Reserve Bank of India Allows NRIs access to ETCD market

Posted on:04 Feb 2017 09:24:22
Reserve Bank of India Allows NRIs access to ETCD market
04 February 2017 Current Affairs: The Reserve Bank of India (RBI) on February 2, 2017 permitted the NRIs to have access to the exchange traded currency derivatives (ETCD) market. This will enable the NRIs to hedge the currency risk due to making investment in India.

Till date NRIs were allowed to hedge their currency risk through Over-The-Counter (OTC) transaction with the Authorized Dealer (AD) banks.

Access to ETCD market will provide them an additional hedging option though subjected to certain conditions.

Firstly NRIs would have to nominate a bank that will monitor and report the position of the NRI concerned in the OTC and ETCD segments.

Besides, NRIs may hedge currency risk on balances held in NRE account, market value of their permissible limit of Rupee investment in debt and equity as allowed under FEMA 1999 and any dividend due.

The NRIs would be liable to maintain the permissible limit of investment. If the magnitude of exposure will exceed the limit, NRIs would be liable for penal action by RBI.

 
The Reserve Bank of India (RBI) on February 2, 2017 permitted the NRIs to have access to the exchange traded currency derivatives (ETCD) market. This will enable the NRIs to hedge the currency risk due to making investment in India.

Till date NRIs were allowed to hedge their currency risk through Over-The-Counter (OTC) transaction with the Authorized Dealer (AD) banks.

Access to ETCD market will provide them an additional hedging option though subjected to certain conditions.

Firstly NRIs would have to nominate a bank that will monitor and report the position of the NRI concerned in the OTC and ETCD segments.

Besides, NRIs may hedge currency risk on balances held in NRE account, market value of their permissible limit of Rupee investment in debt and equity as allowed under FEMA 1999 and any dividend due.

The NRIs would be liable to maintain the permissible limit of investment. If the magnitude of exposure will exceed the limit, NRIs would be liable for penal action by RBI.

 

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