Facilities for Non-resident Indians (NRIs)

Facilities for Non-resident Indians (NRIs)
Purpose
v) To hedge the exchange rate risk on the market value of investment made under the
portfolio scheme in accordance with provisions of FERA, 1973 or under notifications issued
there under or in accordance with provisions of FEMA, 1999. For access to ETCD market, see para. 4 below. vi) To hedge the exchange rate risk on the amount of dividend due on shares held in Indian
companies. vii) To hedge the exchange rate risk on the amounts held in FCNR (B) deposits. viii) To hedge the exchange rate risk on balances held in NRE account. Products
ix) Forward foreign exchange contracts with rupee as one of the currencies, and foreign currency-
INR options. x) Additionally, for balances in FCNR (B) accounts – Cross currency (not involving the rupee)
forward contracts to convert the balances in one foreign currency to other foreign currencies in
which FCNR (B) deposits are permitted to be maintained. (c)Terms
9 and conditions for Non-Resident Indians (NRIs) participating in the Exchange
Traded Currency Derivatives (ETCD)
i. NRIs shall designate an AD Cat-I bank for the purpose of monitoring and reporting their combined
positions in the OTC and ETCD segment

(an)NRIs may take positions in the currency futures / exchange traded options market to hedge the
currency risk on the market value of their permissible (under FEMA, 1999) Rupee investments in
debt and equity and dividend due and balances held in NRE accounts. (ao)The exchange/ clearing corporation will provide details of all transactions of the NRI to the
designated bank. (ap)The designated bank will consolidate the positions of the NRI on the exchanges as well as the
OTC derivative contracts booked with them and with other AD banks. The designated bank shall
monitor the aggregate positions and ensure the existence of underlying Rupee currency risk and
bring transgressions, if any, to the notice of RBI / SEBI. (aq)The onus of ensuring the existence of the underlying exposure shall rest with the NRI
concerned. If the magnitude of exposure through the hedge transactions exceeds the magnitude of
underlying exposure, the concerned NRI shall be liable to such penal action as may be taken by
Reserve Bank of India under the Foreign Exchange Management Act (FEMA), 1999.