Reserve Bank Of India
A.P. (DIR Series) Circular No. 90
March 14, 2013
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Maintenance of Collateral by Foreign Institutional Investors (FIIs)
for transactions in the cash and F & O segments
Attention of Authorised Dealer Category - I (AD Category-I) banks is invited to
Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by
a Person Resident Outside India) Regulations, 2000, notified vide Notification
No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time, in terms of
which FIIs may offer such securities as permitted by the Reserve Bank from time
to time as collateral to the recognized Stock Exchanges in India for their
transactions in exchange traded derivative contracts as specified in
sub-Regulation 6 of Regulation 5 of the said Notification and
A.P. (DIR Series)
Circular No. 4 dated July 28, 2006 and
A.P. (DIR Series) Circular No. 47 dated
April 12, 2010.
- On a review, it has been decided in consultation with the Government of India
and the Securities and Exchange Board of India (SEBI), to permit FIIs to use, in
addition to already permitted collaterals, their investments in corporate bonds
as collateral in the cash segment and government securities and corporate bonds
as collaterals in the F & O segment. The operational guidelines in this regard
will be issued separately by SEBI. With the proposed changes coming into effect,
henceforth, FIIs will be eligible to offer government securities/corporate bonds
(acquired by FIIs in accordance with provisions of Schedule 5 to
Notification
No. FEMA 20 dated May 3, 2000), cash and foreign sovereign securities with AAA
ratings in both cash and F & O segments.
- AD Category – I banks may bring the contents of this circular to the notice
of their constituents and customers concerned.
- The directions contained in this circular have been issued under sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager-in Charge
RBI/2012-13/439