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

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..... Regulations, 2000 dated May 3, 2000 (Notification No. FEMA.25/RB-2000 dated May 3, 2000), as amended from time to time, and Master Direction - 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 .....

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..... Dealers shall offer 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 license under FEMA, 1999, and operating Int .....

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..... rom 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 branches in India or through their foreign branches (in case of foreign banks operating in India, through any branch of the parent bank). Authorised Dealers .....

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