RBI Issues Revised Guidelines on Forex Risk Hedging w.e.f. April 05, 2024
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- Last Updated on 8 January, 2024
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A. P. (DIR SERIES) CIRCULAR NO. 13
The RBI has issued the revised directions on ‘ Risk Management and Inter-Bank Dealings – Hedging of foreign exchange risk’. Revised directions, allow Authorised Dealers (AD) to classify users as retail or non-retail to offer forex derivative contracts and foreign currency interest rate derivative contracts. ADs can offer foreign exchange contracts, involving INR or otherwise, to users (both retail and non-retail) for Cash, tom; and spot. The revised directions define key terms and categorize users into retail and non-retail, outlining the eligibility and access to various derivative contracts for each. It details the types of foreign exchange and currency interest rate derivative contracts that Authorized Dealers can offer, focusing on their usage for hedging purposes. Additionally, it lays out specific directives for hedging, rebooking of contracts, and documentation requirements, especially in interactions with non-resident users. The revised directions also delineate the roles of market-makers, stock exchanges, and clearing corporations in offering and regulating these derivatives. These directions are vital for ensuring adherence to regulatory standards in the complex domain of foreign exchange derivative transactions. Directions shall come into force w.e.f. April 05, 2024.
Click Here To Read The Full Circular
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