RBI announces draft directions on facilities for hedging foreign exchange risk by Residents and Non-residents
The Reserve Bank of India today released a draft of the revised directions and regulations on facilities for hedging foreign exchange risk by Residents and Non-residents. Comments on the draft directions are invited from banks, market participants and other interested parties by March 15, 2019.
Background
A review of the existing facilities for hedging of foreign exchange risk by non-residents and residents was announced in the Statement on Developmental and Regulatory Policies in February 2018 and August 2018 respectively.
Post review, a draft of the revised directions is being put in the public domain for seeking comments. The draft directions propose to, inter alia:
(i) Merge the facilities for residents and non-residents into a single unified facility for all users,
(ii) Allow users having valid exposure to hedge the same using any available instrument,
(iii) Introduce the facility to hedge anticipated exposure,
(iv) Simplify the procedures for authorised dealers to offer foreign exchange derivatives.
Once finalised, the directions shall replace the existing directions in Part A – Section I and II of the Master Direction on Risk Management and Interbank Dealings.
About the Author
