TaxTMI 
TaxTMI 
Master Circular on Risk Management and Inter-Bank Dealings
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.... download Master Circular ============= Document 1 INDEX PART A-RISK MANAGEMENT 3 SECTION I 3 Facilities for Persons Resident in India other than Authorised Dealers Category-I 3 1. Forward Contracts 3 2. Contracts other than Forward Contracts 8 3. General Guidelines for Over the Counter Foreign Exchange Derivative Contracts 10 4. Currency Futures 11 5. Commodity Hedging 12 A. Hedging of Commodity Price Risk in the International Commodity Exchanges/Markets 13 B. Hedging of price risk on petroleum & petroleum Products 14 C. Commodity Hedging by entities in Special Economic Zones 15 6. Freight hedging 15 SECTION II 17 Facilities for Persons Resident outside India 17 1. Facilities for Foreign Institutional Investors (Flls). 19 2. Facilities for Non-resident Indians (NRIs) 18 3. Facilities for Hedging Foreign Direct Investment in India 18 SECTION III- Facilities for AD Category - I banks 20 1. Management of Banks' Assets-Liabilities 20 2. Hedging of Gold Prices 20 3. Hedging of Capital. 20 4. Participation in Currency Futures in India 22 PART B-ACCOUNTS OF NON-RESIDENT BANK 23 1. General 23 2. Rupee Ac....
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....er; d) where the exact amount of the underlying transaction is not ascertainable, the contract is booked on the basis of a reasonable estimate; e) foreign currency loans/bonds will be eligible for hedge only after final approval is accorded by the Reserve Bank, where such approval is necessary or Loan Registration Number (LRN) is given by the Reserve Bank; f) Global Depository Receipts (GDRs) and American Depository Receipts (ADRs) will be eligible for hedge only after the issue price has been finalized; g) balances in the Exchange Earner's Foreign Currency (EEFC) accounts sold forward by the account holders shall remain earmarked for delivery and such contracts shall Website:www.fema.rbi.org.in Email: [email protected] 3 not be cancelled. They may, however, be rolled-over; h) all forward contracts with Rupee as one of the currencies, booked to cover foreign exchange exposures, falling due within one year, can be freely cancelled and rebooked. All forward contracts, involving the Rupee as one of the currencies, booked by residents to hedge current account transactions, regardless of tenor, may be allowed to be cancelled and rebooked freely. This relaxat....
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.... of their constituents after examination of the following documents: . A certificate from the Chartered Accountant of the customer stating that all guidelines have been adhered to while utilizing this facility. . A certificate of import/export turnover of the customer during the past three years duly certified by their Chartered Accountant/bank in the format given in Annex-VI. f) In the case of an exporter, the amount of overdue bills should not be in excess of 10 per cent of the turnover, to avail the above facility. g) AD Category I banks are required to submit a monthly report (as on the last Friday of every month) on the limits granted and utilized by their constituents under this facility in the format given in Annex-IX. The report may be forwarded to The Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Amar Building, 5th Floor, Central Office, Mumbai-400 001. NOTE: Limits specified in paragraph (ii) pertain to forward contracts booked on the basis of declaration of an exposure. When forward contracts are booked by the AD Category I bank after verification of documentary evidence, these limits are not applicable ....
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....t exceed USD 100,000 at any time. c) The contracts may be permitted to be booked up to tenors of one year only. d) Such contracts may be booked through AD Category I banks with whom the resident individual has banking relationship, on the basis of an application-cum-declaration in the format given in Annex XV. The AD Category I banks should satisfy themselves that the resident individuals understand the nature of risk inherent in booking of forward contracts and should carry out due diligence regarding "user appropriateness" and "suitability" of the forward contracts to such customer. (v) A forward contract cancelled with one AD Category I banks can be rebooked with another AD Category I banks subject to the following conditions: a) The switch is warranted by competitive rates on offer, termination of banking Website:www.fema.rbi.org.in Email: [email protected] 6 relationship with the AD Category I banks with whom the contract was originally booked, etc. b) The cancellation and rebooking are done simultaneously on the maturity date of the contract. c) The responsibility of ensuring that the original contract has been cancelled rests with the AD Categ....
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....by the Reserve Bank for borrowing in foreign currency. c) the notional principal amount of the hedge does not exceed the outstanding amount of the foreign currency loan. d) the maturity of the hedge does not exceed the unexpired maturity of the underlying loan. These contracts may be freely cancelled and rebooked. Email: [email protected] Website:www.fema.rbi.org.in 8 (ii) A person resident in India, who has a foreign exchange or Rupee liability, may enter into a contract for Foreign Currency-Rupee Swap with an AD Category I bank in India to hedge long term exposure under the following terms and conditions: a) No swap transactions involving upfront payment of Rupees or its equivalent in any form shall be undertaken. b) Swap transactions may be undertaken by AD Category I banks as intermediaries by matching the requirements of corporate counter parties. c) While no limits are placed on the AD Category I banks for undertaking swaps to facilitate customers to hedge their foreign exchange exposures, limits have been put in place for swap transactions facilitating customers to assume a foreign exchange liability, thereby resulting in supply in the market.....
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....der this sub-paragraph. NOTE: In respect of foreign exchange derivative contracts both involving the Rupee and not involving the Rupee the following shall be strictly observed. A. In the case of swap structures where premium is inbuilt into the cost and option contracts involving cost reduction structures, AD Category I banks should ensure that - . such structures do not result in increase in risk in any manner and . do not result in net receipt of premium by the customer. B. AD Category I banks should not offer leveraged swap structures. C. AD Category I banks should not allow the swap route to become a surrogate for forward contracts for those users who do not qualify for forward cover. 3. General Guidelines for Over the Counter Foreign Exchange Derivative Contracts vide DBOD.No.BP.BC. 86/21.04.157/2006-07 dated April 20, 2007 are also applicable to forex derivatives. . The provisions of comprehensive guidelines on Derivatives · Sharing of information on derivatives between banks is mandatory, as detailed vide circular DBOD.No.BP.BC.94/08.12.001/2008-09 dated December 8, 2008. Website:www.fema.rbi.org.in 10 Email: [email protected] .....
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....e segment or the cash segment. Membership for both trading and clearing, in the currency futures market shall be subject to the guidelines issued by the SEBI. (ii) Banks authorized by the Reserve Bank under section 10 of the Foreign Exchange Management Act, 1999 as 'AD Category - I bank' are permitted to become trading and clearing members of the currency futures market of the recognized stock exchanges, on their own account and on behalf of their clients, subject to fulfilling the minimum prudential requirements: (iii) AD Category - I banks which do not meet the above minimum prudential requirements and AD Category - I banks which are Urban Co-operative banks or State Co-operative banks can participate in the currency futures market only as clients, subject to approval therefor from the respective regulatory Departments of the Reserve Bank. Position limits i. The position limits for various classes of participants in the currency futures market shall be subject to the guidelines issued by the SEBI. ii. The AD Category - I banks, shall operate within prudential limits, such as Net Open Position (NOP) and Aggregate Gap (AG) limits. The exposure of the banks, on their ....
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.... 5th Floor, Mumbai- 400 001, for consideration through the International Banking Division of an AD Category I banks along with specific recommendation giving the following details: 1. A brief description of the hedging strategy proposed, namely: a) description of business activity and nature of risk, b) instruments proposed to be used for hedging, c) names of commodity exchanges and brokers through whom risk is proposed to be hedged and credit lines proposed to be availed. The name and address of the regulatory authority in the country concerned may also be given, d) size /average tenure of exposure and/or total turnover in a year, together with expected peak positions thereof and the basis of calculation. 2. A copy of the Risk Management Policy approved by the Management covering; a) risk identification, b) risk measurements, Email: [email protected] Website:www.fema.rbi.org.in 13 c) guidelines and procedures to be followed with respect to revaluation and/or monitoring of positions, and d) names and designations of officials authorised to undertake transactions and limits 3. Any other relevant information. A one-time approval will be ....
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....by entities in Special Economic Zones AD Category I banks may allow entities in the Special Economic Zones (SEZ) to undertake hedging transactions in the overseas commodity exchanges/markets to hedge their commodity prices on export/import, subject to the condition that such contract is entered into on a stand-alone basis. Note: The term "stand alone" means the unit in SEZ is completely isolated from financial contacts with its parent or subsidiary in the mainland or within the SEZs as far as its import/export transactions are concerned. 6. Freight hedging A. Resident entities having freight exposures are permitted to hedge the freight risk in the international commodity exchanges/markets. It may be noted that the role of the Authorized Dealer here is primarily to provide facilities for remitting foreign currency amounts towards margin requirements from time to time. This facility must not be used in conjunction with any other derivative product. The hedging can be undertaken using plain vanilla Over the Counter (OTC) or exchange traded products in the international market, with a maximum tenor of one year forward. The exchanges on which the products are purchased must ....
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....f hedge will be determined by the number and capacity of these ships. The same may be certified by a Chartered Accountant to the AD Category - I bank. Website:www.fema.rbi.org.in 16 Email: [email protected] (ii) Contracts booked will have to be regularized by production of underlying documents i.e. employment of the ship during the currency of the hedge. An undertaking may be obtained from the company to this effect. (iii) AD Category - I banks may also ensure that the freight derivatives being entered into by the shipping companies are reflective of the underlying business of the shipping companies. C. Freight hedging by other companies exposed to freight risk: Companies other than those at B above may seek permission to hedge the freight risk in overseas regulated exchanges /OTC markets from the Reserve Bank. The applications may be forwarded through the international banking division of their AD Category I bank to The Chief General Manager- in - Charge, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Amar Building, 5th floor, Fort, Mumbai 400 001. Section II Facilities for Persons Resident outside India 1. Facilities for F....
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....in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 or under notifications issued thereunder or is made in accordance with the provisions of the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 as amended from time to time and in both cases subject to the terms and conditions specified in the proviso to paragraph 1 above. 3. Facilities for Hedging Foreign Direct Investment in India a) AD Category I banks may enter into forward contracts with residents outside India to hedge the investments made in India since January 1,1993, subject to verification of the exposure in India. b) Residents outside India having foreign direct investment in India are also permitted to enter into forward contracts with AD Category I banks with Rupee as one of the currencies to hedge the currency risk on dividend receivable by them on their investments in Indian companies. c) Residents outside India may also enter into forward sale contracts with AD Category I banks Website:www.fema.rbi.org.in 18 Email: [email protected] to hedge the currency risk arising out of their proposed foreign direc....
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....roducts, jewellery manufacturers, trading houses, etc.) in respect of the underlying sale/purchase and loan transactions in gold with them, subject to the conditions specified by the Reserve Bank. The tenor of such contracts should not exceed six months. 3. Hedging of Capital Website:www.fema.rbi.org.in Email: [email protected] 20 a) Foreign banks may hedge the entire Tier I Capital held by them in Indian books subject to the following conditions: i) the forward contract should be for tenor of one year or more and may be rolled over on maturity. Rebooking of cancelled hedge will require prior approval of Reserve Bank; ii) the capital funds should be available in India to meet local regulatory and CRAR requirements. Therefore, foreign currency funds accruing out of hedging should not be parked in nostro accounts but should remain swapped with banks in India at all times. b) Foreign banks are permitted to hedge their Tier II Capital in the form of Head Office borrowing as subordinated debt , by keeping it swapped into Indian Rupees at all times in terms of our Department of Banking Operations and Development (DBOD)'s circular No.IBS.BC.65/23.10.015/2001-02 d....
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....3. Funding of Accounts of Non-resident Banks (i) AD Category I banks may freely purchase foreign currency from their overseas correspondents/branches at on-going market rates to lay down funds in their accounts for meeting their bonafide needs in India. (ii) Transactions in the accounts should be closely monitored to ensure that overseas banks do not take a speculative view on the Rupee. Any such instances should be notified to the Reserve Bank. NOTE: Forward purchase or sale of foreign currencies against Rupees for funding is prohibited. Offer of two-way quotes in Rupees to non-resident banks is also prohibited. 4. Transfers from other Accounts Transfer of funds between the accounts of the same bank or different banks is freely Email: [email protected] Website:www.fema.rbi.org.in 23 permitted. 5. Conversion of Rupees into Foreign Currencies Balances held in Rupee accounts of non-resident banks may be freely converted into foreign currency. All such transactions should be recorded in Form A2 and the corresponding debit to the account should be in form A3 under the relevant Returns. 6. Responsibilities of Paying and Receiving Banks In the cas....
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....3. Inter-bank Transactions Subject to compliance with the provisions of paragraphs 1 and 2, AD Category I banks may freely undertake foreign exchange transactions as under: a) With AD Category I banks in India: (i) Buying/Selling/Swapping foreign currency against Rupees or another foreign currency. (ii) Placing/Accepting deposits and Borrowing/Lending in foreign currency. b). With banks overseas and Off-shore Banking Units in Special Economic Zones (i) Buying/Selling/Swapping foreign currency against another foreign currency to cover client transactions or for adjustment of own position, (ii) Initiating trading positions in the overseas markets. NOTE : A. Funding of accounts of Non-resident banks - please refer to paragraph 3 of Part B. B. Form A2 need not be completed for sales in the inter-bank market, but all such transactions shall be reported to Reserve Bank in R Returns. Website:www.fema.rbi.org.in 26 Email: [email protected] 4. Foreign Currency Accounts/ Investments in Overseas Markets (i) Inflows into foreign currency accounts arise primarily from client-related transactions, swap deals, deposits, borrowings, etc. AD Category I....
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....l Commercial Borrowings and loans/overdrafts from their Head Office, overseas branches and correspondents and overdrafts in nostro accounts (not adjusted within five days), shall not exceed 50 per cent of their unimpaired Tier I capital or USD 10 million (or its equivalent), whichever is higher. The aforesaid limit applies to the aggregate amount availed of by all the offices and branches in India from all their branches/correspondents abroad and also includes overseas borrowings in gold for funding domestic gold loans (cf. DBOD circular No. IBD.BC. 33/23.67.001/2005-06 dated September 5, 2005). If drawals in excess of the above limit are not adjusted within five days, a report, as per the format in Annex-VIII, should be submitted to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Mumbai 400001, within 15 days from the close of the month in which the limit was exceeded. Such a report is not necessary if arrangements exist for value dating. b) The funds so raised may be used for purposes other than lending in foreign currency to constituents in India and repaid without reference to the Reserve Bank. As an exce....
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....actions undertaken by residents in terms of Paragraph 2 (i) and 2 (iv) of Part A Section I and submit half-yearly reports (June and December) to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Amar Building, 5th Floor, Mumbai-400 001 as per the format indicated in the Annex-IV. iv) AD Category-I banks should forward details of exposures in foreign exchange as at the end of every quarter as per the format indicated in Annex-V to the Chief General Manger, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Amar Building, 5th Floor, Mumbai, 400 001. Please note that details of exposures of all corporate clients who meet the prescribed criteria have to be included in the report. v) AD Category-I banks have to report their total outstanding foreign currency borrowings under all categories as on the last Friday of every month to The Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Forex Markets Division, Central Office, Amar Building, 5th Floor, Mumbai-400 001, as per the format in Annex-VIII. The report should be received by the 10th of the follo....
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.... Email: [email protected] Website:www.fema.rbi.org.in 31 [See Part C ,Paragraph 2] Guidelines for Foreign Exchange Exposure Limits of Authorised Dealers Category-I 1. Coverage For banks incorporated in India, the exposure limits fixed by the Board should be the aggregate for all branches including their overseas branches and Off-shore Banking Units. For foreign banks, the limits will cover only their branches in India. 2. Capital Capital refers to Tier I capital as per instructions issued by Reserve Bank of India (Department of Banking Operations and Development). 3. Calculation of the Net Open Position in a Single Currency The open position must first be measured separately for each foreign currency. The open position in a currency is the sum of (a) the net spot position, (b) the net forward position and (c) the net options position. a) Net Spot Position The net spot position is the difference between foreign currency assets and the liabilities in the balance sheet. This should include all accrued income/expenses. b) Net Forward Position This represents the net of all amounts to be received less all amounts to be paid in the future as a....
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....nd 12 months and upto 13 months: LIBOR rates for 11 months & 12 months may be considered; the difference between these 2 months can be added to the LIBOR rate for 12 months to arrive at the 13 months LIBOR rate. iii) In respect of Forward Exchange Contracts with tenor beyond 13 months and all other derivative contracts: The discount factors for arriving at the net present value may be computed on the basis of the current swap curve as appearing on page ICAP 1 and SWAQ of the REUTERS screen on a consistent basis( i.e. adopting a specified time at which the same is to be determined). The methodology to be adopted/ selection of the rate/cut-off time etc. are to be a part of respective bank's laid down policy guidelines by the Management. 5. Capital Requirement As prescribed by Reserve Bank from time to time Email: [email protected] Website:www.fema.rbi.org.in 34 Annex II [see Part D, paragraph (i)] Reporting of Forex Turnover Data - FTD and GPB The guidelines and formats for preparation of the FTD and GPB reports are given below. AD Category-I banks may ensure that the reports are properly compiled on the basis of these guidelines: The data for a ....
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...., Ready, T.T. etc. Forwards Cancellation of Forwards Spot Swap Forwards FCY/INR Purchase from Sales to FCY/FCY Purchase from Sales to Spot, Cash, Ready, T.T. etc. GPB Statement showing gaps, position and cash balances as on. Foreign Currency Balances : IN USD MILLION (Cash Balance + All Investments) Net Open Exchange Position : O/B (+)/O/S (-) IN INR CRORE Website:www.fema.rbi.org.in Email: [email protected] 36 (Rs.) Of the above FCY/INR . . IN INR CRORE AGL maintained (In USD mio) . . VaR maintained(In INR): . . . . FOREIGN CURRENCY MATURITY MISMATCH (IN USD MILLION) I month II months III months IV months V months VI months >VI months Email: [email protected] Website:www.fema.rbi.org.in 37 Annex III [see Part D ,paragraph (ii)] Statement of Nostro/Vostro Balances for the month of Name & address of the Authorised Dealer Category-I bank. Sr. No. Currency Net balance in Nostro Account Net balance in Vostro Account. 1 USD 2 EUR 3 JPY 4 GBP 5 INR 6 Other currencies (in US $ million) Note: In case the variation in each item above (given at 1 to 5) exceeds 10% in a month....
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....(Amount in USD million) Financial Year Existing limit for booking of forward cover based on past performance Percentage of Turnover overdue bills to turnover (April-March) Export Import Export Import Export Import 2006-07 2007-08 2008-09 Annex VII [See Part A, Section I, paragraph 2 (iii)] Foreign currency- Rupee Options 1. AD Category-I banks are permitted to offer foreign currency - Rupee options under the following terms and conditions: a) This product may be offered by AD Category-I banks having a minimum CRAR of 9 per cent, on a back-to-back basis. b) AD banks having adequate internal control, risk monitoring/ management systems, mark to market mechanism and fulfilling the following criteria will be allowed to run an option book after obtaining a one time approval from the Reserve Bank: i. Continuous profitability for at least three years ii. Minimum CRAR of 9 per cent iii. Net NPAs at reasonable levels (not more than 5 per cent of net advances) iv. Minimum Net worth not less than Rs. 200 crore c) For the present, AD Category-I banks can offer only plain vanilla European options. d) i. Customers can purchase....
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.... Fort, Mumbai-400001 with a copy of the approval of the Competent Authority (Board/Risk Committee/ALCO) and a copy of the detailed memorandum put up in this regard. AD Category-I banks who wish to use the product on a back-to-back basis may keep the above Division informed in this regard. b) Market makers would be allowed to hedge the 'Delta' of their option portfolio by accessing the spot markets. Other 'Greeks' may be hedged by entering into option transactions in the inter-bank market. The 'Delta' of the option contract would form part of the overnight open position. As regards inclusion of option contracts for the purpose of 'AGL', the "delta equivalent" as at the end of each maturity shall be taken into account. The residual maturity (life) of each outstanding option contracts can be taken as the basis for the purpose of grouping under various maturity buckets. (For definition of the various 'Greeks' relating to option contracts, please refer the report of the RBI Technical Committee on foreign currency-Rupee options). c) For the present, AD Category-I banks are expected to manage the option portfolio within the risk management limits already approved by the Reserve Bank....
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....iation separately) in INR terms for other currency pairs, such as EUR- INR, JPY-INR etc. IV. Strike Concentration Report Maturity Buckets Strike Price 1 week 2 weeks 1 month 2 months 3 months > 3 months Website:www.fema.rbi.org.in 47 Email: [email protected] This report should be prepared for a range of 150 paise around current spot level. Cumulative positions to be given. All amounts in USD million. When the bank owns an option, the amount should be shown as positive. When the bank has sold an option, the amount should be shown as negative. All reports may be sent via e-mail by market-makers to [email protected]. Reports may be prepared as of every Friday and sent by the following Monday. Website:www.fema.rbi.org.in Email: [email protected] 48 Annex VIII [See Part C, paragraph 5 (a)] Overseas foreign currency borrowings -Report as on Amount (in equivalent USD* Million) External Commercial Borrowings Unimpaired Tier-I capital as at the close of previous Borrowings under following scheme as per IECD Master Circular on Export Credit in Foreign Currency dated July 1, 2003 & Regulation 4.2(iv) of Notification No. FEMA 3/2000-....
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.... , platinum and silver) in the international commodity exchanges/ markets. AD Category I banks satisfying the minimum norms as given below and interested in extending this facility to their customers may forward the application for approval, to the Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Central Office, Forex Markets Division, Amar Building, 5th Floor, Fort, Mumbai - 400 001. Minimum norms which are required to be satisfied by the AD Category-I banks: i) Continuous profitability for at least three years; ii) Minimum CRAR of 9%; iii) Net NPAs at reasonable level but not more than 4 per cent of net advances; and iv) Minimum net worth of Rs 300 crore. AD Category-I banks may grant permission to corporates only after obtaining approval from the Reserve Bank. Reserve Bank retains the right to withdraw the permission granted to the bank, if considered necessary. 2. Before permitting corporates to undertake hedge transactions, authorized dealer would require them to submit a Board resolution indicating (i) that the Board understands the risks involved in these transactions, (ii) nature of hedge transactions that the corporate would u....
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.....fema.rbi.org.in Email: [email protected] 52 Report(s), duly confirmed/countersigned by the corporate's Financial Controller should be verified by the AD Category-I bank to ensure that all off-shore positions are/were backed by physical exposures. 4. A of the Broker's Month-end copy 5. The periodic statements submitted by Brokers, particularly those furnishing details of transactions booked and contracts closed out and the amount due/payable in settlement, should be checked by the corporate/firm. Un-reconciled items should be followed up with the Broker and reconciliation completed within three months. 6. The corporate/firm should not undertake any arbitraging/speculative transactions. The responsibility of monitoring transactions in this regard will be that of the AD Category-I bank. 7. An annual certificate from Statutory Auditors should be submitted by the company/firm to the AD Category-I bank. The certificate should confirm that the prescribed terms and conditions have been complied with and that the corporate/firm's internal controls are satisfactory. These certificates may be kept on record for internal audit/inspection. 53 Email: fedcofmd@....
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....ve hedging facilities, AD Category - I banks should ensure that the domestic crude oil refining companies hedging their exposures should comply with the following: i. to have Board approved policies which define the overall framework within which derivatives activities are undertaken and the risks contained; ii. sanction of the company's Board has been obtained for the specific activity and also for dealing in OTC markets; iii. the Board approval must include explicitly the mark-to-market policy, the counterparties permitted for OTC derivatives, etc .; and iv. domestic crude oil companies should have put up the list of OTC transactions to the Board on a half yearly basis, which must be evidenced by the AD Category - I bank before permitting continuation of hedging facilities under this scheme. 3. The AD Category - I banks should also ensure "user appropriateness" and "suitability" of the hedging products used by the customer as laid down in Para 8.3 of 'Comprehensive Guidelines on Derivatives' issued vide our circular DBOD No. BP.BC. 86/21.04.157/2006-07 dated April 20, 2007. Email: [email protected] Website:www.fema.rbi.org.in 55 Annex XIII [see Par....
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....undertaking permitted current and / or capital account transactions. I also certify that I have not booked foreign exchange forward contracts with any other bank / branch. I have understood the risks inherent in booking of foreign exchange forwardcontracts. Signature of the applicant (Name) Place: Date: Certificate by the Authorised Dealer Category - I bank This is to certify that the customer . .(Name of the applicant) having PAN No ........ has been maintaining an account ........ (no.) with us since * We certify that the customer meets the AML / KYC guidelines laid down by RBI and confirm having carried out requisite suitability and appropriateness test. Name and designation of the authorised official: Place: Signature: Date: Stamp and seal * month / year Email: [email protected] 58 Website:www.fema.rbi.org.in Annex XVI [A. P. (DIR Series) Circular No. 35, dated November 10, 2008] [see Part A, Section I, paragraph 5] Conditions / Guidelines for issuance of standby letter of credit /bank guarantee - commodity hedging transactions 1. AD Category I banks may issue guarantees/standby letters of credit only where the remittance is covered under t....