| Date: |
13-02-2015
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| Notification No: |
RBI/2014-15/469 A.P. (DIR Series) Circular No. 78
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| Issuing Authority: |
RBI
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| Type: |
A.P.D.(Series) Circulars
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| File No: |
RBI/2014-15/469 |
| Subject: |
Risk Management and Inter Bank Dealings: Foreign Currency (FCY) – INR Swaps
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RBI/2014-15/469
A.P. (DIR Series) Circular No. 78
February 13, 2015
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Risk Management and Inter Bank Dealings: Foreign Currency (FCY) – INR
Swaps
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.
- In terms of paragraph (1) (iv) of section B contained in the annex to
the above circular, eligible residents can enter into FCY-INR swaps to hedge
exchange rate and/or interest rate risk exposure arising out of long-term
foreign currency borrowing or to transform long-term INR borrowing into
foreign currency liability, subject to operational guidelines, terms and
conditions listed thereunder. As per condition listed at (e), swap
transactions, once cancelled, shall not be rebooked or reentered, by
whichever mechanism or by whatever name called.
- To permit greater flexibility to the residents borrowing in foreign
currency, it has been decided that in cases where the underlying is still
surviving, the client, on cancellation of the swap contract, may be
permitted to re-enter into a fresh FCY-INR swap to hedge the underlying but
only after the expiry of the tenor of the original swap contract that had
been cancelled. All other operational guidelines, terms and conditions
governing FCY-INR swaps remain unchanged.
- 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
(Dimple Bhandia)
General Manager
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