Foreign Exchange Management (Foreign exchange derivative contracts) Regulations, 2000
Notification No. FEMA 25/2000-RB, dated 3rd May 2000 - In exercise of the powers conferred by clause (h) of sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank makes the following regulations, to promote orderly development and maintenance of foreign exchange market in India, namely:

1. Short title & commencement :-

(i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Second Amendment) Regulations, 2009.

(ii) They shall be deemed to have come into effect from the 3 rd day of June, 2008 @.

(Above Regulation 1 has been amended vide NTF. NO. FEMA 201/2009-RB, DT. 05/11/2009)

[OLD
(i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2009.

(ii) They shall be deemed to have come in to effect from the 4 th day of February, 2009 @.]

(Above Regulation 1 has been amended vide NTF. NO. FEMA 191/2009-RB, DT. 20/05/2009)

[OLD
(i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2008.

(ii) They shall come in to force from the date of their publication in the Official Gazette.]

(Above Regulation 1 has been amended vide NTF. NO. FEMA 177/2008-RB, DT. 01/08/2008)

[OLD
(i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2007.

(ii) These regulations shall come into force on the dates specified hereunder @.

@ It is clarified that no person will be adversely affected as a result of retrospective effect being given to these regulations.]

(Above Regulation 1 has been amended vide NTF. NO. FEMA 159/2007-RB, DT. 17/09/2007)

[OLD
(i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Second Amendment) Regulations, 2006.

(ii) They shall come in to force from July 23, 2005 *

* It is clarified that no person will be adversely affected as a result of retrospective effect being given to these regulations.]

(Above Regulation 1 has been vide NTF. NO. FEMA 148/2006-RB, DT. 16/03/2006)

[OLD
(i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2006.

(ii) They shall come in to force from June 23, 2005*.

* It is clarified that no person will be adversely affected as a result of retrospective effect being given to these Regulations.

(Above Regulation 1 has been vide NTF. NO. FEMA 147/2006-RB, DT. 16/03/2006)

[OLD
(i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2005.

(ii) They shall come into force from July 7, 2003.*

(Note. * It is clarified that no person will be adversely affected as a result of retrospective effect being given to such regulation.)

(Above Regulation 1 has been vide NTF. NO. FEMA 143/2005-RB, DT. 19/12/2005)

[OLD
1. (i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts; (Fourth Amendment) Regulations, 2003.

(ii) They shall come into force from the date of their publication in the Official Gazette.

(Above Regulation 1 has been vide NTF. NO. FEMA 105/2003*-RB, DT. 21/10/2003)

[OLD
1. (i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Third Amendment) Regulations, 2003.

(ii) They shall come into force from the date of their publication in the Official Gazette.

(Above Regulation 1 has been vide NTF. NO. FEMA 104/2003*-RB, DT. 21/10/2003)

(i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2003.

(ii) They shall come into force from the date of their publication in the Official Gazette.

(Above Regulation 1 has been vide NTF. NO. FEMA 81/2003-RB, DT. 08/01/2003)

These Regulations may be called the Foreign Exchange Management (Foreign exchange derivative contracts) (Amendment) Regulations, 2003 and these shall come into force from the date of publishing in the Official Gazette.

(In above sub-regulation the figure "2003" at short title & "Amendment" has been substituted vide CORRIGENDUM - G.S.R. No.554(E), DT. 31/08/2004)

(Above Regulation 1. has been vide Ntf.No. FEMA 70/2002-RB, Dt. 26/08/2002)

(i) These Regulations shall be called the Foreign Exchange Management (Foreign exchange derivative contracts) (Second Amendment) Regulations, 2002.

(ii) They shall come into force from with effect from their publication in the Official Gazette.

(Above (i) & (ii) has been amended vide Ntf.No. FEMA 66/2002-03-RB, Dt. 27/07/2002)

i. These Regulations may be called the Foreign Exchange Management (Foreign exchange derivative contracts) (Amendment) Regulations, 2002.

ii. They shall come into force from the date of their publication in the Official Gazette.

(Above sub-regulations i. & ii. has been amended vide FEMA Ntf. No. 54/2002-RB, Dt. 05/03/2002)

i. These Regulations may be called the Foreign Exchange Management (Foreign exchange derivative contracts) (Amendment) Regulations, 2000.

ii. They shall come into force with immediate effect. (Above sub-regulations i. & ii. has been amended vide Ntf. No. 28/2000-RB, dated 05/09/2000)
(1) These Regulations may be called the Foreign Exchange Management (Foreign exchange derivative contracts) Regulations, 2000.

(2) They shall come in force on the 1st day of June,2000. ]

2.

Definitions :-

In these Regulations, unless the context requires otherwise, -

1. `Act means the Foreign Exchange Management Act,1999 (42 of 1999);
   
   
2. ‘authorised dealer’ means a person authorised as authorised dealer under sub-section (1) of section 10 of the Act;
   
   
3. ‘Cash delivery ’ means delivery of foreign exchange on the day of transaction ;
   
   
4. ‘Forward contract’ means a transaction involving delivery, other than Cash or Tom or Spot delivery, of foreign exchange;
   
   
5. ‘Foreign exchange derivative contract’ means a financial transaction or an arrangement in whatever form and by whatever name called, whose value is derived from price movement in one or more underlying assets, and includes,
   
   
   1. a transaction which involves at least one foreign currency other than currency of Nepal or Bhutan, or
      
      
   2. a transaction which involves at least one interest rate applicable to a foreign currency not being a currency of Nepal or Bhutan , or
      
      
   3. a forward contract, but does not include foreign exchange transaction for Cash or Tom or Spot deliveries;
   
   
   
   
   (va) Currency Futures’ means a standardised foreign exchange derivative contract traded on a recognized stock exchange to buy or sell one currency against another on a specified future date, at a price specified on the date of contract, but does not include a forward contract.
   
   (Above Clause (va) has been inserted vide NTF. NO. FEMA 177/2008-RB, DT. 01/08/2008)
   
   
6. ‘Registered Foreign Institutional Investor (FII) ’ means a foreign institutional investor registered with Securities and Exchange board of India;
   
   
7. ‘Schedule’ means a schedule annexed to these Regulations;
   
   
8. ‘Spot delivery’ means delivery of foreign exchange on the second working day after the day of transaction;
   
   
9. ‘Tom delivery’ means delivery of foreign exchange on a working day next to the day of transaction;
   
   
10. the words and expressions used but not defined in these Regulations shall have the same meanings respectively assigned to them in the Act.

3.

Prohibition :-

Save as otherwise provided in these Regulations, no person in India shall enter into a foreign exchange derivative contract or currency futures without the prior permission of the Reserve Bank.

(In above 3., words "or currency futures" has been inserted vide NTF. NO. FEMA 177/2008-RB, DT. 01/08/2008)

4.

Permission to a person resident in India to enter into a Foreign Exchange Derivative contract :-

A person resident in India may enter into a foreign exchange derivative contract in accordance with provisions contained in Schedule I, to hedge an exposure to risk in respect of a transaction permissible under the Act, or rules or regulations or directions or orders made or issued thereunder.

5.

Permission to a person resident outside India to enter into a Foreign Exchange Derivative contract :-

A person resident outside India may enter into a foreign exchange derivative contract with a person resident in India in accordance with provisions contained in Schedule II, to hedge an exposure to risk in respect of a transaction permissible under the Act, or rules or regulations or directions or orders made or issued thereunder.

5A. Permission to a person resident in India to enter into currency futures A person resident in India may enter into a currency futures in a stock exchange recognized under section 4 of the Securities Contract (Regulation) Act, 1956, to hedge an exposure to risk or otherwise, subject to such terms and conditions as may be set forth in the directions issued by the Reserve Bank of India from time to time.

(Above regulation 5A has been inserted vide NTF. NO. FEMA 177/2008-RB, DT. 01/08/2008)

6. Commodity Hedge:-

(i) Reserve Bank may, on an application made in accordance with the procedure specified in Schedule III permit, subject to such terms and conditions as it may consider necessary, a person resident in India to enter into a contract in a commodity exchange or market outside India to hedge the price risk in a commodity.

(ii) Notwithstanding anything contained in sub-regulation (i), an authorized dealer bank specially authorized in that behalf by the Reserve Bank may permit a company, resident in India [OMITTED- and listed on a recognized stock exchange], to enter into contracts in a commodity exchange or market outside India, to hedge the price risk in a commodity [OMITTED- imported/exported by it] subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time.

(In above sub-regulation (ii) the words "and listed on a recognised stock exchange" omitted vide NTF. NO. FEMA 201/2009-RB, DT. 05/11/2009)

(In above (ii) the words "imported/exported by it" has been omitted vide NTF. NO. FEMA 159/2007-RB, DT. 17/09/2007 wef. 31/05/2007)

Provided that such authorised dealer bank shall exercise such authority subject to the directions and guidelines issued to them by the Reserve Bank in that behalf.

(iii) An authorised dealer bank may apply to the Reserve Bank of India, Foreign Exchange Department for grant of authority to grant permission under sub-regulation (ii) to its customers.

(iv) Notwithstanding anything contained in this regulation a unit in the Special Economic Zone (SEZ) may enter into contracts in a commodity exchange or market outside India to hedge the price risk of the commodity of export/import, subject to the condition that such contract is entered into on a stand-alone basis.

Explanation:The term stand-alone means that the unit in the SEZ is completely isolated from financial contracts with its parent or subsidiary in the mainland or within the SEZ(s) as far as its import/export transactions are concerned.

(Above Regulation 6 has been substituted vide NTF. NO. FEMA 148/2006-RB, DT. 16/03/2006)

[OLD-
6. Commodity Hedge :-

Reserve Bank may, on an application made in accordance with the procedure specified in Schedule III, permit subject to such terms and conditions as it may consider necessary, a person resident in India to enter into a contract in a commodity exchange or market outside India to hedge price risk in a commodity.

Provided that a unit in the Special Economic Zone (SEZ) may, without prior approval of the Reserve Bank, enter into a contract in a commodity exchange or market outside India to hedge the price risk in the commodity on export/import, subject to the condition that such contract is entered into on a "stand-alone" basis.

Explanation : - The term "stand-alone" means that the unit in the SEZ is completely isolated from financial contracts with its parent or subsidiary in the mainland or within the SEZ(s) as far as its import/export transactions are concerned.]

(In paragraph 6 Proviso & Explanation has been added vide Ntf.No. FEMA 66/2002-03-RB, Dt. 27/07/2002)
"Freight" hedge

6A. (i) Reserve Bank may, on an application made in accordance with such procedure as may be directed by Reserve Bank, permit a person resident in India, subject to such terms and conditions as may be considered necessary, to enter in to a freight derivative contract in an exchange or a market out side India to hedge the freight risk such person is exposed to.

(ii) Notwithstanding anything contained in sub regulation (i) an authorised dealer in India specially authorised by the Reserve Bank under sub-regulation (ii) of Regulation 6 may permit an oil refining company or a shipping company, resident in India, to enter in to freight derivative contracts in an exchange or market outside India, to hedge the freight risk which the company is exposed to, subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time.

Provided that such authorised dealer category-I bank shall exercise the authority subject to directions and guidelines issued to them by the reserve Bank in that behalf.

(Above Regulation 6A has been added vide NTF. NO. FEMA 191/2009-RB, DT. 20/05/2009)

7.

Remittance related to a Foreign Exchange Derivative contract :-

An authorised dealer in India may remit outside India foreign exchange in respect of a transaction, undertaken in accordance with these Regulations, in the following cases, namely;

1. option premium payable by a person resident in India to a person resident outside India ,
   
   
2. remittance by a person resident in India of amount incidental to a foreign exchange derivative contract entered into in accordance with Regulation 4,
   
   
3. remittance by a person resident outside India of amount incidental to a foreign exchange derivative contract entered into in accordance with Regulation 5,
   
   
4. any other remittance related to a foreign exchange derivative contract approved by Reserve Bank.

8. Remittance related to a Commodity Derivative Contract -

An authorised dealer in India may remit outside India foreign exchange in respect of a transaction, undertaken in accordance with these Regulations, in the following cases, namely : -

(a) option premium payable by a person resident in India to a person resident outside India;

(b) remittance by a person resident in India of amount incidental to a commodity derivative contract entered into in accordance with Regulation 6,

(c) any other remittance related to a commodity derivative contract approved by Reserve Bank.

(Above regulation 8 has been inserted vide NTF. NO. FEMA 159/2007-RB, DT. 17/09/2007)

(P.R. GOPALA RAO)
Executive Director

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Schedule I
(See regulation 4)

Foreign exchange derivative contract permissible for a person resident in India
A. Forward Contract

1.

A person resident in India may enter into a forward contract with an authorised dealer in India to hedge an exposure to exchange risk in respect of a transaction for which sale and/or purchase of foreign exchange is permitted under the Act, or rules or regulations or directions or orders made or issued thereunder, subject to following terms and conditions-

(a) the authorised dealer through verification of documentary evidence is satisfied about the genuineness of the underlying exposure or as otherwise permitted by the Reserve Bank from time to time.

(Item (a) of Paragraph A.1 of the Schedule 1 has been substituted vide FEMA Ntf. No. 54/2002-RB, Dt. 05/03/2002)

[OLD -
(a) the authorised dealer through verification of documentary evidence is satisfied about the genuineness of the underlying exposure, ]

(b) the maturity of the hedge does not exceed the maturity of the underlying transaction,

(c) the currency of hedge and tenor are left to the choice of the customer,

(d) where the exact amount of the underlying transaction is not ascertainable, the contract is booked on the basis of a reasonable estimate,

(e) foreign currency loans/bonds will be eligible for hedge only after final approval is accorded by the Reserve Bank where such approval is necessary,

(f) in case of Global Depository Receipts (GDRs) the issue price has been finalised,

(g) balances in the Exchange Earner’s Foreign Currency(EEFC) accounts sold forward by the account holders shall remain earmarked for delivery and such contracts shall not be cancelled. They may be ,however, be rolled-over,

(h) Contracts involving the rupee as one of the currencies, once cancelled, shall not be rebooked except as otherwise permitted by the Reserve Bank from time to time although they can be rolled over at on-going rates on or before maturity. Such contracts booked by residents to hedge current account transactions, regardless of tenor, not being those booked on past performance basis without documents or booked to hedge transactions denominated in foreign currency but settled in Indian Rupee, may be cancelled and rebooked freely at on going rates. Contracts covering export transactions may also be cancelled, rebooked or rolled over at on going rates without any restriction.

(Above Sub-item (h) has been substituted vide NTF. NO. FEMA 147/2006-RB, DT. 16/03/2006)

[OLD-
(h) contracts involving the rupee as one of the currencies, once cancelled, shall not be re-booked except as otherwise permitted by the Reserve Bank from time to time although they can be rolled over at on-going rates on or before maturity. Contracts covering export transactions may be cancelled, re-booked or rolled over at on-going rates without any restrictions. ]

(Above item (h) has been substituted vide Ntf.No. FEMA 70/2002-RB, Dt. 26/08/2002)

[OLD-
(h) contracts involving rupee as one of the currencies, once cancelled shall not be re-booked although they can be rolled over at ongoing rates on or before maturity. This restriction shall not apply to contracts covering export transactions which may be cancelled, rebooked or rolled over at on-going rates, ]

(i) substitution of contracts for hedging trade transactions may be permitted by an authorised dealer on being satisfied with the circumstances under which such substitution has become necessary.

(j) a person resident in India may, subject to the terms and conditions prescribed by Reserve Bank of India, enter into a forward contract with an authorised dealer in India to hedge an exposure to exchange risk in respect of transactions denominated in foreign currency but settled in Indian rupees.

(Above paragraph (j) has been added vide NTF. NO. FEMA 104/2003*-RB, DT. 21/10/2003)

AA. Forward Contract in respect of Economic Exposure -

A person resident in India may, subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time, enter into a forward contract with an authorised dealer in India to hedge an economic exposure to exchange risk in respect of such transactions as may be prescribed by the Reserve Bank from time to time.

(Above AA has been inserted vide NTF. NO. FEMA 159/2007-RB, DT. 17/09/2007 wef. 13/12/2006)

B. Contract other than Forward Contract.

2.

(1) A person resident in India who has borrowed foreign exchange in accordance with the provisions of Foreign Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000 , may enter into an Interest rate swap or Currency swap or Coupon Swap or Foreign Currency Option or Interest rate cap or collar (purchases) or Forward Rate Agreement (FRA) contract with an authorised dealer in India or with a branch outside India of an authorised dealer for hedging his loan exposure and unwinding from such hedges,

Provided that –


1. the contract does not involve rupee,
   
   
2. the Reserve Bank has accorded final approval for borrowing in foreign currency,
   
   
3. the notional principal amount of the hedge does not exceed the outstanding amount of the foreign currency loan, and
   
   
4. the maturity of the hedge does not exceed the un-expired maturity of the underlying loan,

(2) A person resident in India, who owes a foreign exchange or rupee liability, may enter into a contract for foreign currency-rupee swap with an authorised dealer in India to hedge long term exposure,

(3) The contract entered into under sub-paragraph 2, if cancelled shall not be rebooked or re-entered, by whatever name called.

3.

(1) A person resident in India may enter into a foreign currency option contract not involving the rupee as one of the currencies with an authorised dealer in India to hedge foreign exchange exposure of such person arising out of his trade :

(Bold words at above (1) has been inserted vide NTF. NO. FEMA 143/2005-RB, DT. 19/12/2005)

Provided that in respect of cost effective risk reduction strategies like range forwards, ratio-range forwards or any other variable by whatever name called there shall not be any net inflow of premium.

Explanation :The contingent foreign exchange exposure arising out of submission of a tender bid in foreign exchange is also eligible for hedging under this sub-paragraph.


(2) A Transactions undertaken under sub-paragraph (1) may be freely booked and/or cancelled.

(3) A person resident in India may enter into a foreign currency–rupee option contract with an authorised dealer to hedge an exposure to exchange risk in respect of a transaction for which sale and / or purchase of foreign currency is permitted under the Act or the rules or regulations or directions or orders made or issued there under on the same terms and conditions applicable to forward contracts.

(Above sub-paragraph (3) has been inserted vide NTF. NO. FEMA 143/2005-RB, DT. 19/12/2005)

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Schedule II
(See regulation 5)

Foreign exchange derivative contracts permissible for a person resident outside India

1.

A Registered Foreign Institutional Investor (FII) may enter into a forward contract with rupee as one of the currencies with an authorised dealer in India to hedge its exposure in India,

Provided that -

1. the value of the hedge does not exceed the market value of the underlying debt or equity instruments, provided forwards contracts once booked shall be allowed to continue to the original maturity even if the value of the underlying portfolio shrinks, for reasons other than sale of securities.
   
   [OLD - the value of the hedge does not exceed the current market value in respect of investments in debt instruments, ]
   
   [DELETED -
   b. the value of the hedge does not exceed 15% of the market value of the equity as at the close of business on 31st March 1999, converted at the rate of US $ 1= Rs.42.43 plus the increase in market value/inflows after 31st March 1999 provided that the forward cover once taken shall be allowed to continue as long as it does not exceed the value of the underlying investment,]
   
   
2. forward contracts may be cancelled and rebooked subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time, or may be rolled over on or before maturity.
   
   (Above b. has been substituted vide NTF. NO. FEMA 159/2007-RB, DT. 17/09/2007 WEF. 08/02/2007)
   
   [OLD-
   b. forward contracts once cancelled shall not be rebooked but may be rolled over on or before the maturity, ]
   
   
3. the cost of hedge is met out of repatriable funds and/or inward remittance through normal banking channel,
   
   
4. all outward remittances incidental to hedge are net of applicable Indian taxes.
   
   (Above sub-clause a. amended, b. delete & c. to e. has been re-number as b. to d. vide NTF. NO. FEMA 81/2003-RB, DT. 08/01/2003)
   
   

2.

A non-resident Indian or Overseas Corporate Body may enter into forward contract with rupee as one of the currencies, with an authorised dealer in India to hedge;

1. the amount of dividend due to him/it on shares held in an Indian company;
   
   
2. the balances held in Foreign Currency Non-Resident (FCNR) account or Non-Resident External Rupee (NRE) account,
   
   
3. the amount of investment made under portfolio scheme in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 or under notifications issued thereunder or is made in accordance with the provisions of the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 and in both cases subject to the terms and conditions specified in the proviso to paragraph 1 of this Schedule.

2A.

A non-resident Indians may, subject to conditions prescribed by the Reserve Bank of India from time to time, enter into cross currency (not involving the rupee) forward contracts to convert the balances held in FCNR (B) accounts in one foreign currency to another foreign currency in which FCNR (B) deposits are permitted to be maintained.

(Above paragraph 2A. has been added vide NTF. NO. FEMA 104/2003*-RB, DT. 21/10/2003)

3.

Authorised dealers may offer forward contracts to persons resident outside India to hedge the investments made in India since January 1, 1993, subject to verification of the exposure in India. These forward contracts once cancelled are not eligible to be rebooked.

[OLD - Reserve Bank may, on application, allow a person resident outside India to purchase a forward contract to hedge his investment made since 1st January 1993. ]

(Above Clause (3) has been substituted vide NTF. NO. FEMA 81/2003-RB, DT. 08/01/2003)

3A.

A person resident outside India may, subject to conditions prescribed by the Reserve Bank of India from time to time, enter into a forward sale contract with an authorized dealer in India to hedge the currency risk arising out of his proposed foreign direct investment in India.

3B.

A person resident onside India having Foreign Direct Investments in India may, subject to the condition that forward cover shall be taken only after the rate has been approved by the Board, enter into forward contracts with rupee as one of the currencies to hedge the curency risk on dividend receivable by him from the Indian company.

(Above paragraph 3A. & 3B. has been added vide NTF. NO. FEMA 104/2003*-RB, DT. 21/10/2003)

4. A Foreign Institutional Investor, a Non-Resident Indian or a Person Resident outside India having Foreign Direct Investment in India, may enter into a foreign currency-rupee option contract with an authorised dealer in India, under the same terms and conditions applicable to forward contracts.

(Above paragraph 4. has been inserted vide NTF. NO. FEMA 143/2005-RB, DT. 19/12/2005)

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Schedule III
(See Regulation 6)

Procedure for application for approval for hedging of commodity price risk

1.

A person resident in India , engaged in export-import trade or as permitted by the Reserve Bank, who seeks to hedge price risk in respect of any commodity including Gold, [OMITTED -but excluding oil and petroleum products, ] may submit an application to the International Banking Division of an authorised dealer giving the following details.

(In above para 1. words or as permitted by the Reserve Bank has been added vide NTF. NO. FEMA 105/2003*-RB, DT. 21/10/2003)

(In above para 1. words but excluding oil and petroleum products, has been omitted vide Ntf. No. 28/2000-RB, dated 05/09/2000)

1. A brief description of the hedging strategy proposed ; namely :-
   
   
   1. description of business activity and nature of risk;
      
      
   2. instruments proposed to be used for hedging ;
      
      
   3. names of commodity exchange and brokers through whom the risk is proposed to be hedged and credit lines proposed to be availed. The name and address of the regulatory authority in the country concerned may also be given ;
      
      
   4. size/average tenure of exposure and/or total turnover in a year , together with expected peak positions thereof and the basis of calculation.
   
   
2. copy of the Risk Management Policy approved by the Management covering:
   
   
   1. risk identification,
      
      
   2. risk measurements,
      
      
   3. guidelines and procedures to be followed with respect to revaluation and/or monitoring of positions,
      
      
   4. names and designations of the officials authorised to undertake transactions and limits.
   
   
3. Any other relevant information.

2. Authorized dealer, after ensuring that the application is supported by documents indicated in paragraph 1, as may be relevant, may forward the application with its recommendations to the Reserve Bank of India, where applicable. In all other cases, the application may be forwarded by the company concerned to an authorized dealer bank authorized to grant permission under sub-regulation (ii) of regulation 6, for consideration.

(Above paragraph 2 has been substituted vide NTF. NO. FEMA 148/2006-RB, DT. 16/03/2006)

[OLD-
2. Authorised dealer after ensuring that the application is supported by documents indicated in paragraph 1, may forward the application with its recommendations to Reserve Bank for consideration.]

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