The Reserve Bank of India (RBI) has revised guidelines relating to the participation of a person resident in India and Foreign Portfolio Investor (FPI) in the Exchange Traded Currency Derivatives (ETCD) Market.
Currently, persons resident in India and FPIs are allowed to take a long (bought) or short (sold) position in USD-INR up to USD 15 million per exchange without having to establish the existence of underlying exposure. In addition, residents & FPIs are allowed to take long or short positions in EUR-INR, GBP-INR, and JPY-INR pairs, all put together, up to USD 5 million equivalent per exchange without having to establish the existence of any underlying exposure.
A circular issued by the Bank on Monday clarified that it has now been decided to permit persons resident in India and FPIs to take positions (long or short), without having to establish existence of underlying exposure, up to a single limit of USD 100 million equivalent across all currency pairs involving INR, put together, and combined across all exchanges.
“The onus of complying with the provisions of this circular rests with the participant in the ETCD market and in case of any contravention the participant shall be liable to any action that may be warranted as per the provisions of Foreign Exchange Management Act, 1999 and the regulations, directions, etc. issued thereunder. These limits shall also be monitored by the exchanges, and breaches, if any, may be reported to the Reserve Bank of India. All other operational guidelines, terms, and conditions shall remain unchanged,” the circular said.
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