RBI/2004-05/265
A.P. (DIR Series) Circular No. 26
November 1, 2004
To
All Banks Authorised to Deal in Foreign
Exchange
Madam / Sirs,
Booking of Forward Contracts Based
on Past Performance
Attention of Authorised Dealer
(AD) banks is invited to A.P.(DIR)
Series Circular No. 46 dated December 9, 2003 and paragraph A.2 of our Master
Circular No. 2 dated July 1,2004 on Risk Management and Inter-Bank Dealings,
in terms of which importers/exporters are permitted to book forward contracts
on the basis of past performance (without production of any underlying documents)
up to the average of the past three years’ or the previous year’s turnover,
whichever is higher. Outstanding contracts under this facility at any point
of time should not exceed 50 per cent of the eligible limit. Importers/exporters
desirous of higher limits are required to approach the Reserve Bank for necessary
approval.
2. Reserve Bank has been receiving
representations from importers/exporters for greater flexibility in view of
the increasing turnover. It has, therefore, been decided that AD banks may,
henceforth, grant permission to their importer/exporter constituents for enhancement
of the outstanding limit of forward contracts under this facility from 50 per
cent to 100 per cent of the eligible limit.
3. The enhanced limits may be
permitted by AD banks on being satisfied about the genuine requirements of their
constituents after examination of the following documents:
- A certificate from the Chartered Accountant
of the customer that all guidelines have been adhered to while utilizing this
facility.
- A certificate of import/export turnover of the
customer during the past three years duly certified by their Chartered Accountant/bank
in the format given in Annex- VII of our Master Circular mentioned above.
4. In the case of an exporter,
the amount of overdue bills should not be in excess of 10 per cent of the turnover
to avail this facility. All other conditions prescribed for this facility remain
unchanged. As hitherto, contracts booked in excess of 25 per cent of the eligible
limit will have to be necessarily delivered.
5. Authorised Dealers are required
to submit a monthly report (as on the last Friday of every month) on the limits
granted and utilized by their constituents under this facility in the format
annexed to this circular. The report may be forwarded to The
Chief General Manager, Foreign Exchange Department, Forex Markets Division,
Central Office, RBI, Mumbai-400 001 so as to reach the department by the 10th of the following month.
6. Authorised Dealer banks
may bring the contents of this circular to the notice of their constituents
and customers.
7. The direction contained
in this circular has been issued under sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions / approvals, if any, required under any other law.
Yours
faithfully
F. R.
Joseph
Chief
General Manager
Annex
Booking of forward contracts on past performance
basis-
Report as on …………………………..
Name of the bank-
(in USD)
|
Total Limits sanctioned during the month
|
Cumulative sanctioned limits
|
Amt of contracts booked during the month
|
Amount utilized (by delivery of documents)
|
Amount of forward contracts cancelled
|
|
1
|
2
|
3
|
4
|
5
|
| |
|
|
|
|
Notes:
1. The position of the bank as a whole shall be
indicated.
2. Amounts in columns 2, 3, 4 and 5 should be cumulative
positions over the year. Outstanding amounts at the end of each financial year
shall be carried over and taken into account in the next year’s limit.
|