onomi     on epts and erminolo ies        22.21
     mounted to privatise it, so that a chosen few could
     not corner its huge profits.
                                                             free trADe
                                                          The international trade among an agreed-upon
         forwArD contrAct                                 group of countries without any barriers (such as
                                                          tariffs, quotas, forex controls, etc.), promoted
     A transaction contract of commodity on an agreed
                                                          with the objective of securing international
     price which binds the seller and buyer both to pay
                                                          specialisation and an edge in their foreign trade.
     and deliver the commodity on a future date. The
     price agreed upon is known as forward rate.
          One must not confuse this with the term
                                                             free port
     ‘future contract’ as in it, the term of the contract A port that is designated as such is the one where
     cannot be decided by the mutual needs of the         imports are allowed without any duty, provided
     parties involved (which is possible in a ‘forward    they are re-exported (i.e., entrepot). If the same is
     contract’).                                          correct in the case of an area, it is known as the
                                                          free trade zone.
         forwArD trADing
     A trading system in certain shares (as allowed by       fringe benefit tAx
     the SEBI in India) in which buyers and sellers are   The Finance Act, 2005 introduced 30 per cent
     allowed to postpone/defer payment and delivery       ‘Income Tax on fringe benefit’ on fringe benefits
     respectively after paying some charges. If the
                                                          received by the employees from his employer.
     buyer wants deferment, it is known as badla (an
     Indian term for contango) and if the seller goes          It means any privilege, service, facility or
     for deferment of delivery of shares, it is known     amenity, directly or indirectly provided by an
     as undha badla (in India, elsewhere it is known as   employer to his employees. It also includes such
     backwardation).                                      facilities provided to former employees. Any
                                                          reimbursement made either directly or indirectly
         frActionAl bAnking                               to the employer will also be considered as a fringe
                                                          benefit. Travelling ticket provided by the employer
     A system of banking in which banks maintain a        to the employees and his family members would
     minimum reserve asset ratio in order to maintain     be a fringe benefit. Even an amount, which is
     adequate liquidity to meet the customer’s cash       a contribution by the employer to an approved
     demands in its everyday business (the SLR in India   superannuating fund would be called a fringe
     is such a provision,).                               benefit.
                                                               It applies on deemed benefits, too such as
         free gooDs                                       entertainment, festival celebration, gifts, use of
     The goods which are in abundance (as air and         club facilities, provision of hospitality facilities,
     water) and are not considered as scarce economic     maintenance of any accommodation in the nature
     goods. As such goods have zero supply price and      of a guest house, conference, employee welfare, use
     they will be used in large volumes resulting into    of health club, sports and similar facilities, sales
     rising environmental pollution (point should         promotion including publicity; conveyance tour
     be noted that today air and water may not be         and travel including foreign travel, hotel, boarding
     considered as the typical free goods, at least the   and lodging, repair, running and maintenance
     ‘pure air’ and ‘pure water’).                        of motorcars, repair running and maintenance