The above contracts may unwound also, may be freely cancelled and rebooked.
The contract should not involve the Rupee
Final approval (loan identification number) should have been issued by the RBI
Hedge amount should not exceed the outstanding loan amount
Maturity of hedge should not exceed maturity of loan.
Resident Indian having long-term forex OR Rupee exposure may enter into Foreign Currency – Rupee Swap under following conditions:
No upfront payment of Rupees or its equivalent in any form shall be undertaken
ADs to act as intermediaries, matching counterparty requirements
Banks allowed to enter into FX-Rupee Options with their customers on a back-to-back basis. They can also run Option books under RBI approval. All guidelines applicable
to forward contracts are applicable to Rupee options also.
Resident Indian may enter into a Cross Currency Option Contract (not involving the Rupee) subject to
There should be no net inflow of premium
Maybe freely booked/ cancelled
Contingent forex exposure arising from submission of foreign currency tender bid may be hedged using Options
All guidelines applicable to cross currency forward contracts are applicable to cross currency options also.
Cross currency options are to be written on a fully covered back-to-back basis.
GUIDELINES FOR BANKS
Banks to ensure that in the case of
swap structures where premium is inbuilt into the cost
option contracts involving cost reduction structures, such structures do not result in increase in risk in any manner and do not result in net receipt of premium by the customer
Banks should not offer leveraged swap structures
Banks should not allow swap route to be used as surrogate forward contracts for those not qualified for forward covers.