Schedule II
(See regulation 5)

1.  

A Registered Foreign Institutional Investor (FII) may enter into a forward contract with rupee as one of the currencies with an authorised dealer in India to hedge its exposure in India:

Provided that -

     ²

a)

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.

      [***]²

b)

forward contracts once cancelled shall not be rebooked but may be rolled over on or before the maturity,

c)

the cost of hedge is met out of repatriable funds and/or inward remittance through normal banking channel,

d)

all outward remittances incidental to hedge are net of applicable Indian taxes.

2.

A non-resident Indian   [***]³ may enter into forward contract with rupee as one of the currencies, with an authorised dealer in India to hedge;

(a)

the amount of dividend due to him/it on shares held in an Indian company;

(b)

the balances held in Foreign Currency Non-Resident (FCNR) account or NonResident External Rupee (NRE) account,

(c)

the amount of investment made under portfolio scheme in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 or under notifications issued there under or is made in accordance with the provisions of the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 and in both cases subject to the terms and conditions specified in the proviso to paragraph 1 of this Schedule.

A non-resident Indian may, subject to conditions prescribed by the Reserve Bank of India from time to time, enter into cross currency (not involving the rupee) forward contracts to convert the balances held in FCNR (B) accounts in one foreign currency to another foreign currency in which FCNR (B) deposits are permitted to be maintained

⁵4.

A Foreign Institutional Investor, a Non-Resident Indian or a Person Resident outside India having Foreign Direct

Investment in India, may enter into a foreign currency-rupee option contract with an authorised dealer in India,

under the same terms and conditions applicable to forward contracts .

Schedule III
(See Regulation 6)

i)

A brief description of the hedging strategy proposed ; namely :-

a)

description of business activity and nature of risk;

b)

instruments proposed to be used for hedging ;

c)

names of commodity exchange and brokers through whom the risk is proposed to be hedged and credit lines proposed to be availed. The name and address of the regulatory authority in the country concerned may also be given ;

d)

size/average tenure of exposure and/or total turnover in a year , together with expected peak positions thereof and the basis of calculation.

ii)

copy of the Risk Management Policy approved by the Management covering:

a)

risk identification,

b)

risk measurements,

c)

guidelines and procedures to be followed with respect to revaluation and/or monitoring of positions,

d)

names and designations of the officials authorised to undertake transactions and limits.

iii)

Any other relevant information.

⁶2.

Authorized dealer, after ensuring that the application is supported by documents indicated in paragraph 1, as may be relevant, may forward the application with its recommendations to the Reserve Bank of India, where applicable. In all other cases, the application may be forwarded by the company concerned to an authorized dealer bank authorized to grant permission under sub-regulation (ii) of regulation 6, for consideration.