Date: |
15-02-2021
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Notification No: |
A. P. (DIR Series) Circular No. 10
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Issuing Authority: |
RBI
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Type: |
A.P.D.(Series) Circulars
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File No: |
RBI/2020-21/98 |
Subject: |
Margin for Derivative Contracts
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RBI/2020-21/98
A. P. (DIR Series) Circular No. 10
February 15, 2021
All Authorised Dealer Category-I Banks
Madam/Sir,
Margin for Derivative Contracts
Attention of Authorised Dealer Category-I
(AD Cat-I) banks is invited to the Foreign Exchange Management (Margin for
Derivative Contracts) Regulations, 2020 notified in the Gazette of India vide
notification no. FEMA.399/RB-2020 dated October 23, 2020 (Annex I). Accordingly,
directions are being issued to allow posting and collection of margin for
permitted derivative contracts between a person resident in India and a person
resident outside India.
2. AD Cat-I banks may post and collect margin in
India, on their own account or on behalf of their customers, for a permitted
derivative contract entered into with a person resident outside India in the
form of:
Indian currency;
Freely convertible foreign currency;
Debt securities issued by Indian Central Government and State Governments;
Rupee bonds issued by persons resident in India which are:
Listed on
a recognized stock exchange in India; and
Assigned a credit rating of AAA
issued by a rating agency registered with the Securities and Exchange Board of
India. If different ratings are accorded by two or more credit rating agencies,
then the lowest rating shall be reckoned.
Explanation: Permitted
derivative contract shall have the same meaning as assigned to it in the Foreign
Exchange Management (Margin for Derivative Contracts) Regulations, 2020
[Notification no. FEMA.399/RB-2020 dated October 23, 2020].
3. AD Cat-I
banks may post and collect such margin outside India in the form of:
Freely convertible foreign currency; and
Debt securities issued by
foreign sovereigns with a credit rating of AA- and above issued by S&P Global
Ratings / Fitch Ratings or Aa3 and above issued by Moody’s Investors Service. If
different ratings are accorded by two or more credit rating agencies, then the
lowest rating shall be reckoned.
4. AD Cat-I banks may receive and pay
interest on margin posted and collected on their own account or on behalf of
their customers for a permitted derivative contract entered into with a person
resident outside India.
5. AD Cat-I banks shall maintain a separate
account in the name of persons resident outside India for the purpose of posting
and collecting cash margin in India, and transactions incidental thereto.
6. 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,
(Dimple Bhandia) Chief
General Manager
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