Interest Component

AFM

Sir, In case of early actions, I understood the impact of interest component (that is. Planned flow of fund is only on due date, due to early action by customer, bank is in need of earlier than planned - so interest gets attracted for the unexpired period). With respect to after due date actions, however we are cancelling the contract as on due date itself, where it involves cashflow. Here, the cashflow happens on the planned date - then what is the logic behind interest component in this case, sir? [Video Time Stamp: 14:14] Video Details ------------- Advanced Financial Management - AFM Foreign Exchange Exposure and Risk Management #145. Illustration # 88 - May 2018

Swathi S

CA Final

★ 975

26-Mar-26 11:54

143

Answers (1)

Bank is entering into a ODFC. So till that date they have to keep funds. If you ask for execution 2 days after due date then bank has to maintain funds idle for those 2 days

Sriram Somayajula

Admin

26-Mar-26 12:32