
2) Margin (spread)
This is the “extra” the bank adds—often where exporters lose money.
Here’s the uncomfortable truth:
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A reasonable spread might be small (varies by bank, relationship, volume).
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But if a bank applies a wide discretionary margin, the exporter suffers—especially when the exporter didn’t even consent to conversion timing.
So when you see a poor realized rate, the question becomes:
“What was your treasury rate at that time, and what margin did you apply to me?”
That’s why asking for the rate split in writing matters.
Without a rate split, you’re arguing in the dark.
With a rate split, you can finally see whether the bank’s pricing was fair—or opportunistic.
MT103: the single document that turns “he said / she said” into facts
If there is one document exporters should treat like gold, it’s this:
What is MT103?
MT103 is the SWIFT message for an international customer credit transfer.
Think of it as the remittance “birth certificate.”
It shows what came, from where, and under what instructions.
A proper MT103 typically includes:
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Currency and amount sent (USD)
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Value date
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Ordering customer/bank
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Beneficiary bank details
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Charges instruction (OUR/SHA/BEN)
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Remittance narrative/purpose
Why MT103 matters in disputes
Because when you complain about conversion and rate, banks may respond vaguely. MT103 prevents vague answers by proving:
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The payment was truly an international remittance
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It was sent in USD
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Charges were OUR (where applicable)
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Which banks were involved in routing
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The remittance purpose description
In short: MT103 anchors your complaint to hard evidence.
Precaution exporters should take
Always request MT103 for every export remittance, and archive it.
Don’t rely only on “credit advice” or bank statement lines.
FIRC: who must issue it?
Exporters often waste time asking the overseas bank. Don’t.
FIRC (or e-FIRC) is issued by the Indian beneficiary bank / Authorized Dealer (AD Bank)—the bank that received/realized the remittance and credited your account.
In this case, that’s Indian Bank (beneficiary bank).
FIRC matters because it supports:
Where your client is right (and where the bank may defend itself)
Where the exporter is strong
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Conversion happened without consent and without pre-rate confirmation
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The exporter is entitled to ask for:
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If margins are unusually high and not disclosed, it can look like non-transparent service
Where the bank may defend itself
Banks often say:
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“We converted as per default policy because no EEFC/holding instruction existed”
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“Google rate is not our benchmark”
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“RTGS is the credit method”
Some of these are technically defensible. But even then, transparency and documentation are still expected—especially when the customer disputes conversion timing and pricing.
The practical solution path: Bank first, then RBI Banking Ombudsman
If you want a real resolution (not endless branch visits), follow the formal path.
Step 1: Email the bank with a clear 30-day deadline
You need a written complaint trail. This becomes your foundation.
Sample email to bank (copy-paste and customize)
Subject: Formal Complaint – Unauthorised FX Conversion, Request for MT103, Rate Split, FIRC & EDPMS Closure (Export Proceeds)
Dear Sir/Madam,
We refer to foreign inward remittances received against our export invoice(s). The payments were received through international SWIFT transfer(s) in USD. We confirm that we did not provide any prior approval/confirmation for USD–INR conversion rate or timing, and no rate was communicated to us before conversion.
We request the following in writing:
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Complete MT103 / SWIFT message copy for each remittance
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Written confirmation of who executed/authorized the USD–INR conversion
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Detailed exchange rate breakup: treasury/card rate + margin applied, and the timestamp/basis used
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Issuance of FIRC (e-FIRC) for each remittance, mapped to relevant export invoice(s)
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Confirmation of EDPMS closure / status against the relevant invoice(s)
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Clarification and resolution for the financial impact due to non-transparent conversion (including appropriate compensation/ex-gratia, as applicable)
Kindly resolve and respond within 30 days from the date of this email. Failing which, we will escalate the matter to the RBI Integrated Ombudsman Scheme via RBI’s Complaint Management System for deficiency in banking service and non-transparent handling of export proceeds.
Regards,
Name:
Firm:
IEC:
Account No:
Contact:
Step 2: If no satisfactory reply within 30 days → file RBI complaint
File via RBI CMS portal: https://cms.rbi.org.in
Attach:
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Your email complaint to bank + acknowledgment
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Bank reply (if any)
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MT103 / SWIFT copies
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Credit entries showing INR conversion
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Your calculation of implied rate difference
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Invoice & export docs (invoice/packing list/COO)
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Request log for FIRC and EDPMS closure
RBI Ombudsman matters because banks take it seriously—suddenly your complaint is no longer “customer support,” it becomes compliance-grade.
The precautions that save exporters from heartbreak next time
If you export regularly, don’t leave this to luck.
1) Open/use an EEFC account
So you can hold USD and convert when you choose.
2) Give written standing instruction
Email your bank and keep a copy:
“Do not convert foreign currency receipts without my written rate approval.”
3) Demand rate confirmation before conversion
Ask for:
4) Always collect MT103
For every remittance. Archive it.
5) Ask for FIRC immediately
Don’t wait weeks. Ask as soon as the inward is realized and linked to your invoice.
6) Track EDPMS closure status
Export compliance pain often begins when EDPMS isn’t closed properly. Make it routine.
A gentle but powerful conclusion
Exporters don’t ask for favours.
They ask for fairness, clarity, and control over their own money.
If a bank converts your export USD without consent, doesn’t disclose the margin, delays your FIRC, and keeps you guessing—your best weapon is not anger.
Your best weapon is documentation + deadlines + escalation the right way.
A Hard Truth Exporters Must Understand: RBI Does NOT Control FX Margins
One of the most misunderstood aspects of foreign exchange conversion in India is this:
RBI does not regulate or cap the exchange margin charged by banks.
This single fact explains why exchange-rate outcomes can feel uneven, arbitrary, and negotiable—and why two exporters receiving the same USD amount on the same day can get very different INR credits.
The Real Protection Strategy for Exporters
The safest position isn’t fighting after the loss — it’s building a system that prevents surprises.
Because in exports, there are two different risks:
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Pricing/Transparency Risk (bank converts without consent, applies a wide margin)
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Market Risk (USD-INR moves against you between shipment and realization)
You can’t control the market every day, but you can control process, approvals, and hedging.
1) Set the Rule: “No Conversion Without Approval”
Give your bank a written instruction:
“Do not convert foreign currency receipts without my written rate approval.”
This prevents auto-conversion at treasury card rate + discretionary margin.
2) Use an EEFC Account to Control Timing
An EEFC account allows you to hold USD and convert when:
This reduces “forced timing loss.”
3) Ask for a Written Quote: Treasury Rate + Margin + Validity Window
Before conversion, insist on a quote like:
This is how you stop hidden “rate cuts.”
4) Hedge the Market Risk (The Part Most Exporters Skip)
Even with perfect transparency, USD-INR can move sharply. Hedging is what protects you from that movement.
A) Forward Contract (Most Common Cover)
A forward locks your future conversion rate for a set date/window.
Key point: Forward is not speculation — it’s price protection.
B) Option Contracts (Flexibility Cover)
Options can protect you from downside while allowing upside (subject to premium/cost).
Useful when:
C) Natural Hedge (Operational Cover)
Match inflows and outflows in the same currency:
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Use USD receipts to pay USD expenses (imports, SaaS tools, freight, etc.)
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Keep part funds in EEFC for planned USD payments
This reduces how much you need to convert at all.
5) Decide Your Hedge Ratio (Practical Rule)
A simple practical approach many exporters use:
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Hedge the “must-pay INR commitments” portion (raw material, salaries, EMIs)
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Leave some portion open if you can tolerate movement
You can think in ranges like:
(Exact ratio depends on your order cycle and risk appetite.)
6) Document Everything (This Is Your Shield)
Maintain a simple file for each remittance:
When disputes happen, the winner is the one with paper trail, not emotions.
7) Negotiate FX Margin Upfront (Not After the Loss)
Margins are not fixed. If you export regularly, ask your RM/treasury:
Because once conversion is done, negotiating becomes harder.
The takeaway
If you don’t hedge, you’re exposed to market movement.
If you don’t control conversion approvals, you’re exposed to bank pricing discretion.
Most exporters don’t lose money because they lack capability.
They lose money because banking processes, FX margins, and compliance rules are never explained clearly.
At Barai Overseas, we work closely with exporters to help them:
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Review export remittance credits and identify hidden FX margin losses
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Understand treasury card rates, margins, and bank pricing logic
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Draft strong, professional representations to banks
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Prepare RBI Banking Ombudsman complaints when required
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Set up preventive systems (EEFC usage, rate-approval formats, hedging planning)
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Improve export documentation discipline (MT103, FIRC, EDPMS)
Whether you’re facing a current dispute or simply want to ensure your next export payment is handled correctly, a short review today can prevent a costly surprise tomorrow.
Tags: export-usd-reached-india-did-you-receive-the-right-amount