NTF. NO. FEMA 104/2003*-RB, DT. 21/10/2003

Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Third. Amendment) Regulations, 2003

G.S.R. 880(E).-In exercise of the powers conferred by clause (h) of Sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (Act 42 of 1999), and in partial modification of its Notification No. FEMA 25/RB-2000 dated May 3, 2000, the Reserve Bank of India makes the following amendments in the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000, as amended from time to time, namely:-

Short title and Commencement

1. (i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Third Amendment) Regulations, 2003.

(ii) They shall come into force from the date of their publication in the Official Gazette.

Amendment of the Regulations

2. In the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulation's, 2000

(i) In Schedule I, under the heading `A Forward Contract' after paragraph (i) the following paragraph shall be added, namely:-

"(j) a person resident in India may, subject to the terms and conditions prescribed by Reserve Bank of India, enter into a forward contract with an authorised dealer in India to hedge an exposure to exchange risk in respect of transactions denominated in foreign currency but settled in Indian rupees''

(ii) In Schedule II,

(a) after paragraph 2, the following shall be added, namely :-

"2A. A non-resident Indians may, subject to conditions prescribed by the Reserve Bank of India from time to time, enter into cross currency (not involving the rupee) forward contracts to convert the balances held in FCNR (B) accounts in one foreign currency to another foreign currency in which FCNR (B) deposits are permitted to be maintained."

(b) after paragraph 3, the following paragraphs shall be aced namely:-

"3A. A person resident outside India may, subject to conditions prescribed by the Reserve Bank of India from time to time, enter into a forward sale contract with an authorized dealer in India to hedge the currency risk arising out of his proposed foreign direct investment in India."

"3B. A person resident onside India having Foreign Direct Investments in India may, subject to the condition that forward cover shall be taken only after the rate has been approved by the Board, enter into forward contracts with rupee as one of the currencies to hedge the curency risk on dividend receivable by him from the Indian company."

Sd/-
Usha Thorat,
Executive Director

[No. 1/23/EC/2000-Vol.II]

Foot Note: The Principal regulations were published in the Official Gazette vide G.S.R. No. 411 (E) dated May 8, 2000 in Part II, Section 3, Sub-section (i). and subsequently amended vide G.S.R.No. 756(E) dated September 28, 2000 G.S.R No. 264(E) dated April, 9, 2002, G.S.R No. 579(E) dated August 19, 2002, G.S.R No. 222(E) dated March 18, 2003 and G.S.R No. 532(E) dated July 9, 2003.

(Above Foot Note has been added vide Corrigendum G.S.R. 795(E)-RB, DT. 27/11/2004)

(Pl. refer CIR. NO. 65/2003-04-RB, DT. 05/02/2004 - Foreign Exchange Management Act, 1999-Amendments to Foreign Exchange Management Regulations )

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