SCH III - See Regulation 6 - Procedure for Application for Approval for Hedging of Commodity Price Risk - Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000

Schedule III ( See Regulation 6) Procedure for Application for Approval for Hedging of Commodity Price Risk 1. A person resident in India, engaged in export-import trade 2 [ or as permitted by the Reserve Bank ] , who seeks to hedge price risk in respect of any commodity including Gold, 1 [***] may submit an application to the International Banking Division of an authorised dealer giving the following details. (i) A brief description of the hedging strategy proposed; namely:- (a) description of business activity and nature of risk; (b) instruments proposed to be used for hedging ; (c) names of commodity exchange and brokers through whom the risk is proposed to be hedged and credit lines proposed to be availed. The name and address of the regulatory authority in the country concerned may also be given; (d) size/average tenure of exposure and/or total turnover in a year, together with expected peak positions thereof and the basis of calculation. (ii) copy of the Risk Management Policy approved by the Management covering: (a) risk identification, (b) risk measurements, (c) guidelines and procedures to be followed with respect to revaluation and/or monitoring of positions, (d) names and designations of the officials authorised to undertake transactions and limits. (iii) Any other relevant information. 3 [ 2. Authorized dealer, after ensuring that the application is supported by documents indicated in paragraph 1, as may be relevant, may forward the application with its recommendations to the Reserve Bank of India, where applicable. In all other cases, the application may be forwarded by the company concerned to an authorized dealer bank authorized to grant permission under sub-regulation (ii) of regulation 6, for consideration. *************** NOTES:- 1 . Omitted vide Notification No. 028/2000 dated 05-09-2000 , w.e.f. 05-09-2000 before it was read as, but excluding oil and petroleum products 2 . Inserted vide Notification No. 105/2003 dated 21-10-2003 , w.e.f. 21-10-2003. 3 . Substituted vide Notification No. 148/RB-2006 dated 16-03-2006 , w.e.f. 16-03-2006 before it was read as, Authorised dealer after ensuring that the application is supported by documents indicated in paragraph 1, may forward the application with its recommendations to Reserve Bank for consideration.