The Reserve Bank today said domestic investors can re-enter into a foreign currency-rupee swap deal if the underlying remains on cancellation of the contract, but only after the expiry original contract's tenor.
Residents can enter into foreign currency (FCY)-rupee swaps to hedge exchange rate and/or interest rate risk exposure arising out of long-term foreign currency borrowing or to transform long-term INR borrowing into foreign currency liability.
The norms have been announced with an aim to permit greater flexibility to the residents borrowing in foreign currency.
"...It has been decided that in cases where the underlying is still surviving, the client, on cancellation of the swap contract, may be permitted to re-enter into a fresh FCY-INR swap to hedge the underlying but only after the expiry of the tenor of the original swap contract that had been cancelled," the central bank said.
