Risk Management and Inter-Bank Dealings - Commodity Hedging Exposures of domestic oil refining and marketing companies

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..... l refining and marketing companies Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to Regulation 6 of Notification No. FEMA.25/RB-2000 dated May 3, 2000 , as amended from time to time, in terms of which residents in India are permitted to enter into a contract in a commodity exchange or market outside India to hedge price risk in a commodity, subjec .....

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..... domestic crude oil refining companies to hedge their commodity price risk exposure dynamically, as announced in the Annual Policy Statement for the Year 2008-09 (para 129), it has been decided to extend the following facilities: A. Hedging of domestic purchases of crude oil and sales of petro-products: As per the prevailing trade practices, indigenously produced crude oil is purchased at int .....

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..... performance up to 50 per cent of the volume of actual imports during the previous year or 50 per cent of the average volume of imports during the previous three financial years, whichever is higher. Contracts booked under this facility will have to be regularized by production of supporting import orders during the currency of hedge. An undertaking may be obtained from the companies to this effec .....

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..... nterparties permitted for OTC derivatives, etc.; and iv. domestic crude oil companies should have put up the list of OTC transactions to the Board on a half yearly basis, which must be evidenced by the AD Category - I bank before permitting continuation of hedging facilities under this scheme. 5. The AD Category - I banks should also ensure " user appropriateness " and "suitability " of the h .....

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..... been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Salim Gangadharan) Chief General Manager-in-Charge - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxman .....

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