Bare Acts Live

Central Acts and Rules Amended and Updated
  • Home
  • Central Acts
  • State Acts
    Delhi Local Acts Andhra Pradesh Local Acts Uttar Pradesh Local Acts West Bengal Local Acts Rajasthan Local Acts Jammu and Kashmir Local Acts Himachal Pradesh Local Acts Haryana Local Acts Punjab Local Acts Maharashtra Local Acts Kerala Local Acts Tamil Nadu Local Acts Goa Local Acts Bihar Local Acts Uttranchal Local Acts Jharkhand Local Acts Chhatisgarh Local Acts Madhya Pradesh Local Acts Assam & North East Local Acts Orissa Local Acts Gujarat Local Acts Telangana Local Acts Chandigarh Local Acts Karnataka Local Acts
  • Law Commission Reports
  • International Treaties
  • Join Law Finder

      • 1. Short title
      • 2. Authority for authentication and the manner of authentication of documents
      • 1. Short title and commencement
      • 2. Definitions
      • 3.
      • 4. Power of Reserve Bank to compound contravention
      • 5. The Power of Enforcement Directorate to compound contraventions
      • 6.
      • 7.
      • 8. Procedure for compounding
      • 9. Payment of amount compounded
      • 10.
      • 11.
      • 12. Contents of the order of the Compounding Authority
      • 13. Copy of the order
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Acquisition and transfer of property in India by an Indian citizen resident outside India
      • 4. Acquisition and transfer of property in India by a person of Indian origin
      • 5. Acquisition of immovable property for carrying on a permitted activity
      • 5-A. Purchase/sale of immovable property by Foreign Embassies/ Diplomats/Consulate Generals
      • 6. Repatriation of sale proceeds
      • 7. Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries
      • 8. Prohibition on transfer of immovable property in India
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Restriction on acquisition or transfer of immovable property outside India
      • 4. Exemptions
      • 5. Acquisition and transfer of immovable property outside India
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Restriction on acquisition or transfer of immovable property outside India.
      • 4. Exemptions.
      • 5. Acquisition and Transfer of Immovable Property outside India.
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Acquisition and Transfer of Property in India by a NonResident Indian or an Overseas Citizen of India.
      • 4. Acquisition of Immovable Property for carrying on a permitted activity.
      • 5. Purchase/sale of Immovable Property by Foreign Embassies/Diplomats/Consulate Generals.
      • 6. Joint acquisition by the spouse of an NRI or an OCI.
      • 7. Acquisition by a LongTerm Visa holder.
      • 8. Repatriation of sale proceeds.
      • 9. Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries.
      • 10. Prohibition on transfer of immovable property in India.
      • 11. Miscallaneous.
      • 12. Saving.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Appointment of Adjudicating Authority
      • 4. Holding of inquiry
      • 5. Form of appeal
      • 6. Procedure before Special Director (Appeals)
      • 7. Contents of the order in appeal
      • 8. Representation of party
      • 9. Service of notices, requisitions or orders
      • 10. Form of appeal
      • 11. Procedure before Appellate Tribunal
      • 12. Contents of the order in appeal
      • 13. Representation of party
      • 14. Service of notices, requisitions or orders
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Prohibition to borrow or lend in foreign exchange
      • 4. Borrowing and lending in foreign exchange by an authorised dealer
      • 5. Borrowing and lending in foreign exchange by persons other than authorised dealer
      • 6. Other borrowings in foreign exchange under automatic route or with prior approval of the Reserve Bank of India under the approval route or as trade credit
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Prohibition on borrowing and lending in rupees
      • 4. Borrowing in rupees by persons other than companies in India
      • 5. Borrowing in rupees by Indian companies
      • 6. Restriction on use of borrowed funds
      • 7. Loans in rupees to non-residents
      • 8. Providing housing loan in rupees to a non-resident
      • 8-A. Rupee loans to NRI/PIO employees of Indian body corporate
      • 9. Continuance of rupee loan/overdraft to resident who becomes a person resident outside India
      • 10. Continuance of rupee loan in the event of change in the residential status of the lender
      • 11. Overdraft in rupee account maintained with authorised dealer in India by a bank outside India
      • 1. Short Title and Commencement.
      • 2. Definitions.
      • 3. Prohibition to Borrow or Lend.
      • 4. Borrowing from outside India in Foreign Exchange by a Person Resident in India.
      • 5. Lending in Foreign Exchange by a Person Resident in India.
      • 6. Borrowing in Indian Rupees by a Person Resident in India.
      • 7. Lending in Indian Rupees by a Person Resident in India.
      • 7A. Borrowing and lending by persons resident outside India.
      • 8. Continuation of loan in the event of change in the residential status of the lender/borrower.
      • 9. Any borrowing under erstwhile regulations can be continued as permitted up to the due date of repayment.
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3.
      • 4. Inbound merger.
      • 5. Outbound merger.
      • 6. Valuation.
      • 7. Miscellaneous.
      • 8. Reporting.
      • 9. Deemed approval.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Prohibition on drawal of foreign exchange
      • 4. Prior approval of Government of India
      • 5. Prior approval of Reserve Bank
      • 6.
      • 7. Use of International Credit Card while outside India
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Restriction on investment by a person resident outside India.
      • 4. Restriction on receiving investment.
      • 5. Permission for making investment by a person resident outside India.
      • 6. Merger or demerger or amalgamation of Indian companies.
      • 7. Taxes and Remittance of sale proceeds.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Restrictions on deposits between a person resident in India and a person resident outside India
      • 4. Exemptions
      • 5. Acceptance of deposits by an authorised dealer/authorised bank from persons resident outside India
      • 6. Other deposits made or held by authorised dealer
      • 7. Acceptance of deposits by persons other than authorised dealer/ authorised bank
      • 8. Deposits in certain other cases
      • 9. Acceptance of deposits by authorised dealer with the prior approval of Reserve Bank
      • 10. Nomination
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Restrictions on deposits between a person resident in India and a person resident outside India.
      • 4. Exemptions.
      • 5. Acceptance of deposits by an authorised dealer/authorised bank from persons resident outside India.
      • 6. Acceptance of deposits by persons other than authorised dealer/ authorised bank.
      • 7. Other deposits made or held by authorised dealer.
      • 8. Nomination.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Delivery of draft, cheque and other instrument for encashment
      • 4. Encashment of draft, cheque or other instrument
      • 5. Opening an account
      • 6. Indemnity
      • 7. Direction for payment of the proceeds
      • 8. Payment of interest on the seized Indian currency
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Prohibition against establishing branch or office in India
      • 4. Prohibition against establishing a branch or office in India by citizens of certain countries
      • 5. Application to Reserve Bank for opening branch or liaison office
      • 6. Activities which may be undertaken by the branch or office in India
      • 7. Remittance of profit or surplus
      • 1. Short title and commencement
      • 2. Definitions.
      • 3. Prohibition against opening a branch office or a liaison office or a project office or any other place of business in India.
      • 4. Approval for opening a branch office or a liaison office or a project office or any other place of business in India.
      • 5. Approval of the Reserve Bank in certain cases for establishment of branch office, liaison office or project office or any other place of business in India.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Export and import of Indian currency and currency notes
      • 4. Prohibition on export of Indian coins
      • 5. Prohibition on export and import of foreign currency
      • 6. Import of foreign exchange into India
      • 7. Export of foreign exchange and currency notes
      • 8. Export and import of currency to or from Nepal and Bhutan
      • 1. Short title & commencement.
      • 2. Definitions.
      • 3. Export and Import of Indian currency and currency notes.
      • 4. Prohibition on Export of Indian coins.
      • 5. Prohibition on export and import of foreign currency.
      • 6. Import of foreign exchange into India.
      • 7. Export of foreign exchange and currency notes.
      • 8. Export and import of currency to or from Nepal and Bhutan.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Declaration as regards export of goods and services
      • 4. Exemptions
      • 5. Indication of importer-exporter code number
      • 6. Authority to whom declaration is to be furnished and the manner of dealing with the declaration
      • 7. Evidence in support of declaration.
      • 8. Manner of payment of export value of goods
      • 9. Period within which export value of goods/software to be realised
      • 10. Export on elongated credit terms
      • 11. Submission of export documents
      • 12. Transfer of documents
      • 13. Payment for the export
      • 14. Certain exports requiring prior approval
      • 15. Delay in receipt of payment
      • 16. Advance payment against exports
      • 17. Issue of directions by Reserve Bank in certain cases
      • 18. Project exports
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Declaration of exports.
      • 4. Exemptions.
      • 5. Indication of importer-exporter code number.
      • 6. Authority to whom declaration is to be furnished and the manner of dealing with the declaration.
      • 7. Evidence in support of declaration.
      • 8. Manner of payment of export value of goods.
      • 9. Period within which export value of goods/software/ services to be realised.
      • 10. Submission of export documents.
      • 11. Transfer of documents.
      • 12. Payment for the Export.
      • 13. Certain Exports requiring prior approval.
      • 14. Delay in Receipt of Payment.
      • 15. Advance payment against exports.
      • 16. Issue of directions by Reserve Bank in certain cases.
      • 17. Project exports.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Restriction on holding foreign currency account by a person resident in India
      • 4. Opening, holding and maintaining an Exchange Earner's Foreign Currency Account
      • 5. Opening, holding and maintaining a Resident Foreign Currency Account
      • 5-A. Opening, holding and maintaining a Resident Foreign Currency (Domestic) Account
      • 6. Opening, holding and maintaining a Foreign Currency Account in India in certain other cases
      • 6-A. Foreign Currency Account of a Unit in a Special Economic Zone
      • 7. Opening, holding and maintaining a Foreign Currency Account outside India
      • 8. Limit on holding in a Foreign Currency Account
      • 9. Types of accounts
      • 10. Remittances out of the accounts after the account holder's death
      • 11. Responsibility of authorised dealers maintaining foreign currency accounts
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Restriction on holding foreign currency account by a person resident in India.
      • 4. Opening, holding and maintaining Foreign Currency Accounts in India.
      • 5. Opening, holding and maintaining a Foreign Currency Account outside India.
      • 6. Types of accounts.
      • 7. Remittances out of the account after the account holder's death.
      • 8. Responsibility of authorised dealers maintaining foreign currency accounts.
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Prohibition.
      • 4. Permission to a person resident in India to enter into a Foreign Exchange Derivative Contract.
      • 5. Permission to a person resident outside India to enter into a Foreign Exchange Derivative Contract.
      • 5A. Permission to a person resident in India to enter into currency futures or currency options
      • 5C. Permission to resident and nonresident entities to undertake hedge transactions with simplified procedures.
      • 6. Commodity hedge.
      • 6A. Freight hedge.
      • 7. Remittance related to a Foreign Exchange Derivative Contract.
      • 8. Remittance related to a Commodity Derivative Contract.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Prohibition
      • 4. Guarantees which may be given by an authorised dealer
      • 5. Guarantees which may be given by persons other than an authorised dealer
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Permission to take or hold a general insurance policy issued by an insurer outside India
      • 4. Permission to take or hold a life insurance policy issued by an insurer outside India
      • 1. Short Title and Commencement.
      • 2. Definitions.
      • 3. Permission to take or hold a general insurance policy issued by an insurer outside India.
      • 4. Permission to take or hold a life insurance policy issued by an insurer outside India.
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3.
      • 4.
      • 5.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Restrictions on investment in a firm or a proprietary concern in India by a person resident outside India
      • 4. Permission for investment in certain cases
      • 5. Permission to a firm or a proprietary concern to make payment to a non--resident Indian or a person of Indian origin who has made investment
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Prohibition on transfer or issue of security
      • 4. Transfer or issue of security with the permission of Reserve Bank
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Manner of receipt in foreign exchange
      • 4. Payment for export in certain cases
      • 5. Manner of payment in foreign exchange
      • 6. Manner of payment in certain cases
      • 1. Short title & commencement.
      • 2. Definitions.
      • 3. Mode of Payment and Remittance of sale proceeds.
      • 4. Reporting Requirements.
      • 5. Delays in reporting.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Permissible capital account transactions
      • 4. Prohibition
      • 5. Method of payment for investment
      • 6. Declaration to be furnished
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Limits for possession and retention of foreign currency or foreign coins
      • 4. Possession of foreign exchange by a person resident in India but not permanently resident therein
      • 1. Short title & commencement.
      • 2. Definitions.
      • 3. Limits for possession and retention of foreign currency or foreign coins.
      • 4. Possession of foreign exchange by a person resident in India but not permanently resident therein.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Duty of persons to realise foreign exchange due
      • 4. Manner of repatriation
      • 5. Period for surrender of realised foreign exchange
      • 6. Period for surrender in certain cases
      • 6-A. Period for surrender of received/realised/unspent/unused foreign exchange by resident individuals
      • 7. Exemption
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Duty of persons to realise foreign exchange due.
      • 4. Manner of Repatriation.
      • 5. Period for surrender of realised foreign exchange.
      • 6. Period for surrender in certain cases.
      • 7. Period for surrender of received/ realised/ unspent/ unused foreign exchange by Resident individuals.
      • 8. Exemption.
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3.
      • 4. Regularization of assets held abroad by persons resident in India.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Prohibition on remittance outside India of assets held in India
      • 4. Permission for remittance of assets in certain cases
      • 5. Permission to an Indian entity to remit funds in certain cases
      • 6. Reserve Bank's prior permission in certain cases
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Prohibition on Remittance outside India of assets held in India.
      • 4. Permission for remittance of assets in certain cases.
      • 5. Permission to an Indian entity to remit funds in certain cases.
      • 6. Permission for remittance of assets on closure or remittance of winding up proceeds of branch office/ liaison office (other than project office).
      • 7. Reserve Bank's prior permission in certain cases.
      • 8. Payment of taxes.
      • 1. Short title and commencement
      • 2. Appointment of Chairperson and Members of Appellant Tribunal on ad hoc basis
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Restriction on issue or transfer of security by a person resident outside India.
      • 4. Restriction on an Indian entity to issue security to a person resident outside India or to record a transfer of security from or to such a person in its books.
      • 5. Permission for purchase of shares by certain persons resident outside India.
      • 6. Acquisition of right shares.
      • 6-A. Acquisition of bonus shares.
      • 6-B. Report to RBI.
      • 7. Issue and acquisition of shares after merger or de-merger or amalgamation of Indian companies.
      • 8. Issue of shares under Employees Stock Options Scheme to persons resident outside India.
      • 9. Transfer of shares and convertible debentures of an Indian company by a person resident outside India.
      • 10. Prior permission of Reserve Bank in certain cases for transfer of security.
      • 11. Remittance of sale proceeds.
      • 1. Short title and commencement
      • 2. Definitions
      • 3. Prohibition on issue or transfer of foreign security
      • 4. Purchase and sale of foreign security by a person resident in India
      • 5. Prohibition on direct investment outside India
      • 6. Permission for direct investment in certain cases
      • 6-A. General permission for investment in agricultural operations overseas directly or through overseas offices
      • 6-B. General permission for investment in equity of a company registered overseas
      • 6-C. Investment by mutual funds
      • 7. Investment by Indian party engaged in financial services sector
      • 8. Omitted.
      • 9. Approval of Reserve Bank in certain cases
      • 9-A. Overseas investments by Registered Trust/Society
      • 10. Unique Identification Number
      • 11. Investment by capitalisation
      • 12. Export of goods towards equity procedure
      • 13. Post investment changes/additional investment in existing JV/WOS
      • 14. Acquisition of a foreign company through bidding or tender procedure
      • 15. Obligations of the Indian party
      • 16. Transfer by way of sale of shares of a JV/WOS outside India
      • 17. Transfer by way of sale of shares involving write-off
      • 18. Pledge of shares of Joint Ventures and Wholly Owned Subsidiaries
      • 19. Prior permission of the Reserve Bank for a proprietary concern in India to accept shares
      • 19-A. Overseas investments—Proprietorship concerns
      • 20. Investment by individuals
      • 21. Prohibition on issue of foreign security by a person resident in India
      • 22. Permission for purchase/acquisition of foreign securities in certain cases
      • 23. Transfer of a foreign security by a person resident in India
      • 24. General permission for acquisition of foreign securities as qualification/rights shares
      • 25. Prior permission from Reserve Bank in certain cases
      • 26. Investment by mutual funds and venture capital funds
      • 27. Opening of demat accounts by clearing corporations of stock exchanges and clearing members
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Restriction on investment by a person resident outside India.
      • 4. Restriction on receiving investment.
      • 5. Permission for making investment by a person resident outside India.
      • 6. Acquisition through a rights issue or a bonus issue.
      • 7. Issue of shares under Employees Stock Options Scheme to persons resident outside India.
      • 8. Issue of Convertible Notes by an Indian startup company.
      • 9. Merger or demerger or amalgamation of Indian companies.
      • 10. Transfer of capital instruments of an Indian company by or to a person resident outside India.
      • 11. Pricing Guidelines.
      • 12. Taxes and Remittance of sale proceeds.
      • 13. Reporting requirements.
      • 14. Downstream Investment.
      • 15. Prohibited activities for investment by a person resident outside India.
      • 16. Permitted sectors, entry routes and sectoral caps for total foreign investment.
      • 1. Short title and commencement
      • 2. Definitions
      • 3.
      • 4.
      • 5.
      • 6.
      • 7.
      • 8.
      • 1. Short title, extent, application and commencement.
      • 2. Definitions.
      • 3. Dealing in foreign exchange, etc.
      • 4. Holding of foreign exchange, etc.
      • 5. Current account transactions.
      • 6. Capital account transactions.
      • 7. Export of goods and services.
      • 8. Realisation and repatriation of foreign exchange.
      • 9. Exemption from realisation and repatriation in certain cases.
      • 10. Authorised person.
      • 11. Reserve Banks powers to issue directions to authorised person.
      • 12. Power of Reserve Bank to inspect authorised person.
      • 13. Penalties.
      • 14. Enforcement of the orders of Adjudicating Authority.
      • 15. Power to compound contravention.
      • 16. Appointment of Adjudicating Authority.
      • 17. Appeal to Special Director (Appeals).
      • 18. Establishment of Appellate Tribunal.
      • 19. Appeal to Appellate Tribunal.
      • 20. Composition of Appellate Tribunal.
      • 21. Qualifications for appointment of Chairperson, Member and Special Director (Appeals).
      • 22. Term of office.
      • 23. Terms and conditions of service.
      • 24. Vacancies.
      • 25. Resignation and removal.
      • 26. Member to act as Chairperson in certain circumstances.
      • 27. Staff of Appellate Tribunal and Special Director (Appeals).
      • 28. Procedure and powers of Appellate Tribunal and Special Director (Appeals).
      • 29. Distribution of business amongst Benches.
      • 30. Power of Chairperson to transfer cases.
      • 31. Decision to be by majority.
      • 32. Right of appellant to take assistance of legal practitioner or chartered accountant and of Government, to appoint presenting officers.
      • 33. Members, etc., to be public servants.
      • 34. Civil Court not to have jurisdiction.
      • 35. Appeal to High Court.
      • 36. Directorate of Enforcement.
      • 37. Power of search, seizure, etc.
      • 38. Empowering other officers.
      • 39. Presumption as to documents in certain cases.
      • 40. Suspension of operation of this Act.
      • 41. Power of Central Government to give directions.
      • 42. Contravention by companies.
      • 43. Death or insolvency in certain cases.
      • 44. Bar of legal proceedings.
      • 44A. Powers of Reserve Bank not to apply to International Financial Services Centre.
      • 45. Removal of difficulties.
      • 46. Power to make rules.
      • 47. Power to make regulations.
      • 48. Rules and regulations to be laid before Parliament.
      • 49. Repeal and saving.
      • 1. Short title and commencement
      • 2.
      • 3. Object and construction of these regulations
      • 4. Overriding effect
      • 5. Withdrawal of general permission and unwinding of investments and transactions
      • 6. Permission to hedge certain transactions
      • 1. Short title and commencement.
      • 2. Definitions.
      • 3. Manner of Receipt in Foreign Exchange.
      • 4. Manner of Receipts in certain cases.
      • 5. Manner of payment in foreign exchange.
      • 6. Manner of Payment in certain cases.

The Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000

Published vide G.S.R. 411(E), dated 3.5.2000, published in the Gazette of India, Extraordinary, Part II, Section 3(i), dated 8.5.2000

Last Updated 28th May, 2020 [11/569]


In exercise of the powers conferred by clause (h) of sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations, to promote orderly development and maintenance of foreign exchange market in India, namely: -

1. Short title and commencement. - (i) These regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000.

(ii) They shall come into force on the 1st day of June, 2000.

2. Definitions. - In these regulations, unless the context requires otherwise, -

(i) "Act" means the Foreign Exchange Management Act, 1999 (42 of 1999);

[(ii) 'authorized dealer' means a person authorised as such by Reserve Bank under subsection (1) of section 10 of the Act;]

[***]

[***]

[(v) "Foreign exchange derivative contract" means a financial contract which derives its value from the change in the exchange rate of two currencies at least one of which is not Indian Rupee or which derives its value from the change in the interest rate of a foreign currency and which is for settlement at a future date, i.e. any date later than the spot settlement date, provided that contracts involving currencies of Nepal and Bhutan shall not qualify under this definition.]

[***]

[***]

(vii) "Schedule" means a Schedule annexed to these regulations;

[***]

[***]

(x) the words and expressions used but not defined in these regulations shall have the same meanings respectively assigned to them in the Act.

[***]

[(xii) 'Contracted exposure' refers to currency risk arising on account of current and capital account transactions permissible under the Act or any rules or regulations made thereunder, that have been entered into.

(xiii) 'Anticipated exposure' refers to currency risk arising on account of current and capital account transactions permissible under the Act or any rules or regulations made thereunder, that are proposed to be entered into in future.

(xiv) 'Currency risk' means the potential for loss on account of movement in exchange rates of Rupee against a foreign currency or on account of movement in exchange rates of one foreign currency against another or on account of movement of interest rate applicable to a foreign currency.

(xv) 'Hedging' means the activity of undertaking a foreign exchange derivative transaction to manage currency risk.

(xvi) 'Exchange traded currency derivatives' means a standardised foreign exchange derivative contract traded on a recognized stock exchange to buy or sell one currency against another on a specified future date, at a price specified on the date of contract.]

3. Prohibition. - Save as otherwise provided in these Regulations, no person in India shall enter into a foreign exchange derivative contract [or currency futures] without the prior permission of the Reserve Bank.

[4. Permission to enter into a foreign exchange derivative contract. - A person, whether resident in India or resident outside India, may enter into a foreign exchange derivative contract or exchange traded currency derivative contract in accordance with provisions contained in Schedule I of this regulation.]

[5. ***]

OLD LAW ▼

5. Permission to a person resident outside India to enter into a Foreign Exchange Derivative Contract. - A person resident outside India may enter into a Foreign Exchange Derivative Contract with a person resident in India in accordance with provisions contained in Schedule II, to hedge an exposure to risk in respect of a transaction permissible under the Act, of rules or regulations or directions or orders made or issued thereunder.

[5A. ***]

OLD LAW ▼

[5A. Permission to a person resident in India to enter into currency futures or currency options - A person resident in India may enter into a currency options on a stock exchange recognized under section 4 of the Securities Contract (Regulation) Act, 1956, to hedge an exposure to risk or otherwise, subject to such terms and conditions as may be set forth in the directions issued by the Reserve Bank of India from time to time.]

[5B. ***]

[5C. ***]

OLD LAW ▼

[5C. Permission to resident and non-resident entities to undertake hedge transactions with simplified procedures. - Notwithstanding anything contained in paras 4, 5, 5A and 5B, resident entities with foreign currency exposures and non- resident entities with rupee exposures, other than individuals, may hedge underlying exchange rate risk arising out of transactions permitted under Foreign Exchange Management Act, 1999, or rules or regulations or directions or orders made or issued thereunder, subject to such simplified terms and conditions as may be set forth in the directions issued by the Reserve Bank from time to time.]

[6. Commodity hedge. - (i) Reserve Bank may, on an application made in accordance with the procedure specified in Schedule III, permit, subject to such terms and conditions as it may consider necessary, a person resident in India to enter into a contract in a commodity exchange or market outside India to hedge price risk in a commodity.

(ii) Notwithstanding anything contained in sub-regulation (i), an authorized dealer bank [* * *]may permit a company, resident in India [* * *], to enter into contracts in a commodity exchange or market outside India, to hedge the price risk in a commodity [* * *][subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time:

[* * *]

[* * *]

(iii) Notwithstanding anything contained in this regulation a unit in the special economic zone ("SEZ") may enter into contracts in a commodity exchange or market outside India to hedge the price risk of the commodity of export/ import, subject to the condition that such contract is entered into on a "stand-alone" basis.

Explanation. - The term "stand-alone" means that the unit in the SEZ is completely isolated from financial contracts with its parent or subsidiary in the mainland or within the SEZ(s) as far as its import/export transactions are concerned.] .

[6A. Freight hedge. - (i) Reserve Bank may, on an application made in accordance with such procedure as may be directed by Reserve Bank, permit a person resident in India, subject to such terms and conditions as may be considered necessary, to enter into a freight derivative contract in an exchange or a market outside India to hedge the freight risk such person is exposed to.

(ii) Notwithstanding anything contained in sub-regulation (i) an authorized dealer in India [specially authorized in that behalf by the Reserve Bank] may permit an oil refining company or a shipping company, resident in India, to enter into freight derivative contracts in an exchange or market outside India, to hedge the freight risk which the company is exposed to, subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time:

Provided that such authorized dealer category I bank shall exercise the authority subject to directions and guidelines issued to them by the Reserve Bank in that behalf.]

7. Remittance related to a Foreign Exchange Derivative Contract. - An authorized dealer in India may remit outside India foreign exchange in respect of a transaction, undertaken in accordance with these Regulations, in the following cases, namely: -

(a) option premium payable by a person resident in India to a person resident outside India,

(b) remittance by a person resident in India of amount incidental to a Foreign Exchange Derivative Contract entered into in accordance with regulation 4,

(c) remittance by a person resident outside India of amount incidental to a Foreign Exchange Derivative Contract entered into in accordance with regulation 5,

(d) any other remittance related to a Foreign Exchange Derivative Contract approved by Reserve Bank.

[8. Remittance related to a Commodity Derivative Contract. - An authorized dealer in India may remit outside India foreign exchange in respect of a transaction, undertaken in accordance with these regulations, in the following cases, namely: -

(a) option premium payable by a person resident in India to a person resident outside India;

(b) remittance by a person resident in India of amount incidental to a commodity derivative contract entered into in accordance with regulation 6;

(c) any other remittance related to a commodity derivative contract approved by Reserve Bank.]

SCHEDULE I

(See regulation 4)

Foreign Exchange Derivative Contract [Permissible foreign exchange derivative contract]

A. Forward Contract

[1. A person, whether resident in India or resident outside India, may enter into a foreign exchange derivative contract with an authorised dealer. Contracts involving Rupee subject to the following condition(s):

i. that such contracts shall be for the purpose of hedging a contracted or anticipated exposure

Provided that contracts not based on a contracted or anticipated exposure may be undertaken, as may be permitted by the Reserve Bank of India

Provided further that transactions that involve the Rupee but are settled by delivery of a foreign currency shall be undertaken only by an authorised dealer or a person not resident in India and such other persons as may be permitted by the Reserve Bank of I ndi a, i n terms of the directions issued i n this regard by the Reserve Bank of India

ii. that such person shall share the details of the exposure with the authorised dealer when called upon to do so by the authorised dealer.

2. A person may enter into an exchange traded currency derivative contract on an exchange recognised under section 4 of the Securities Contract (Regulation) Act, 1956. Contracts involving Rupee shall be subject to the following condition(s):

i. that such contracts shall be for the purpose of hedging a contracted exposure as defined in these regulations.

ii. that such person shall designate an Authorised Dealer in India for monitoring of their positions taken beyond such position limits as may be prescribed by the Reserve Bank of India to an exchange

iii. that such person shall share the details of the contracted exposure with the Authorised Dealer when called upon to do so by the dealer.]

[AA. Forward Contract in respect of Economic Exposure. - A person resident in India may, subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time, enter into a forward contract with an authorized dealer in India to hedge an economic exposure to exchange risk in respect of such transactions as may be prescribed by the Reserve Bank from time to time.]

B. Contract other than Forward Contract

2. (1) A person resident in India who has borrowed foreign exchange in accordance with the provisions of Foreign Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000 , may enter into an Interest rate swap or Currency swap or Coupon Swap or Foreign Currency Option or Interest rate cap or collar (purchases) or Forward Rate Agreement (FRA) contract with an authorized dealer in India or with a branch outside India of an authorized dealer for hedging his loan exposure and unwinding from such hedges:

Provided that -

(a) the contract does not involve rupee,

(b) the Reserve Bank has accorded final approval for borrowing in foreign currency,

(c) the notional principal amount of the hedge does not exceed the outstanding amount of the foreign currency loan, and

(d) the maturity of the hedge does not exceed the un-expired maturity of the underlying loan,

(2) A person resident in India, who owes a foreign exchange or rupee liability, may enter into a contract for foreign currency-rupee swap with an authorized dealer in India to hedge long term exposure.

(3) The contract entered into under sub-paragraph 2, if canceled shall not be rebooked or re-entered, by whatever name called.

3.(1) A person resident in India may enter into a foreign currency option contract [not involving the rupee as one of the currencies] with an authorized dealer in India to hedge foreign exchange exposure of such person arising out of his trade :

Provided that in respect of cost effective risk reduction strategies like range forwards, ratiorange forwards or any other variable by whatever name called there shall not be any net inflow of premium.

Explanation. - The contingent foreign exchange exposure arising out of submission of a tender bid in foreign exchange is also eligible for hedging under this sub-paragraph.

(2) A Transactions undertaken under sub-paragraph (1) may be freely booked and/or canceled.

[(3) A person resident in India may enter into a foreign currency-rupee option contract with an authorized dealer to hedge an exposure to exchange risk in respect of a transaction for which sale and / or purchase of foreign currency is permitted under the Act or the rules or regulations or directions or orders made or issued there under on the same terms and conditions applicable to forward contracts.]

[(C) Writing of standalone options against underlying exposure. - A person resident in India may enter into cross-currency option contract (not involving the rupee as one of the currencies) and/ or foreign currency - rupee option contract authorized dealer against an underlying foreign exchange exposure in respect of a transaction for which sale and/ or purchase of foreign currency is permitted under the Act or the rules or regulations or directions or orders made or issued thereunder subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time.]

[***]

OLD LAW ▼

SCHEDULE II

(See regulation 5)

FOREIGN EXCHANGE DERIVATIVE CONTRACTS PERMISSIBLE FOR A PERSON RESIDENT OUTSIDE INDIA

1. A Registered Foreign Institutional Investor (FII) [/Qualified Foreign Investor (QFI)] may enter into a forward contract with rupee as one of the currencies with an authorized dealer in India to hedge its exposure in India :

Provided that -

(a) the value of the hedge does not exceed the market value of the underlying debt or equity instruments, provided forwards contracts once booked shall be allowed to continue to the original maturity even if the value of the underlying portfolio shrinks, for reasons other than sale of securities,

[(b) forward contracts may be canceled and rebooked subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time, or may be rolled over on or before maturity.]

(c) the cost of hedge is met out of repatriable funds and/or inward remittance through normal banking channel,

(d) all outward remittances incidental to hedge are not of applicable Indian taxes.

2. A non-resident Indian [***] may enter into forward contract with rupee as one of the currencies, with an authorized dealer in India to hedge-

(a) the amount of dividend due to him/it on shares held in an Indian company;

(b) the balances held in Foreign Currency Non-Resident (FCNR) account or Non-Resident External Rupee (NRE) account,

(c) the amount of investment made under portfolio scheme 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 and in both cases subject to the terms and conditions specified in the proviso to paragraph 1 of this Schedule.

[2-A. A non-resident Indians may, subject to conditions prescribed by the Reserve Bank of India from time to time, enter into cross currency (not involving the rupee) forward contracts to convert the balances held in FCNR (B) accounts in one foreign currency to another foreign currency in which FCNR (B) deposits are permitted to be maintained.]

[3. Authorized dealers may offer forward contracts to persons resident outside India to hedge the investments made in India since January 1, 1993, subject to verification of the exposure in India. These forward contracts once canceled are not eligible to be rebooked.]

[3-A. A person resident outside India may, subject to conditions prescribed by the Reserve Bank of India from time to time, enter into a forward sale contract with an authorized dealer in India to hedge the currency risk arising out of his proposed foreign direct investment in India.

3-B. A person resident onside India having Foreign Direct Investments in India may, subject to the condition that forward cover shall be taken only after the rate has been approved by the Board, enter into forward contracts with rupee as one of the currencies to hedge the currency risk on dividend receivable by him from the Indian company.]

[4. A Foreign Institutional Investor, a Non-Resident Indian or a Person Resident outside India having Foreign Direct Investment in India, may enter into a foreign currency-rupee option contract with an authorized dealer in India, under the same terms and conditions applicable to forward contracts.]

[7. A Foreign Portfolio Investor may enter into forward contracts, foreign currency-rupee option contract, cost reduction structures or swaps with Rupee as one of the currencies with an Authorised Dealer in India to hedge the currency risk in respect of investments made under the Voluntary Retention Route (VRR) facility subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time.]

Schedule III

(See regulation 6)

PROCEDURE FOR APPLICATION FOR APPROVAL FOR HEDGING OF COMMODITY PRICE RISK

1. A person resident in India , engaged in export-import trade [or as permitted by the Reserve Bank], who seeks to hedge price risk in respect of any commodity including Gold, may submit an application to the International Banking Division of an authorized dealer giving the following details:

(i) 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 exchange and brokers through whom the 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.

(ii) copy of the Risk Management Policy approved by the Management covering -

(a) risk identification,

(b) risk measurements,

(c) guidelines and procedures to be followed with respect to revaluation and/or monitoring of positions,

(d) names and designations of the officials authorized to undertake transactions and limits.

(iii) Any other relevant information.

[2. Authorized dealer, after ensuring that the application is supported by documents indicated in paragraph 1, as may be relevant, may forward the application with its recommendations to the Reserve Bank of India, where applicable. In all other cases, the application may be forwarded by the company concerned to an authorized dealer bank authorized to grant permission under sub-regulation (ii) of regulation 6, for consideration.]

Bare Acts Live

Copyright © 2016 Chawla Publications (P) Ltd. - Home | About Us | Contact Us

Revolutionising Law Reporting !
Install Now! Install Now! Install Now!
Get it Now !
You will Never Need a Law Reporter or Back Volumes
Instant Activation !

title

Biggest Law Library in Mobile
Install Now! Install Now! Install Now!
Headlines with Full Text of Cases!
Install Now! Install Now!
Searchable Back Volumes from 1950 !
Install Now! Install Now! Install Now!
Searchable Back Volumes !
Install Now! Install Now! Install Now!
With Searchable Back Volumes from 1950 !
Install Now! Install Now! Install Now!