| The apex bank has done away with the cap of $100 million for booking of forward contracts by authorised dealers (ADs) in foreign exchange. |
| This move is aimed at encouraging exporters/ importers to hedge their exposures, which they have been keeping open in view of the dollar being quoted at a discount for the near term. |
| This step would also encourage the exporters/ importers with high exposure to the forex markets to book forwards more frequently as well as in bigger sizes. |
| RBI has decided that the eligible limit for booking of forward contract would be the average of the past three years' export/import turnover or the previous year's turnover, whichever is higher. |
| The forward contracts so booked and the outstanding forwards at any point of time shall not exceed 50% (raised from 25%) of the eligible limit without any cap. |
| This facility will be allowed provided that any amount in excess of 25 per cent of the eligible limit shall be only on a deliverable basis. |
| These limits shall be computed separately for export/import transactions. All other conditions prescribed for this facility remain the same. |
| Earlier forward contracts could be booked on the basis of declaration of an exposure based on past performance. |
| This was subject to the condition that at any point of time the forward contracts so booked plus the outstanding forwards ( not settled as due date was yet to arrive) could not exceed 25 per cent of the limit assigned by the exporter/ importer's bank or $100 million whichever was lower. |
| This was worked out on the basis of last three years' average import/ export performance. |
| These limits should be computed separately for export/import transactions, the central bank said adding, all other conditions prescribed for this facility remain the same. |
| Importers/exporters desirous of availing limits higher than the overall cap of 50 per cent would have to apply to RBI through their ADs. |
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