RBI/2013-14/557
A.P. (DIR Series) Circular No. 119
April 07, 2014
To,
All Authorised Dealer Category – I banks
Madam / Sir,
Risk Management & Inter-Bank Dealings: Booking of Forward Contracts -
Liberalisation
Please refer to paragraph 23 of the first Bi-Monthly Monetary Policy
Statement, 2014-15 wherein, inter alia, it has been proposed to allow all
resident individuals, firms and companies with actual foreign exchange exposures
to book foreign exchange derivative contracts up to US$ 250,000 on declaration,
subject to certain conditions.
- Attention of Authorised Dealer 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.15 dated October 29, 2007 regarding liberalisation
in respect of booking of forward contracts, in terms of which resident
individuals, to manage/ hedge their foreign exchange exposures arising out
of actual or anticipated remittances, both inward and outward, are allowed
to book forward contracts, without production of underlying documents, up to
a limit of US$ 100,000 based on self-declaration.
- With a view to further liberalising the existing facilities, it has now
been decided to allow all resident individuals, firms and companies, who
have actual or anticipated foreign exchange exposures to book foreign
exchange forward contracts up to US$ 250,000 on the basis of a simple
declaration without any requirement of further documentation. The existing
facilities in terms of the aforementioned circular for Small and Medium
Enterprises (SMEs) having direct and/ or indirect exposures to foreign
exchange risk permitting them to book/ cancel/ roll over forward contracts
without production of underlying documents to manage their exposures
effectively subject to conditions specified therein shall remain unchanged.
- The revised reporting format is provided in Annexes I and II of this
circular. All other conditions including tenor of the contracts as laid down
in
A.P. (DIR Series) Circular No.15 dated October 29, 2007 will apply
mutatis mutandis.
- 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 Section
10(4) and Section 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