Risk Management and Inter Bank Dealings

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..... orised dealers are permitted to offer foreign currency rupee swaps to a person resident in India to hedge long term exposures subject to the condition that the market access by Authorised dealers on account of such swaps shall not exceed USD 25 million. Thereafter, on specific requests, certain banks were permitted higher limits. It has been decided that such specified limits will not be applicable to swaps offered to facilitate customers to hedge their foreign exchange exposures . Accordingly, authorised dealers are free to offer such swaps to customers subject to overall prudential and risk management guidelines. The specified limits would, however, continue for swap transactions facilitating customers to assume a foreign exchange li .....

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..... ot exceed 25 per cent of the eligible limit, within the cap of USD 100 million. It may be noted that the eligible limits are to be computed separately for import and export transactions. All other conditions remain unchanged. 4. Booking and cancelling of forward contracts Authorised dealers were permitted, vide circulars EC.CO.FMD.790/ 02.03.75/2001-02 dated March 26, 2002 and EC.CO.FMD.2/02.03.75/2002-03 dated July 31, 2002, to allow resident entities to rebook cancelled contracts covering all transactions subject to certain conditions. While detailed instructions were issued for calculating the eligible limit, it was indicated that irrespective of the eligibility, there would be a cap of USD 100 million per financial year for a cus .....

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..... ermission to Authorised dealers to offer such forward contracts to persons resident outside India. Accordingly, Authorised dealers are free to offer forward contracts to persons resident outside India subject to verification of the exposure in India. These forward contracts once cancelled are not eligible to be rebooked . 7. All the above facilities would be available upto March 31, 2003, subject to review . 8. Necessary amendments to the Foreign Exchange Management Regulations, 2000 are being issued separately. 9. Authorised dealers may bring the contents of this circular to the notice of their concerned constituents. 10. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Forei .....

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