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RBI has granted license to certain established firms, hotels and other organizations permitting them to deal in foreign currency notes, coins and travelers’ cheques. They are termed as ___________

RBI has granted license to certain established firms, hotels and other organizations permitting them to deal in foreign currency notes, coins and travelers’ cheques. They are termed as ___________

Looking for the answer to the question below related to Financial Management ? 

RBI has granted license to certain established firms, hotels and other organizations permitting them to deal in foreign currency notes, coins and travelers’ cheques. They are termed as ___________

 Options:

A. Authorized Banks
B. Authorized Dealers
C. Authorized Money changers
D. Authorized shopkeeper

The Correct Answer Is:

  • C. Authorized Money changers

The correct answer is C. Authorized Money changers because the Reserve Bank of India (RBI) grants licenses to certain established firms, hotels, and other organizations to deal in foreign currency notes, coins, and travelers’ cheques. These entities are commonly referred to as authorized money changers.

Let’s explore in detail why Option C is the correct choice and why the other options (A. Authorized Banks, B. Authorized Dealers, and D. Authorized shopkeeper) are not accurate in this context.

C. Authorized Money changers (Correct):

Authorized money changers are entities that have obtained a license from the Reserve Bank of India to engage in the exchange of foreign currency, including foreign currency notes, coins, and travelers’ cheques. These organizations are typically firms, hotels, or other businesses that cater to foreign tourists, travelers, or international clients.

They play a critical role in providing foreign exchange services to individuals and businesses, making it convenient for travelers to acquire the local currency of the destination they are visiting. Authorized money changers must adhere to regulatory requirements and maintain records of their foreign exchange transactions.

Now, let’s examine why the other options are not correct in this context:

A. Authorized Banks (Not Correct):

While authorized banks do have the authority to deal in foreign currency and offer foreign exchange services, they are distinct from authorized money changers.

Authorized banks include both commercial banks and other financial institutions that have been authorized by the RBI to conduct foreign exchange transactions. These banks offer a wide range of financial services, including foreign exchange, but their primary focus extends beyond currency exchange.

B. Authorized Dealers (Not Correct):

Authorized dealers, in the context of foreign exchange regulations, refer to entities authorized by the RBI to facilitate foreign exchange transactions and remittances, particularly in the context of trade and investment. Authorized dealers may include banks, financial institutions, and other entities involved in international trade and finance.

They are responsible for complying with foreign exchange regulations and reporting foreign exchange transactions. However, they are not specifically focused on currency exchange for travelers and tourists, which is the primary function of authorized money changers.

D. Authorized shopkeeper (Not Correct):

The term “authorized shopkeeper” is not a common or recognized term in the context of foreign exchange regulations in India. While individual retail shops or stores may engage in currency exchange activities, the designation of “authorized shopkeeper” is not a standard term used to describe entities licensed by the RBI to deal in foreign currency notes, coins, and travelers’ cheques.

The licensing and regulation of such entities fall under the category of authorized money changers.

In summary, authorized money changers are the entities that have been granted licenses by the RBI to deal in foreign currency notes, coins, and travelers’ cheques. They play a significant role in facilitating foreign exchange transactions, particularly for travelers and tourists.

The other options, such as authorized banks, authorized dealers, and authorized shopkeepers, do not accurately represent this specific category of entities and their role in the foreign exchange market. Understanding the distinction between these entities is essential for individuals and businesses involved in foreign currency transactions in India.

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