The Reserve Bank of India (RBI) on 14 January 2015 relaxed the Forex Hedging Norms for exporters and importers.
The norms were relaxed under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999.
Relaxed Forex Hedging Norms
• Now, the exporters and importers can book forward foreign exchange contracts in excess of 50 percent of the eligible limit. This will give them greater operational flexibility.
• However, approval of these contracts is subjected to some conditions including the submission of a declaration that all guidelines have been adhered to while utilising the facility.
• The declaration has to be signed by the Chief Financial Officer (CFO) and the Company Secretary (CS).
• In the absence of a company secretary (CS), the Chief Executive Officer or the Chief Operating Officer shall co-sign the undertaking of the customer along with the Chief Financial Officer.
• Moreover, a certificate of import or export turnover of the customer during the past three years has to be attached.
• All other operational guidelines, terms and conditions shall remain unchanged.