Brief Overview:
The new directions replace the Section on Facilities for Persons Resident in India other than Authorised Dealers Category – I and for Persons Resident outside Indiaof Master Direction on Risk Management and Interbank Dealings (“Master Direction”) (“New Directions”). This will be effective from 5th April 2024.
The remaining Sections on Facilities for Authorised Dealer Category-I, Accounts for Non-Residents Banks, Interbank Foreign Exchange Dealings and Reports to Reserve Bank under the Master Direction continue to apply.
Technical Details:
OTC:
1) Consolidates all foreign exchange transactions including cash, tom and spot.
2) Allows users to hedge their outstanding exposure upto USD 100 million without the establishing an underlying as opposed to the existing threshold of USD 10 million.
Exchange traded:
Existing circulars on currency futures and exchange trades currency options are superseded and consolidated under the New Directions.
JC Takeaways:
1) With one single New Directions for all the transactions, the hassle of referring to different product specific laws will be done away with.
2) With providing greater clarity this seems to aid the functioning of an efficient Indian derivatives market.
For further details, please see:
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12594&Mode=0
For any queries / clarifications, please feel free to ping us and we will be happy to chat
● Ms. Smrithi Nair (smrithi.nair@jclex.com)
● Ms. Aashka Shah (aashka.shah@jclex.com)
● Ms. Mahak Saboo (mahak.saboo@jclex.com)
