A.P.
(DIR Series) (2000-2001) Circular No. 11, dated 5-9-2000
Attention
of authorised dealers is invited to the Notification No. FEMA 25/RB-2000, dated
3rd May, 2000 issued by Reserve Bank under the Foreign Exchange Management Act,
1999, making “Foreign Exchange Management (Foreign Exchange Derivative
Contracts) Regulations, 2000”. In terms of the Regulation 6 of the
Notification, Reserve Bank considers applications, from persons resident in
India, for granting permission to enter into contracts for hedging the price
risk in a commodity excluding oil and petroleum products. It has now been
decided that importers/exporters of crude oil and petroleum products may also
be permitted to hedge their exposure to price risk.
2. Procedure
for making application to Reserve Bank seeking its approval for entering into
contracts for hedging of commodity price risk as specified in Schedule III to
the Notification, referred to above, shall apply mutatis mutandis to crude oil
and petroleum products.
3. Necessary
amendment to the Notification is being issued separately.
4. Authorised
dealers may bring the contents of this circular to the notice of their
constituents concerned.
5. The directions
contained in this circular have been issued under section 10(4) and section
11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Any
contravention or non-observance of these directions is subject to the penalties
prescribed under the Act.