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  • Risk Management and Inter Bank Dealings

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    deepu.srivas
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    1. The Reserve Bank of India issued a circular to all Authorized Dealer Category-I banks regarding foreign currency (FCY) - INR swaps. 2. The circular references previous regulations and guidelines regarding eligible residents entering into FCY-INR swaps to hedge foreign currency borrowing or transform long-term INR borrowing into foreign currency. 3. To provide greater flexibility, the circular updates that residents may now re-enter an FCY-INR swap contract to hedge an underlying exposure, if the original swap was cancelled, as long as it is done after the original swap contract's tenor has expired.

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    Risk Management and Inter Bank Dealings: Foreign Currency (FCY) – INR Swaps

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    1. The Reserve Bank of India issued a circular to all Authorized Dealer Category-I banks regarding foreign currency (FCY) - INR swaps. 2. The circular references previous regulations and guidelines regarding eligible residents entering into FCY-INR swaps to hedge foreign currency borrowing or transform long-term INR borrowing into foreign currency. 3. To provide greater flexibility, the circular updates that residents may now re-enter an FCY-INR swap contract to hedge an underlying exposure, if the original swap was cancelled, as long as it is done after the original swap contract's tenor has expired.

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    © All Rights Reserved
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    11 Ansichten2 Seiten

    Risk Management and Inter Bank Dealings

    Hochgeladen von

    deepu.srivas
    1. The Reserve Bank of India issued a circular to all Authorized Dealer Category-I banks regarding foreign currency (FCY) - INR swaps. 2. The circular references previous regulations and guidelines regarding eligible residents entering into FCY-INR swaps to hedge foreign currency borrowing or transform long-term INR borrowing into foreign currency. 3. To provide greater flexibility, the circular updates that residents may now re-enter an FCY-INR swap contract to hedge an underlying exposure, if the original swap was cancelled, as long as it is done after the original swap contract's tenor has expired.

    Copyright:

    © All Rights Reserved
    Als PDF, TXT herunterladen oder online auf Scribd lesen
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    von 2

    RESERVE BANK OF INDIA

    Financial Markets Regulation Department


    Central Office
    Mumbai - 400 001

    RBI/201415/469

    February13,2015

    A.P.(DIRSeries)CircularNo.78

    To
    AllCategoryIAuthorisedDealerBanks

    Madam/Sir,

    RiskManagementandInterBankDealings:ForeignCurrency(FCY)INRSwaps

    Attention of Authorised Dealers CategoryI (AD CategoryI) banks is invited to the Foreign
    Exchange Management(Foreign Exchange Derivative Contracts) Regulations, 2000 dated May
    3,2000(NotificationNo.FEMA/25/RB2000datedMay3,2000)asamendedfromtimetotime
    andA.P.(DIRSeries)circularno.32datedDecember28,2010,asamendedfromtimetotime.

    2. In terms of paragraph (1) (iv) of section B contained in the annex to the above circular,
    eligibleresidentscanenterintoFCYINRswapstohedgeexchangerateand/orinterestraterisk
    exposure arising out of longterm foreign currency borrowing or to transform longterm INR
    borrowingintoforeigncurrencyliability,subjecttooperationalguidelines,termsandconditions
    listedthereunder.Asperconditionlistedat(e),swaptransactions,oncecancelled,shallnotbe
    rebookedorreentered,bywhichevermechanismorbywhatevernamecalled.

    3. To permit greater flexibility to the residents borrowing in foreign currency, it has been
    decided that in cases where the underlying is still surviving, the client, on cancellation of the
    swapcontract,maybepermittedtoreenterintoafreshFCYINRswaptohedgetheunderlying
    butonlyaftertheexpiryofthetenoroftheoriginalswapcontractthathadbeencancelled.All
    other operational guidelines, terms and conditions governing FCYINR swaps remain
    unchanged.

    4.ADCategoryIbanksmaybringthecontentsofthiscirculartothenoticeoftheirconstituents
    andcustomers.
    5.ThedirectionscontainedinthiscircularhavebeenissuedunderSections10(4)and11(1)of
    the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
    permissions/approvals,ifany,requiredunderanyotherlaw.

    Yoursfaithfully

    (DimpleBhandia)
    GeneralManager

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