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April 2013

Risk Management and Inter-Bank Dealings

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Annexed to this circular are the revised guidelines on calculation of the Foreign Exchange Exposure Limits of the Authorised Dealers.

The revised guidelines have withdrawn the restrictions on open positions limits (both overnight and intra-day) of Authorised Dealers involving Rupee as one of the currencies. However, the following restrictions will continue to apply: –

i. Positions on the exchanges (both Futures and Options) cannot be netted/offset by undertaking positions in the OTC market and vice-versa. Positions initiated on the exchanges mt be liquidated /closed in the exchanges only.

 ii. Position limit for the trading member bank in the exchanges for trading Currency Futures and Options will be US INR6,152 million or 15% of the outstanding open interest, whichever is lower.

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