The swap with RBI will entail very large risk limit consumption (since it would be an off-market, in-the-money swap for banks). This will impact capital requirements substantially. Are such exposures on RBI exempted from capital adequacy requirements?
Swap Window for attracting FCNR (B) Dollar funds - As on Sep 18, 2013
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Capital adequacy exemption: exposures to central bank from off market swaps are treated as exempt under FEMA FAQ. Exposures arising from off market, in the money swaps with the central bank consume substantial risk limits and impact capital requirements; FEMA guidance for the Swap Window attracting FCNR(B) dollar funds (FAQ) states such central bank exposures are exempt from capital adequacy requirements.
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.
Capital adequacy exemption: exposures to central bank from off market swaps are treated as exempt under FEMA FAQ.
Exposures arising from off market, in the money swaps with the central bank consume substantial risk limits and impact capital requirements; FEMA guidance for the Swap Window attracting FCNR(B) dollar funds (FAQ) states such central bank exposures are exempt from capital adequacy requirements.
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