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Monday, September 08, 2014

Foreign Portfolio Investors (FPIs) allowed to hedge coupon receipts for debt securities

Amendment to regulation was done as announced in the Monetary Policy Statement of 01 April 2014 

The Reserve Bank of India has decided to permit Foreign Portfolio Investors (FPIs) to hedge the coupon receipts arising out of their investments in debt securities in India falling due during the following twelve months. However, the hedge contracts shall not be eligible for rebooking on cancellation. The contracts can, however, be rolled over on maturity provided the relative coupon amount is yet to be received. 

The amendment to regulation was done, as announced in the Monetary Policy Statement of 01 April 2014. The move is aimed at enhancing the hedging facilities for the FPIs holding securities under the Portfolio Investment Scheme (PIS). 

Under the extant regulations, FPIs are allowed to hedge their currency risk on the market value of entire investment in equity and/or debt in India as on a particular date.
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