(i) Banks may freely purchase foreign currency at ongoing market rates to lay down funds in the accounts of their correspondents for meeting their bonafide needs in India.

(ii) Transactions in the accounts should be closely monitored to ensure that overseas banks do not take a speculative view on the rupee. Any such instances should be brought to the notice of Reserve Bank.

NOTE: Forward purchase or sale of foreign currencies against rupees and offer of two-way quotes to non-resident banks are prohibited