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October 2012

A. P. (DIR Series) Circular No. 30 dated 12th September, 2012

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Comprehensive Guidelines on Over the Counter (OTC) Foreign Exchange Derivatives – Cost Reduction Structures

Presently, use of cost reduction structures, i.e., cross currency option cost reduction structures and foreign currency – INR option cost reduction structures, is permitted only to hedge exchange rate risk arising out of trade transactions and the External Commercial Borrowings (ECB).

This circular permits the use of cost reduction structures, additionally, for hedging the exchange rate risk arising out of foreign currency loans availed of domestically against FCNR (B) deposits.

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