Subject to compliance with the provisions of paragraphs 5B.1 and 5B.2, banks may freely undertake foreign exchange transactions as under:
a) With banks in India:
(i) Buying/Selling/Swapping foreign currency against rupees or another foreign currency
(ii) Placing/Accepting deposits in foreign currency
b) With banks overseas :
(i) Buying/Selling/Swapping foreign currency against another foreign currency to cover client transactions or for adjustment of own position
(ii) Initiating trading positions in the overseas markets subject to Reserve Bank approval. Applications in this regard should be made to the Chief General Manager, Exchange Control Department (Forex Markets Division), Reserve Bank of India, Central Office, Mumbai 400001. NOTES:
A. Funding of accounts of Non-resident banks - Refer to paragraph 5A.5.
B. Form A2 need not be completed for sales in the inter-bank market but all such transactions should be reported to Reserve Bank in R Returns.