TMI BlogSee Regulation 4 - Permissible foreign exchange derivative contractX X X X Extracts X X X X X X X X Extracts X X X X ..... or anticipated exposure may be undertaken, as may be permitted by the Reserve Bank of India Provided further that transactions that involve the Rupee but are settled by delivery of a foreign currency shall be undertaken only by an authorised dealer or a person not resident in India and such other persons as may be permitted by the Reserve Bank of India, in terms of the directions issued in this regard by the Reserve Bank of India. ii. that such person shall share the details of the exposure with the authorised dealer when called upon to do so by the authorised dealer. 2. A person may enter into an exchange traded currency derivative contract on an exchange recognised under section 4 of the Securities Contract (Regulation) Act, 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates on or before maturity. This restriction shall not apply to contracts covering export transactions which may be cancelled, rebooked or rolled over at on-going rates. 3. Has been added vide Notification No. 104/2003 dated 21/10/2003 4. Has been inserted vide Notification No.143/2005 dated 19/12/2005 5. Has been inserted vide Notification No. 159/2007 dated 17/9/2007 6. Have been inserted vide Notification No. FEMA 240/2012-RB, dated 25-09-2012 with effect from May 3, 2000. 7. Omitted vide Notification No. FEMA 240/2012-RB, dated 25-09-2012 w.e.f. 01-02-2011, before it was read as:- Provided that in respect of cost effective risk reduction strategies like range forwards, ratio-range forwards or any other varia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder, subject to following terms and conditions- 1 (a) the authorised dealer through verification of documentary evidence is satisfied about the genuineness of the underlying exposure or as otherwise permitted by the Reserve Bank from time to time. (b) the maturity of the hedge does not exceed the maturity of the underlying transaction, (c) the currency of hedge and tenor are left to the choice of the customer, (d) where the exact amount of the underlying transaction is not ascertainable, the contract is booked on the basis of a reasonable estimate, (e) foreign currency loans/bonds will be eligible for hedge only after final approval is accorded by the Reserve Bank where such approval is neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed by the Reserve Bank from time to time. B. Contract other than Forward Contract. 2. (1) A person resident in India who has borrowed foreign exchange in accordance with the provisions of Foreign Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000 , may enter into an Interest rate swap or Currency swap or Coupon Swap or Foreign Currency Option or Interest rate cap or collar (purchases) or Forward Rate Agreement (FRA) contract with an authorised dealer in India or with a branch outside India of an authorised dealer for hedging his loan exposure and unwinding from such hedges, Provided that - (a) the contract does not involve rupee, (b) the Reserve Bank has accorded fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns or orders made or issued there under on the same terms and conditions applicable to forward contracts. 8 [ (4) A person resident in India may enter into cross-currency option cost reduction structures (not involving the rupee as one of the currencies) and foreign currency-rupee option cost reduction structures with an authorised dealer to hedge an exposure to exchange risk arising out of trade transactions or external commercial borrowings 10 [or foreign currency loans availed of domestically against FCNR(B) deposits] subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time. ] 11 [ (C) Writing of standalone options against underlying exposure A person resident in India may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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