RBI issues consolidated guidelines on unhedged foreign currency exposures
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- Last Updated on 14 October, 2022
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Circular No. RBI/2022-23/131 DOR.MRG.REC.76/00-00-007/2022-23, dated: 11.10.2022
RBI issued several guidelines/instructions/directives to the banks on Unhedged Foreign Currency Exposure (UFCE) of the entities which have borrowed from banks. Various references were received from banks seeking clarification on various aspects related to UFCE. Accordingly, a comprehensive review of the extant guidelines has been undertaken and all existing instructions on the subject have been consolidated in the Directions. Further, the instructions shall be effective from 01.01.2023. RBI, after receiving references from banks seeking clarifications, notifies definition of entity as “Entity” means a counterparty to which bank has exposure in any currency under Reserve Bank of India (Unhedged Foreign Currency Exposure) Directions, 2022. Earlier, ‘entities’ was defined as those entities which have borrowed from banks including borrowing in INR and other currencies irrespective of the size of exposure or entity.
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