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Risk Management and Inter-bank Dealings: Permitting Non Resident Indians (NRIs) access to Exchange Traded Currency Derivatives (ETCD) market

FEMA - 30 - Dated:- 2-2-2017 - RBI/2016-17/221 A.P. (DIR Series) Circular No. 30 February 2, 2017 To All Category - I Authorised Dealer Banks Madam / Sir, 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) issued under clause (h) of sub-section (2) of Section 47 of FEMA, 1999 (Act 42 of 1999), as amended .....

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r FEMA, 1999. An announcement to this effect was made in the Monetary Policy Statement on April 5, 2016. 3. NRIs may access the ETCD market as per the following terms and conditions: NRIs shall designate an AD Cat-I bank for the purpose of monitoring and reporting their combined positions in the OTC and ETCD segments. NRIs may take positions in the currency futures / exchange traded options market to hedge the currency risk on the market value of their permissible (under FEMA, 1999) Rupee invest .....

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to the notice of RBI / SEBI. The onus of ensuring the existence of the underlying exposure shall rest with the NRI concerned. If the magnitude of exposure through the hedge transactions exceeds the magnitude of underlying exposure, the concerned NRI shall be liable to such penal action as may be taken by Reserve Bank of India under the Foreign Exchange Management Act (FEMA), 1999. 4. Necessary amendments (Notification No.FEMA 378/2016-RB dated October 25, 2016) to Foreign Exchange Management (Fo .....

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y 2, 2017 viz., Currency Futures (Reserve Bank) (Amendment) Directions, 2017 and Exchange Traded Currency Options (Reserve Bank) (Amendment) Directions, 2017 amending the Directions notified vide Notifications No. FED.1 / DG (SG) - 2008 dated August 6, 2008 and Notifications No. FED. 1/ ED (HRK) - 2010 dated July 30, 2010 respectively have been issued. Copies of the Directions are enclosed (Annexes II & III). These Directions have been issued under Section 45W of the Reserve Bank of India Ac .....

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(Amendment) Regulations, 2016 G.S.R. 1005 (E) .-In exercise of the powers conferred by clause (h) of sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments in the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 (Notification No. FEMA 25/RB-2000 dated May 3, 2000), namely:- 1. Short Title and Commencement : (i) These regulations may be called the Foreign Exchang .....

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ssion to a person resident outside India to enter into exchange traded currency derivatives A person resident outside India who is exposed to Rupee currency risk arising out of: (i) a permitted current account transaction or (ii) a Rupee denominated asset held by him or a Rupee denominated liability incurred by him, as permitted under FEMA, 1999, may transact currency derivatives contracts on a stock exchange recognised under section 4 of Securities Contracts (Regulations) Act, 1956 to hedge suc .....

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owers conferred by section 45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, hereby gives the following directions to all the persons dealing in currency futures. 1. Short title and commencement of the directions These directions may be called the Currency Futures (Reserve Bank) Amendment Directions 2017 and they shall come into force with effect from February 2, 2017. 2. Amendment to Currency Futures (Reserve Bank) Directions 2008 (as amended vide Curr .....

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of: (I) a permitted current account transaction or (II) a Rupee denominated asset held by him or a Rupee denominated liability incurred by him, as permitted under FEMA, 1999, may transact currency futures on a stock exchange recognised under section 4 of Securities Contracts (Regulations) Act, 1956 to hedge such exposure, subject to such terms and conditions as may be set forth in the directions issued by the Reserve Bank of India from time to time. (T Rabi Sankar) Chief General Manager Annex II .....

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