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Risk Management and Inter-Bank Dealings - Non-deliverable derivative contracts (NDDCs) - FEMA - 05

Extract

..... on Risk Management and Inter-Bank Dealings dated July 5, 2016, as amended from time to time. 2. As per the extant regulatory framework, AD Cat-I banks operating International Financial Services Centre (IFSC) Banking Units (IBUs) are permitted to offer non-deliverable derivative contracts (NDDCs) to persons resident outside India. Such derivatives are cash-settled in foreign currency. With a view to developing the onshore INR NDDC market and providing residents the flexibility to efficiently design their hedging programmes, it has been decided to permit: (a) AD Cat-I banks operating IBUs to offer NDDCs involving INR to resident non-retail users for the purpose of hedging. Such transactions shall be cash settled in INR; and (b) The flexibilit .....

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Risk Management and Inter-Bank Dealings - Non-deliverable derivative contracts (NDDCs) - FEMA

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..... er derivative contracts to a user as per the user s classification in para (i) above. While offering a derivative contract involving INR, other than NDDCs, to a user, and during the life of such contracts, Authorised Dealers shall ensure that: Authorised Dealers shall offer derivative contracts to a user as per the users classification in para (i) above. While offering a derivative contract involving INR to a user, other than NDDCs offered to persons resident outside India, and during the life of such contracts, Authorised Dealers shall ensure that: The existing para 2(A)(x) of Part-A (Section-I), shall be substituted iii. Banks in India having an Authorised Dealer Category-1 licen .....

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Risk Management and Inter-Bank Dealings - Non-deliverable derivative contracts (NDDCs) - FEMA

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..... 999, and operating IBUs shall also be eligible to offer NDDCs involving INR to resident non-retail users from their branches in India subject to compliance with the directions set out in para 2A(ii) above. Such transactions shall be cash-settled in INR. The existing para 3A of Part C, shall be substituted. v. Authorised dealers having an IFSC Banking Unit (IBU) (as specified in circular no. RBI/2014-15/533.DBR.IBD.BC.14570/23.13.004/2014-15 dated April 1, 2015 (as amended from time to time)) may transact in Non-deliverable derivative contracts (NDDCs) with other AD Category 1 banks having IBUs and banks overseas. Banks can undertake such transactions through their IBUs or through their branche .....

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Risk Management and Inter-Bank Dealings - Non-deliverable derivative contracts (NDDCs) - FEMA

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