Reserve Bank of India
Exchange Control Department
Central Office
Mumbai-400 001

Notification No. FEMA. 81/2003-RB

In exercise of the powers conferred by clause (h) of sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (Act 42 of 1999), and in partial modification of its Notification No. FEMA 25/RB-2000 dated May 3, 2000, the Reserve Bank of India makes the following amendments in the Foreign Exchange Management (Foreign exchange derivative contracts) Regulations, 2000, as amended from time to time, namely: -

(i) These Regulations may be called the Foreign Exchange Management (Foreign exchange derivative contracts) (Amendment) Regulations, 2003.

(ii) They shall come into force from the date of their publication in the Official Gazette.

In the Foreign Exchange Management (Foreign exchange derivative contracts) Regulations 2000,

A. In clause (1) of Schedule II to the Notification,

a) Sub-clause (a) shall be substituted by the following words:

'the value of the hedge does not exceed the market value of the underlying debt or equity instruments, provided forward contracts once booked shall be allowed to continue to the original maturity even if the value of the underlying portfolio shrinks, for reasons other than sale of securities'

b). Sub-clause (b) shall be deleted and the subsequent sub-clauses (c) (d) and (e) shall be renumbered as (b), (c) and (d) respectively.

B. Clause (3) of Schedule II shall be substituted by the following words:

'Authorised dealers may offer forward contracts to persons resident outside India to hedge the investments made in India since January 1, 1993,subject to verification of the exposure in India. These forward contracts once cancelled are not eligible to be rebooked.'

(K.J. Udeshi)
Executive Director