(i) Authorised dealers may offer cross currency options to residents to cover their genuine exposures including contingent exposures like tender bids. Cost effective risk reduction strategies like range forwards, ratio-range forwards and such other variables may also be offered to customers provided there is no net inflow of premium. These products may be allowed to be freely booked and cancelled.

(ii) The option should be written on a fully covered back-to-back basis. The cover transaction may be undertaken with overseas banks/internationally recognised approved option exchanges/other authorised dealers in India.

Note: As an exception to this rule, options offered to clients to hedge loan exposures may be directly booked overseas with the branch of an authorised dealer in India.

(iii) Option premium may be remitted without the prior approval of Reserve Bank.

(iv) Authorised dealers who propose to write options, should apply to the Chief General Manager, Exchange Control Department, (Forex Markets Division), Reserve Bank of India, Central Office, Mumbai for permission.