DBOD.No. FSC. BC. 68/24.76.002/97-98

July 3, 1998

Aashada 12, 1920 (Saka)

The Chairmen/Chief Executives of all Commercial Banks

Dear Sir,

reverse ready forward transactions

Please refer to our Circular DBOD. No.FSC.BC. 151/24.76.002/97-98 dated 9th December 1997 on the above subject.

2. The Government of India has since notified 5 non-bank entities in addition to the institutions indicated earlier to undertake Reverse Ready Forward contracts in Treasury Bills of all maturities and in such dated securities of Government of India as are approved by the Reserve Bank of India in consultation with Central Government. A copy of the Notification No. 345(E) dated April 24, 1998 issued by government of India in this regard is enclosed.

3. Accordingly, when the non-bank entities mentioned therein enter into Reverse Ready Forward contracts with banks and primary dealers, it is stipulated that the non-bank entities will be purchasing securities in the first leg and will be selling back securities in the second leg of the transaction.

4. A directive DBOD No. FSC.BC 67/24.76.002/97-98 dated 3 July 1998 issued in this regard is enclosed.

Yours faithfully,

(Smt. Chitra Chandramouliswaran)

General Manager