Schedule I - See Regulation 4 - Permissible foreign exchange derivative contract - Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000

Schedule I (See regulation 4) 12 [Permissible foreign exchange derivative contract] 13 [ 1. A person, whether resident in India or resident outside India, may enter into a foreign exchange derivative contract with an authorised dealer. Contracts involving Rupee subject to the following condition(s): i. that such contracts shall be for the purpose of hedging a contracted or anticipated exposure Provided that contracts not based on a contracted 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, 1956 . Contracts involving Rupee shall be subject to the following condition(s): i. that such contracts shall be for the purpose of hedging a contracted exposure as defined in these regulations. ii. that such person shall designate an Authorised Dealer in India for monitoring of their positions taken beyond such position limits as may be prescribed by the Reserve Bank of India to an exchange. iii. that such person shall share the details of the contracted exposure with the Authorised Dealer when called upon to do so by the dealer. ] **************** Notes : 1. Has been substituted vide Notification No. 054/2002 dated 5/3/2002 , before it was read as, a) the authorised dealer through verification of documentary evidence is satisfied about the genuineness of the underlying exposure, 2. Has been substituted vide Notification No. 147/RB-2006 dated 16/3/2006 , Earlier substituted vide Notification No. 070/2002 dated 26/8/2002 , as (h) contracts involving the rupee as one of the currencies, once cancelled, shall not be re-booked except as otherwise permitted by the Reserve Bank from time to time although they can be rolled over at ongoing rates on or before maturity. Contracts covering export transactions may be cancelled, re-booked or rolled over at on-going rates without any restrictions. before it was read as, contracts involving rupee as one of the currencies, once cancelled shall not be re-booked although they can be rolled over at ongoing 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 variable by whatever name called there shall not be any net inflow of premium. 8. Inserted vide Notification No. FEMA 240/2012-RB, dated 25-09-2012 w.e.f. 01-02-2011. 9. Omitted vide NOTIFICATION No. FEMA. 260/2013-RB dated 18/02/2013 w.e.f. 15/12/2011. before it was read as, Such contracts booked by residents to hedge current account transactions, regardless of tenor, not being those booked on past performance basis without documents or booked to hedge transactions denominated in foreign currency but settled in Indian Rupee, may be cancelled and rebooked freely at ongoing rates. Contracts covering export transactions may also be cancelled, rebooked or rolled over at ongoing rates without any restriction. 10. Inserted vide NOTIFICATION No. FEMA. 260/2013-RB dated 18/02/2013 w.e.f. 12/09/2012. 11. Inserted vide Not.365/2016-RB - Dated 1-6-2016 12. Substituted vide Notification No. FEMA.398/RB-2020 dated 18-02-2020 before it was read as Foreign exchange derivative contract permissible for a person resident in India 13. Substituted vide Notification No. FEMA.398/RB-2020 dated 18-02-2020 before it was read as A. Forward Contract 1. A person resident in India may enter into a forward contract with an authorised dealer in India to hedge an exposure to exchange risk in respect of a transaction for which sale and/or purchase of foreign exchange is permitted under the Act, or rules or regulations or directions or orders made or issued 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 necessary, (f) in case of Global Depository Receipts (GDRs) 6 [ American Depository Receipts (ADRs) ] the issue price has been finalised, (g) balances in the Exchange Earner's Foreign Currency(EEFC) accounts sold forward by the account holders shall remain earmarked for delivery and such contracts shall not be cancelled. They may be ,however, be rolled-over, 2 (h) Contracts involving the rupee as one of the currencies, once cancelled, shall not be rebooked except as otherwise permitted by the Reserve Bank from time to time although they can be rolled over at on-going rates on or before maturity. 9 [***] (i) substitution of contracts for hedging trade transactions may be permitted by an authorised dealer on being satisfied with the circumstances under which such substitution has become necessary. 3 (j) a person resident in India may, subject to the terms and conditions prescribed by Reserve Bank of India, enter into a forward contract with an authorised dealer in India to hedge an exposure to exchange risk in respect of transactions denominated in foreign currency but settled in Indian rupees. 5 AA. Forward Contract in respect of Economic Exposure.- A person resident in India may, subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time, enter into a forward contract with an authorised dealer in India to hedge an economic exposure to exchange risk in respect of such transactions as may be 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 final approval for borrowing in foreign currency, (c) the notional principal amount of the hedge does not exceed the outstanding amount of the foreign currency loan, and (d) the maturity of the hedge does not exceed the un-expired maturity of the underlying loan, (2) A person resident in India, who owes a foreign exchange or rupee liability, may enter into a contract for foreign currency-rupee swap with an authorised dealer in India to hedge long term exposure, (3) The contract entered into under sub-paragraph 2, if cancelled shall not be rebooked or re-entered, by whatever name called. (1) A person resident in India may enter into a foreign currency option contract 4 not involving the rupee as one of the currencies with an authorised dealer in India to hedge foreign exchange exposure of such person arising out of his trade: 7 [***] Explanation : The contingent foreign exchange exposure arising out of submission of a tender bid in foreign exchange is also eligible for hedging under this sub-paragraph. (2) A Transactions undertaken under sub-paragraph (1) may be freely booked and/or cancelled. 4 (3) A person resident in India may enter into a foreign currency-rupee option contract with an authorised dealer to hedge an exposure to exchange risk in respect of a transaction for which sale and / or purchase of foreign currency is permitted under the Act or the rules or regulations or directions 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 enter into cross-currency option contract (not involving the rupee as one of the currencies) and / or foreign currency rupee option contract authorised dealer against an underlying foreign exchange exposure in respect of a transaction for which sale and / or purchase of foreign currency is permitted under the Act or the rules or regulations or directions or orders made or issued thereunder subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time.]