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Wednesday, May 28, 2014

RBI raises forward forex contracts limit for importers

Importers can book forward contracts up to 50% of the eligible limit compared to 25% currently 

With a view to providing importers with greater flexibility in hedging facility, the Reserve Bank of India has decided to allow importers to book forward contracts, under the past performance route, up to 50% of the eligible limit. 

Importers who have already booked contracts up to previous limit of 25% in the current financial year shall be eligible for difference arising out of the enhanced limits. All other operational guidelines, terms and conditions shall apply mutatis mutandis. 

Under the extant guidelines relating to hedging of currency risk of probable exposures based on past performance, resident importers are allowed to book contracts up to 25% of the eligible limit. The eligible limit is computed as the average of the previous three financial years import turnover or the previous year's actual import turnover, whichever is higher.
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