Identify DDA before choosing a collateral model
RBI’s exchange-house Vostro Master Direction, updated 1 October 2026 and checked on 27 October 2026, separates DDA, Non-DDA and Speed Remittance procedures. Section 5(A)(q) describes DDA collateral scenarios, including seven days’ projected drawings for an exchange house without three years’ operation and fifteen days’ estimated drawings where the stated auditor appointment is not possible. Its language is may be obtained; do not describe every illustration as a universal mandatory deposit. RBI exchange-house Vostro Master Direction: section 5(A), especially paragraph (q).
Track experience and the actual auditor arrangement
For an exchange house with three years of successful operations, the paragraph states no collateral is prescribed while allowing the bank to secure adequate cover. Record the history and current risk decision. The auditor-related scenario has its own condition; it is not simply an additional fifteen days imposed on every account. Preserve any representative arrangement and the bank’s conclusion on the applicable conditions rather than treating auditor availability as a label. RBI exchange-house Vostro Master Direction: section 5(A), especially paragraph (q).
Build the projection before multiplying days
Use supportable daily drawings, seasonality and pipeline activity. If the covered days have different expected volumes, sum those daily amounts rather than automatically multiplying one favourable day by seven. Identify the forecast period, currency and conversion basis. The examples assume a documented bank decision to use the stated cover model; the arithmetic does not itself determine eligibility or the amount the bank must require. RBI exchange-house Vostro Master Direction: section 5(A), especially paragraph (q).
Revalue cover and track its availability
The paragraph calls for periodic review and monitoring of deposit or guarantee adequacy. Reconcile the required cover under the adopted model against available, valid collateral. Confirm the instrument, beneficiary, currency and conditions. An expired or unavailable guarantee should not be counted simply because its nominal amount remains on an old schedule. Currency conversion examples use fictional rates, not current market quotes. RBI exchange-house Vostro Master Direction: section 5(A), especially paragraph (q).
Separate collateral from funding and float
Collateral cover does not replace the account’s funding requirements or authorise an overdraft. DDA operations have separate daily deposit, transfer and maximum-float instructions. Keep a funding ledger, drawings projection and collateral schedule distinct. Do not import the Non-DDA or Speed procedure’s separate collateral wording into this DDA calculation without identifying the actual arrangement. RBI exchange-house Vostro Master Direction: section 5(A), especially paragraph (q).
Applicable primary references
RBI exchange-house Vostro Master Direction: section 5(A), especially paragraph (q)
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Seven days at a constant projection
Assume the bank adopts seven days’ projected drawings for a qualifying new DDA relationship. At ₹5 lakh per day, model cover is 7 × 5 = ₹35 lakh. Retain the projection and bank decision rather than describing ₹35 lakh as an automatic statutory invoice.
Illustrative example 2: Seven unequal drawing days
Projected daily drawings in ₹ lakh are 3, 4, 5, 6, 7, 4 and 6. Sum is 35. Using only the first day’s 3 × 7 would give 21 and understate this adopted projection model by 14.
Illustrative example 3: The specified auditor-unavailability scenario
Assume the bank determines the stated fifteen-day model applies and estimated drawings are ₹6 lakh per day. Cover under that model is ₹90 lakh. The difference from seven days at the same daily estimate, ₹42 lakh, is ₹48 lakh; the two bases are not automatically cumulative.
Illustrative example 4: Currency conversion without rounding down
Assume adopted cover is ₹2,00,00,000 and fictional conversion is ₹86 per USD. Exact equivalent is USD 232,558.1395… . Rounding upward to cents gives USD 232,558.14, representing ₹2,00,00,000.04. Rounding downward to USD 232,558.13 would leave a ₹0.82 shortfall under these assumptions, before any separate bank margin.
Illustrative example 5: Top up against revised drawings
An adopted seven-day projection rises from ₹4 lakh to ₹5 lakh daily. Target cover rises from ₹28 lakh to ₹35 lakh. If valid available cover remains ₹28 lakh, the model shortfall is ₹7 lakh. Review actual top-up and instrument validity rather than merely editing the target column.
Illustrative example 6: A mature relationship and a bank policy choice
Assume three successful years are established and the bank separately chooses a five-day ₹8 lakh-per-day cover policy. The policy target is ₹40 lakh. This five-day figure is a fictional bank choice, not a DDA collateral period prescribed by the cited paragraph; do not confuse it with the separate maximum float provision.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the arrangement type | DDA account and agreement |
| 2 | Establish operating history | Evidence of successful operations |
| 3 | Review auditor arrangements | Applicable inspection and alternatives |
| 4 | Record the adopted collateral basis | Bank decision and paragraph analysis |
| 5 | Support daily drawings | Forecast and historical evidence |
| 6 | Calculate the covered projection | Constant or variable day model |
| 7 | Document currency conversion | Fictional/model or actual approved rate basis |
| 8 | Validate available collateral | Instrument, beneficiary and expiry |
| 9 | Review shortfalls periodically | Target-to-valid-cover reconciliation |
| 10 | Keep funding controls separate | Daily deposits, transfers and overdraft controls |
Sixteen practitioner FAQs
1. Does this article cover every remittance procedure?
No. It focuses on DDA; Non-DDA and Speed arrangements have separate wording.
2. Is seven-day cover a universal mandatory tariff?
No. Preserve the paragraph’s may-be-obtained wording and the applicable bank decision.
3. Which history matters for the younger-relationship scenario?
Whether the exchange house has completed the stated three years of operation.
4. Does three years alone always require release of collateral?
No. Successful operations and the bank’s adequate-cover decision must be evaluated.
5. When does the fifteen-day scenario arise?
The paragraph addresses the specified inability to appoint auditors.
6. Must seven and fifteen days always be added?
No. Establish which scenario and bank decision apply; do not combine models mechanically.
7. Can daily drawings differ within the forecast window?
Yes. Sum supported daily projections where the adopted model uses them.
8. Does the first day always represent the whole week?
No. Seasonality and known pipeline activity can make that shortcut misleading.
9. Are the exchange rates in the examples market quotes?
No. They are fictional rates for computation only.
10. Why show upward rounding in the conversion example?
It prevents a small shortfall against that model’s exact rupee target; separate bank margins remain independent.
11. Can a nominal expired guarantee count as valid cover?
Verify availability and validity rather than relying on a stale nominal amount.
12. Must cover adequacy be reviewed?
The paragraph provides for periodic review and monitoring of deposits and guarantees.
13. Does collateral itself fund beneficiary payments?
No. Maintain funding and collateral as separate control schedules.
14. Does collateral permit an overdraft?
No. Do not replace operating-account restrictions with a collateral calculation.
15. Is the mature-case five-day model prescribed collateral?
No. It is explicitly a fictional bank-policy assumption.
16. Why distinguish collateral days from float days?
They measure different controls and have different legal bases.
Conclusion
Calculate DDA collateral scenarios using documented drawing projections, exchange-house track record and auditor arrangements, without turning discretionary cover into a fixed tariff.