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October 2013

A. P. (DIR Series) Circular No. 36 dated 4th September, 2013

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Risk Management and Inter-Bank Dealings

Presently, Indian residents are not allowed to cancel and rebook forward contracts, involving the rupee as one of the currencies, booked by them to hedge their current and capital account transactions. However, exporters are allowed to cancel and rebook forward contracts to the extent of 25% of the contracts booked by them in a financial year for hedging their contracted export exposures.

This circular has:
1. Increased the said limit of 25% to 50% for exporters. Hence, exporters can now cancel and rebook forward contracts up to 50% of the contracts booked by them in a financial year for hedging their contracted export exposures.

2. Importers are now permitted to cancel and rebook forward contracts entered into by them to the extent of 25% of the contracts booked in a financial year for hedging their contracted import exposures.

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