The Reserve Bank of India has issued a circular dated 22 October in relation to facilities for foreign institutional investors (FIIs).
Before the circular
Previously, only designated branches of authorized dealer category-I (AD) banks that maintained FII accounts were allowed to act as market makers to FIIs to hedge their currency risks on the market value of their entire equity and/or debt investment in India as on a particular date.
After the circular
The circular has done away with this restriction. Now, FIIs can approach any AD bank to hedge their currency risks on the market value of their entire equity and/or debt investment in India as on a particular date.
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.
