Reserve Bank Of India
A. P. (DIR Series) Circular No. 13
July 31, 2012
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. 58
dated December 15, 2011.
- Under extant regulations, the facility of cancellation and rebooking is not
permitted for forward contracts, involving Rupee as one of the currencies,
booked by residents to hedge current and capital account transactions. In order
to provide some operational flexibility to the exporters in their hedging
operations, the extant regulations have been reviewed. Accordingly, it has been
decided to allow exporters to cancel and rebook forward contracts to the extent
of 25 percent of the contracts booked in a financial year for hedging their
contracted export exposures.
- Under extant regulations, Net Overnight Open Position Limit (NOOPL), for
positions involving Rupee as one of the currencies, of AD Category-I banks takes
into account the open positions of the overseas branches of the banks in India.
Further, AD Category-I banks also include the delta of the Options Position
under NOOPL. On a review, so as to provide some flexibility to them in managing
their NOOPL, it has been decided to permit AD Category I banks to exclude their
Net Options Position and the positions taken by the overseas branches from their
NOOPL, for positions involving Rupee as one of the currencies. Accordingly,
limits for such positions, within the overall NOOPL, may be separately fixed by
the respective bank’s board and communicated to the Reserve Bank for approval.
- 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
RBI/2012-13/152