The
Head Offices/Principal Offices of all
Authorized Dealers In Foreign Exchange.
Dear
Sirs,
(i)
Discounting of Sight Export Bills
(ii) Third Currency Exposure Coverage for Imports
(iii) Forward Quotations for Less than One Month
Please refer to the instructions contained
in para 10, Chapter IV of FE Manual-2002 which states that
in case an exporter books forward cover and presents thereagainst
an export bill drawn on usance basis for discounting, the
Authorised Dealer may treat discounting of the usance bill
as delivery against the forward contract provided such bills
are presented for discounting during the option delivery
period only. In all other cases the foreign currency receipts
in respect of discounted bills will not be considered as
delivery against forward contract and the Authorised Dealer
will discount the bill at its current applicable rate and
close out the contract on maturity.
2.
It has now been decided to include sight export bills in
the above facility. Accordingly, Chapter IV paragraph 10,
of Foreign Exchange Manual (8th Edition, 2002) is amended
to read as under:-
“In
case an exporter books forward cover and presents thereagainst
an export bill for discounting, the Authorised Dealer may
treat discounting of the usance or sight bill as delivery
against the forward contract provided such bills are presented
for discounting during the option delivery period only.
In all other cases the foreign currency receipts in respect
of discounted bills will not be considered as delivery against
forward contract and the Authorised Dealer will discount
the bill at its current applicable rate and close out the
contract on maturity.”
3.
Further, in terms of Chapter IV para 3(ii), exporters have
the option to cover their third currency exposure in case
goods exported are invoiced in a convertible currency. In
order to deepen the forex market, it has been decided to
allow such facilities to importers also. Accordingly, para
3(ii) may be amended to read as follows:
“In the case of export of goods to be invoiced in
any convertible currency other than U.S. Dollar, it is permissible
for the Authorised Dealers to buy forward the concerned
currency in terms of US Dollar, if the exporter wishes to
cover only such risk and to carry dollar versus rupee risk
himself. On realization of such proceeds the equivalent
U. S. Dollar amount at the booked rate will not be delivered
but converted at the spot rate and the rupee equivalent
will be paid to the exporter. In case, if exporter does
not want to carry Dollar versus Rupee risk himself and wants
to cover the same in the forward market, the same would
also be permissible. The Authorised Dealers will conduct
such transactions within their approved ‘Exchange
Exposure' limits.”
Further, following is added as sub-para (ii) after
Para 4(i):
“In the case of import of goods invoiced in any convertible
currency other than U. S. Dollar, it is permissible for
Authorised Dealers to sell forward the concerned currency
in terms of US Dollar, if the importer wishes to cover only
such risk and to carry dollar versus rupee risk himself.
On the date of such payment, the equivalent US Dollars amount
at the booked rate will not be claimed but converted at
the spot rate and the rupee equivalent would be claimed
from the importer. In case, if importer does not want to
carry Dollar versus Rupee risk himself and wants to cover
the same in the forward market, the same would also be permissible.
The Authorised Dealers will conduct such transactions within
their approved ‘Exchange Exposure’ limits.”
The existing sub-para (ii) may be renumbered as (iii)
4.
In terms of Para 2 of Chapter IV of FE Manual (8th Edition-2002),
no forward transactions may be made for a tenor of less
than one month. It has now been decided to remove this restriction.
Accordingly, Para 2, Chapter IV of FE Manual would be read
as under:
“Forward
Quotations.
Authorised
Dealers may provide forward cover for exports, imports,
foreign private loans covered under paragraph 8, Chapter
XIX (on roll-over basis) and repatriable foreign currency
loans mentioned in paragraph 15, Chapter XIX of the Manual
(excluding loans obtained by foreign contractors and branches
of foreign companies) for any duration, subject to any restriction
mentioned in subsequent paragraphs, in accordance with the
conditions prevailing in the market.”
Please
bring the above changes to the notice of your constituents.