Hedging of commodity price and freight risk permitted abroad with conditions; banks must ensure due diligence and reporting. Eligible resident entities (other than individuals) may hedge commodity price risk and freight risk in overseas markets using permitted products; gold hedges are limited to recognised IFSC exchanges. Banks may authorise and remit for such hedges after due diligence on exposure, hedge tenor and quantity, justification for OTC or non identical benchmarks, board approved hedging policy and requisite risk management. OTC contracts must be with regulated counterparties in acceptable jurisdictions, structured products are subject to net worth and listing conditions, all payments must pass through designated special accounts, and banks must maintain records, obtain annual statutory auditor certification, report irregularities and submit quarterly XBRL returns.
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.
Hedging of commodity price and freight risk permitted abroad with conditions; banks must ensure due diligence and reporting.
Eligible resident entities (other than individuals) may hedge commodity price risk and freight risk in overseas markets using permitted products; gold hedges are limited to recognised IFSC exchanges. Banks may authorise and remit for such hedges after due diligence on exposure, hedge tenor and quantity, justification for OTC or non identical benchmarks, board approved hedging policy and requisite risk management. OTC contracts must be with regulated counterparties in acceptable jurisdictions, structured products are subject to net worth and listing conditions, all payments must pass through designated special accounts, and banks must maintain records, obtain annual statutory auditor certification, report irregularities and submit quarterly XBRL returns.
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