RBI/2013-14/613
A.P.(DIR Series) Circular No.135
May 27, 2014
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Risk Management and Inter Bank Dealings
Attention of Authorised Dealers Category-I (AD Category-I) banks is invited to
the Foreign Exchange Management (Foreign Exchange Derivative Contracts)
Regulations, 2000 dated May 3, 2000 (Notification No. FEMA/25/RB-2000 dated May
3, 2000) as amended from time to time and
A.P. (DIR Series) circular no. 32
dated December 28, 2010, as amended from time to time, and
A.P. (DIR Series)
circular no. 114 dated March 27, 2014.
- Under the extant guidelines relating to hedging of currency risk of
probable exposures based on past performance, resident importers are allowed
to book contracts up to 25 per cent of the eligible limit. The eligible
limit is computed as the average of the previous three financial years’
import turnover or the previous year’s actual import turnover, whichever is
higher.
- On a review of the evolving market conditions and with a view to
providing importers with greater flexibility in hedging facility, it has
been decided to allow importers to book forward contracts, under the past
performance route, up to 50 per cent of the eligible limit. Importers who
have already booked contracts up to previous limit of 25 per cent in the
current financial year, shall be eligible for difference arising out of the
enhanced limits. All other operational guidelines, terms and conditions
shall apply mutatis mutandis.
- AD Category-I banks may bring the contents of this circular to the notice
of their constituents and customers.
- 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