RBI on booking of forwards contracts

Norms for firms that have actual or anticipated forex exposures to book forex forward and foreign currency

As mentioned in its fourth bi-monthly monetary policy review, the Reserve Bank of India (RBI) has allowed all resident individuals, firms and companies, who have actual or anticipated foreign exchange exposures, to book foreign exchange forwards and foreign currency and rupee options contracts up to $1 million without any requirement of documentation on the basis of simple declaration.  “While the contracts booked under this facility would normally be on a deliverable basis, cancellation and rebooking of contracts are permitted,” RBI said on Thursday.

The regulator also said that based on the track record of the entity, the concerned bank may, however, call for underlying documents, if considered necessary at the time of rebooking of cancelled contracts.