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March 2015

A. P. (DIR Series) Circular No. 78 dated February 13, 2015

By Gaurang Gandhi Chartered Accountant
Reading Time 1 mins
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Risk Management and Inter Bank Dealings: Foreign Currency (FCY) – INR Swaps

Presently, eligible residents who have entered into FCY-INR swaps to hedge their exchange rate and / or interest rate risk exposure arising out of long-term foreign currency borrowing or to transform long-term INR borrowing into foreign currency liability are not permitted to rebook or reenter into the swap once it is cancelled.

This circular permits residents borrowing in foreign currency to re-enter into a fresh FCY-INR swap to hedge the underlying after the expiry of the tenor of the original swap contract that had been cancelled, in cases where the underlying is still surviving.

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