RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001
To,
All Authorised Dealers in Foreign Exchange
Dear Sir,
Forward Exchange Cover for FIIs
Attention of authorised dealers is drawn to A.D. (M.A. Series) Circular No.19 dated 16th June 1998 regarding forward cover to Foreign Institutional Investors (FIIs). It is proposed to gradually extend the facility of forward cover to the existing investments of FIIs in equity market. Accordingly, it has been decided that at present authorised dealers may provide forward exchange cover to FIIs to the extent of 15% of market value of investments (duly reckoning pipeline transactions) in equity as at the close of business on 11th June 1998 converted into dollar terms at the rate of US$ 1 = Rs.42.38. This will be in addition to thefacility already available for incremental investments.

2. Authorised dealers may satisfy themselves about the aggregate eligibility for cover on the basis of declaration furnished by the FII.

3. All other relevant provisions including reporting requirement contained in the circular dated June 16, 1998 cited above will continue to remain in force.

4. The contents of the circular may be brought to the notice of your constituents concerned.

5. The directions contained in this circular have been issued under Section 73(3) of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and any contravention or non-observance thereof is subject to the penalties prescribed under the Act.

Yours faithfully,
KHIZER AHMED
Chief General Manager