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January 2012

A.P. (DIR Series) Circular No. 58, dated 15-12-2011 — Risk management and interbank dealings.

By Gaurang Gandhi, Chartered Accountant
Reading Time 2 mins
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This Circular has, with immediate effect, made the following changes:

(1) Under contracted exposures — Forward contracts booked by residents irrespective of the type and tenor of the underlying exposure, once cancelled, cannot be rebooked.

(2) Under probable exposure based performance:

(a) For importers availing of the above past performance facility, the facility stands reduced to 25% of the limit as computed above, i.e., 25% of the average of the previous three financial years’ (April to March) actual import/ export turnover or the previous year’s actual import/export turnover, whichever is higher. In case of importers who have already utilised in excess of the revised/reduced limit, no further bookings may be allowed under this facility.

(b) All forward contracts booked under this facility by both exporters and importers hence forth will be on fully deliverable basis. In case of cancellations, exchange gain, if any, must not be passed on to the customer.

(3) All cash/tom/spot transactions can be undertaken for actual remittances/delivery only and cannot be cancelled/cash-settled.

(4) Hedging by FII — Forward contracts booked by the FII, once cancelled, cannot be rebooked. The forward contracts may, however, be rolled over on or before maturity.

(5) Treasury functions of authorised dealers

(a) Net Overnight Open Position Limit (NOOPL) to be reduced across the board.

(b) Intra-day open position/daylight limit must not exceed the existing NOOPL approved by RBI.

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