RBI Issues New
Format in OTC Market for Declaration for Utilisation of Past Performance Limits
and Details of Export-Import Turnover
[RBI Circular No. 58 dated 14th January 2015]
Sub: Risk
Management and Inter Bank Dealings: Hedging under Past Performance Route-
Liberalisation of Documentation Requirements in the OTC market
Attention of
Authorised Dealers Category-I (AD Category-I) banks is invited to the Foreign
Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000
(Notification No. FEMA/25/RB-2000 dated May 3, 2000) as amended from time to
time and A.P. (DIR Series) circular no. 32 dated December 28, 2010, as amended
from time to time.
2. In order to further rationalise the
documentation process for exporters and importers relating to hedging of
probable exposures based on past performance, the extant guidelines in this
regard have been revised as follows:
a) In terms of paragraph (2)(g)(ii) of section B
contained in the annex to the above circular, importers and exporters are
required to furnish a quarterly declaration, as per Appendix M, duly certified
by the Statutory Auditor, to the AD Category I banks regarding amounts booked
with other AD Category I banks under this facility. It has now been decided
that importers and exporters shall, henceforth, be required to furnish a
quarterly declaration to the same effect as per the format in Annex I to this
circular signed by the Chief Financial Officer (CFO) and the Company Secretary
(CS). In the absence of a CS, the Chief Executive Officer (CEO) or the Chief
Operating Officer (COO) shall co-sign the undertaking along with the CFO.
b) Further, in terms of paragraph (2)(g)(iv),
aggregate outstanding contracts in excess of 50 per cent of the eligible limit
may be permitted by AD Category I banks on being satisfied about the genuine
requirements of their customers after examination of the following documents:
· A certificate from the
Statutory Auditor of the customer that all guidelines have been adhered to
while utilizing this facility; and
· A certificate of import/export
turnover of the customer during the past three years duly certified by their
Statutory Auditor in the format given in Appendix K.
It
has now been decided that, henceforth, AD Category I banks may permit aggregate
outstanding contracts in excess of 50 per cent of the eligible limit on being
satisfied about the genuine requirements of their customers after examination
of a document as per the format in Annex II to this circular, signed by the CFO
and CS, containing the following:
·
A
declaration that all guidelines have been adhered to
while utilizing this facility; and
·
A certificate of import/export turnover of the customer during the past
three years.
In the absence of a CS, the CEO or the COO shall co-sign the undertaking
along with the CFO.
c) As part of the annual audit
exercise, the Statutory Auditor shall also certify the following:
i.
The amounts booked with AD Category-I banks under this facility; and
ii.
All guidelines have been adhered to while utilizing this facility over the
past financial year.
3. All other operational guidelines,
terms and conditions shall remain unchanged.
4. AD Category-I banks may bring
the contents of this circular to the notice of their constituents and
customers.
5. The directions contained in this
circular have been issued under Sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions/ approvals, if any, required under any other law.
Format of Declaration of amounts booked/cancelled under Past Performance
facility
[On letterhead of the Company]
Date:
To,
(Name and
address of the Bank)
Dear Sir,
Sub:
Declaration of amounts booked/cancelled under Past Performance facility
We refer to
the facility of booking of Forward or Option Contracts involving Foreign
Exchange, based on the past performance facility with Authorised Dealer
Category I Banks (AD Category I Banks), more specifically in relation to the
undertaking submitted by us to you, dated [ ] in this regard
("Undertaking").
In
accordance with the said Undertaking, we hereby furnish a declaration regarding
the amounts of the transactions booked by us with all AD Category I banks.
We are
availing the past performance limit with the following AD Category I banks:
………………………………….
Please find
below the information regarding amounts booked / cancelled with all AD Category
I Banks under the said past performance facility as permitted under the FEMA,
1999 Regulations :
|
(Amount in US
Dollar) |
|||||
|
Eligible limit under past performance |
Aggregate amount of contracts booked with all the
ADs from April till date |
Amount of contracts cancelled with all ADs from
April till date _______ |
Amount of contracts o/s with all ADs as on date |
Amount utilised (by delivery of documents) as on
date |
Available limits under past performance as on
date |
Thanking
you,
Yours
faithfully,
For XXXXXX
(Chief
Financial Officer)
(Company
Secretary)
Format for Declaration for utilisation of past performance limits in excess
of 50 per cent and details of import / export turnover, overdues,
etc.
[On letterhead of the Company]
Date:
To,
(Name and address
of the Bank)
Dear Sir,
Sub:
Declaration for utilisation of past performance limits in excess of 50 per cent
and details of import / export turnover, overdues,
etc.
1.
The value of the outstanding forward cover availed by us under the past
performance route as on [date] is [ ] per cent of our eligibility for our
imports [exports].
2.
We certify that all guidelines in respect of hedging of probable exposures
under the past performance route have been complied with while utilizing this
facility.
3.
We declare that the information in the table below is true to the best of
our knowledge and is provided in support of our application to hedge our
currency risk under the past performance route using permitted foreign exchange
derivative contracts in terms of Regulations and Guidelines issued under FEMA,
1999 (Act 42 of 1999).
|
(Amount in USD
million) |
||||||
|
Financial Year |
Turnover |
Percentage of overdue bills to turnover |
Existing limit for booking of forward cover based
on past performance |
|||
|
Import |
Export |
Import |
Export |
Export |
Import |
|
|
Year 1 |
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Year 2 |
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Year 3 |
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Yours
faithfully,
For XXXXXX
(Chief
Financial Officer)
(Company
Secretary)