Reserve Bank of India (RBI) has issued a notification to all authorised dealer category –I (AD Cat-I) banks, stating that banks are invited to the Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020.
Accordingly, AD Cat-I banks may post and collect margin in India, on their own account or on behalf of their customers, for a permitted derivative contract entered into with a person resident outside India in the form of:
- Indian currency;
- Freely convertible foreign currency;
- Debt securities issued by Indian Central Government and State Governments;
- Rupee bonds issued by person resident in India, which are:
Listed on a recognized stock exchange in India and Assigned a credit rating of AAA issued by a rating agency registered with the SEBI.
However, AD Cat-I banks may post and collect such margin outside India in the form of:
- Freely convertible foreign currency; and
- Debt securities issued by foreign sovereigns with a credit rating of AA.
It further states, AD Cat-I banks may receive and pay interest on margin posted and collected on their own account or on behalf of above mentioned person.
As well as banks shall maintain a separate account in the name of person resident outside India for the purpose of posting and collecting cash margin in India, and transactions incidental thereto.
Click here for detailed official notification:
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