Rupee denominated trade hedging allowed for non-residents to manage currency risk via authorised dealer banks. Non-resident importers and exporters may hedge currency exposure on trade invoiced in Indian Rupees with AD Category I banks using forward INR contracts and FCY INR options. Two operational models are provided: Model I (via overseas bank correspondent) and Model II (direct dealing with AD bank), each requiring documentary verification of underlying trade, customer undertakings against dual hedging and prompt cancellation, KYC/AML certification, adherence of hedge amount and tenor to the underlying transaction, settlement via nostro/vostro accounts, one permitted rollover on extension, prohibition on rebooking cancelled contracts, and quarterly reporting of transactions and suspicious cancellations.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Rupee denominated trade hedging allowed for non-residents to manage currency risk via authorised dealer banks.
Non-resident importers and exporters may hedge currency exposure on trade invoiced in Indian Rupees with AD Category I banks using forward INR contracts and FCY INR options. Two operational models are provided: Model I (via overseas bank correspondent) and Model II (direct dealing with AD bank), each requiring documentary verification of underlying trade, customer undertakings against dual hedging and prompt cancellation, KYC/AML certification, adherence of hedge amount and tenor to the underlying transaction, settlement via nostro/vostro accounts, one permitted rollover on extension, prohibition on rebooking cancelled contracts, and quarterly reporting of transactions and suspicious cancellations.
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