Resurgent India Bonds - Forward Contracts - Clarification

A.P. (DIR Series) (2003-2004) Circular No. 6, dated, 23-7-2003, issued by Exchange Control Department, RBI

Attention of authorised dealers is invited to paragraph 2 of Schedule II to Notification No. FEMA 25/RB-2000, dated May 3, 2000, which lists out the exposure for which forward cover can be offered by authorised dealers to Non-Resident Indians/Overseas Corporate Bodies.

2. As investments in Resurgent India Bonds are not covered by the above provisions and since original terms and conditions of the Resurgent India Bonds issue as prescribed in offer document, had not envisaged the availability of forward cover for the maturing bonds, banks are advised that no forward cover should be offered to Non-Resident Indians/Overseas Corporate Bodies holding Resurgent India Bonds.

3. Authorised dealers may bring the contents of this circular to the notice of their constituents concerned.

4. 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).