The central bank reviewed the existing framework for inter-bank foreign exchange transactions to provide greater flexibility in dealing in FX products, managing risks and exposures, and easing reporting requirements.
“Authorised persons shall mean authorised dealer category-I banks and standalone primary dealers authorised as authorised dealer category-III.”
The draft allows them to borrow and lend foreign currency with other authorised dealers for hedging exposures, balance sheet management, market-making and proprietary positions.
The proposed directions also cover exchange-traded currency transactions, hedging of gold price risk, use of foreign currency accounts, investments in overseas markets, and overseas foreign currency borrowing by authorised dealers.
They set out how authorised dealers can undertake various forex and derivative transactions, including those with overseas branches and entities, within the regulatory framework.
The RBI has released the draft for public consultation and invited comments by March 10 before finalising the directions.
