External Commercial Borrowings ADR/ GDR FCCB Hedging of Foreign Exchange Manish Tyagi Ernst & Young.

External Commercial Borrowings

ADR/ GDR

FCCB

Hedging of Foreign Exchange

Manish TyagiErnst & Young

External Commercial

Borrowings (ECB) and Trade Credits

Manish TyagiErnst & Young Page 3

Agenda

External Commercial Borrowings

Structured obligations

Take out Finance Trade credits

ADR/ GDRs/ FCCBs

Forex Hedging


Concept

ECB refer to cross border commercial loans

(bank loans, buyers’ credit, suppliers’ credit, securitized instruments)

availed by permitted eligible borrowers from permitted non-resident lenders with minimum average maturity of 3 years.


Route for availing ECB

Automatic Route i.e. no Reserve Bank of India (RBI) approval is required (however registration is required)

Approval Route i.e. RBI approval is required.

ECB for investment in industrial sector, infrastructure sector and specified service sectors such as Hotel, Hospital and Software sector is included under Automatic Route.


Automatic

Route


Eligible Borrowers

Corporates including those in hotel, hospital, sofware, Infrastructure Finance Companies registered under the Companies Act.

SEZ units – for their own requirement. Cannot transfer or onlend ECB funds to sister concerns or DTA units

NGO’s engaged in microfinance activity – subject to satisfying the requirements specified by RBI


Eligible Borrowers

Entities that are excluded:

financial intermediaries such as banks, financial institutions (FIs), housing finance companies and NBFCs.

Individual, Trusts and Non Profit making organizations


Eligible Lenders

International Recognized Sources:

International Banks

International Capital Markets

Multilateral Financial Institutions(such as IFC, ADB, CDC etc.)

Export Credit Agencies

Suppliers of Equipment

Foreign Collaborator

Foreign Equity Holder (other than OCB)


Eligible Lenders

Foreign Equity Holder require minimum paid up equity in the borrower company:

ECB upto 5 Million – 25% held directly by the Lender

ECB more than 5 Million – 25% held directly by the lender and debt equity ration not exceeding 4:1


Amount

Entity Maximum amount of ECB per financial year

Corporates USD 500 Million

Corporates in hotel, hospital and software service sector

USD 100 Million

NGO’s in Microfinance activity USD 5 Million

Infrastructure Finance Companies

50% of their Owned funds


Maturity

Amount Minimum Average Maturity

USD 20 Million 3 year

> USD 20 Million up to USD 500 Million

5 years

ECB upto USD 20 million can have call/put option provided minimum average maturity is complied with


Minimum Average Maturity


All-in-cost Ceilings

Average Maturity Period All in Cost ceiling over 6 months LIBOR*

3 years upto 5 years 300 basis points

More than 5 years 500 basis points

* For the respective currency of borrowing or applicable benchmark



Included Excluded

Rate of Interest, other fee and expenses in foreign currency

Commitment fee, pre-payment fee, fee payable in Indian currency, withholding taxes


Permitted End-use

For investment such as import of capital goods, new projects, modernization/ expansion of existing production units) in real sector - industrial sector including small and medium enterprises (SME) and infrastructure sector and specific service sector in India.

Infrastructure sector is defined as (i) power, (ii) telecommunications, (iii) railways, (iv) road including bridges, (v) sea port and airports, (vi) industrial parks and (vii) urban infrastructure (water supply, sanitation and sewage projects).

ODI in JV/WOS abroad


Permitted End-use

First stage acquisition of shares in the disinvestment process and also in the mandatory second stage offer under GOIs disinvestment program

Payment for spectrum Allocation.

For lending to self help groups or for micro credit by NGO’s

IFC’s can avail ECBs equivalent to 50 per cent of their owned funds for on-lending to the infrastructure sector as defined under the ECB policy,.


Prohibited End-use

Working capital

General corporate purpose

Repayment of existing Rupee loans

On lending

Investment in capital market or acquiring a company in India( including investment in SPV or Money Market Mutual Funds)

Real Estate


Guarantees / Security

Guarantee

Issuance of guarantee, standby letter of credit, letter of undertaking or letter of comfort by banks, Financial Institutions and Non-Banking Financial Companies (NBFCs) from India relating to ECB is not permitted.

Security

The choice of security to be provided to the lender is left to the borrower. However, creation of charge over immoveable assets and financial securities - can be done only after obtaining ‘no objection’ from Authorized Dealer bank. Incase of enforcement – property will be transferred only to person resident in India.


Guarantees / Security

Pledge of shares by promoters, domestic associate companies of the borrower

Corporate Guarantee

Personal Guarantee

possible only after obtaining no objection from AD bank.


Prepayment & Refinancing

Prepayment

Up to USD 500 million - subject to compliance with the minimum average maturity as applicable to the Loan.

Refinancing

Possible with the fresh ECB subject to the condition that the fresh ECB is raised at a lower all-in-cost ceiling and outstanding maturity of the original ECB is maintained.


Parking of ECB Proceeds Overseas

Borrowers are permitted to either keep ECB proceeds either overseas or to remit these funds to India, pending utilization for permissible end-uses.

ECB proceeds parked overseas can be invested in the following liquid assets

(a) Deposits or Certificate of Deposit;

(b) Treasury bills and other monetary instruments of one year maturity ;

(c) Deposits with overseas branches / subsidiaries of Indian banks abroad.


Parking of ECB Proceeds Overseas

The funds should be invested in such a manner that the investments can be liquidated as and when funds are required in India.


Conversion of ECB into Equity

Conversion of ECB into equity is permitted subject to the following conditions:

The activity of the company is covered under the Automatic Route for FDI or FIPB approval for foreign equity participation has been obtained by the company, whichever applicable,

The foreign equity holding after such conversion of debt into equity is within the sectoral cap, if any,

Pricing of shares is as per the SEBI and RBI guidelines as may be applicable for listed / unlisted companies.



Full conversion

Form FC-GPR with the Regional Office concerned of the RBI along and form ECB-2 submitted to DSIR RBI within seven working days from the close of month to which it relates.

The words "ECB wholly converted to equity" should be clearly indicated on top of the ECB-2 form. Once reported, filing of ECB-2 in the subsequent months is not necessary.



Partial Conversion

Converted portion of ECB should be reported in form FC-GPR to the Regional Office concerned and form ECB-2 clearly differentiating the converted portion from the unconverted portion.

The words "ECB partially converted to equity" should be indicated on top of the ECB-2 form. In subsequent months, the outstanding portion of ECB should be reported in ECB-2 form to DSIM.


Approval Route


Eligible Borrowers

Financial institutions dealing exclusively with infrastructure or export finance such as IDFC, IL&FS, Power Finance Corporation, Power Trading Corporation, IRCON and EXIM Bank on case to case basis.

Banks and financial institutions which had participated in the textile or steel sector restructuring package as approved by the Government are also permitted to the extent of their investment in the package and assessment by Reserve Bank based on prudential norms


Eligible Borrowers

NBFCs with minimum average maturity of 5 years from multilateral financial institutions, reputable regional financial institutions, official export credit agencies and international banks to finance import of infrastructure equipment for leasing to infrastructure projects.

IFC’s beyond 50% of their owned funds.

FCCBs by housing finance companies satisfying the criteria prescribed – minimum net worth of Rs. 500 Crore, listing on BSE / NSE, Minimum size of FCCB – 100 Million.


Eligible Borrowers

SPV – set up to finance infrastructure companies / projects exclusively.

Multi-State Co-operative Societies engaged in manufacturing activity

SEZ developers can avail of ECBs for providing infrastructure facilities within SEZ.

Corporates which have violated the extant ECB policy and are under investigation by Reserve Bank and / or Directorate of Enforcement.

Cases falling outside the purview of the automatic route limits and maturity period


Amount and Maturity

Corporates can avail additional amount of USD 250 million with average maturity of more than 10 years under the approval route, over and above the existing limit of USD 500 million under the automatic route, during a financial year.

Prepayment and call/put options, however, would not be permissible for such ECB up to a period of 10 years.


Eligible Lenders

International Recognized Sources:

International Banks

International Capital Markets

Multilateral Financial Institutions(such as IFC, ADB, CDC etc.)

Export Credit Agencies

Suppliers of Equipment

Foreign Collaborator

Foreign Equity Holder (other than OCB)


Guarantees

Applications considered:

Applications for providing guarantee/standby letter of credit or letter of comfort by banks, financial institutions relating to ECB in the case of SME.

ECB by textile companies for modernization or expansion of textile units.


Procedure and Compliance


Procedure

Execute a Loan Agreement with the overseas lender. However, Loan agreement is not required to be filed

Prepare and file form 83 for obtaining Loan Registration Number (LRN) in duplicate, certified by the Company Secretary or Chartered Accountant to the Authorized Dealer.

AD will process the application and forward the one copy to Department of statistics and information system, RBI for generating LRN.

First draw down should be only after obtaining LRN.


Compliance

ECB-2 Return certified by the designated AD bank needs to be submitted on monthly basis so that it can reach RBI within seven working days from the close of month to which it relates

Primary responsibility to ensure that ECB raised / utilized is in conformity with the ECB guidelines is of the borrower concerned and any contravention of the ECB guidelines invite penal action under FEMA 1999


Structured

Obligations


Structured Obligation

Indian CompanyIndian BankLoan



Advisory Services

Indian Company

FCo1

India

Outside India

Advisory Fees

Indian BankLoan



Advisory Services

Indian Company

FCo1

India

Outside India

Advisory Fees

Indian BankLoan

Guarantee to repay Loan

Require RBI approval



Advisory Services

Indian Company

FCo1

India

Outside India

Advisory Fees

Indian Bank

Supply of goods

Counter Guarantee to repay the amount on

behalf of ICO

RBI approval ???

???

Indian SupplierPayment

Guarantee to pay the amount on behalf of ICO


Other Instruments that require Compliance with

ECB norms


Preference Shares / Debentures

Non convertible, optionally convertible or partially convertible preference shares.

Foreign Currency Convertible Bonds (FCCB) issued in accordance with the “Issue of FCCB and ordinary shares (through Depositary mechanism scheme, 1993”.

Foreign Currency Exchangeable Bond (FCEB) issued in accordance with “Issue of FCEB Scheme 2008”


Practical Questions


???????

Maturity period – Does it really mean the formula that you are providing where it is written under ECB guidelines.

RBI has not granted the LRN even after 2 months – Can I drawdown the first tranche.

Can I convert ECB into equity including Interest – what about interest on Interest.

What do you mean by swap equivalent of LIBOR?


Take out Finance

Permitted for refinancing of existing Rupee loans availed from the domestic banks by eligible borrowers in the sea port and airport, roads including bridges and power sectors for the development of new projects under approval route, subject to the following conditions:

Execution of tripartite agreement with domestic banks and overseas recognized lenders

Minimum average maturity period of seven years.

Fee payable to the overseas lender should not exceed 100 bps per annum.


Take out Finance

Fee payable to the overseas lender should not exceed 100 bps per annum.

On take-out, the residual loan would be considered as ECB and would be designated in a convertible foreign currency.

Domestic banks / Financial Institutions are not permitted to guarantee the take-out finance.

Domestic bank not permitted to carry any obligation on its balance sheet after the occurrence of the take-out event.

Compliance with the ECB Policy.


Trade Credits

Definition

Credits extended for imports directly by the overseas supplier, bank and financial institution for maturity of less than three years. Trade credits include suppliers’ credit or buyers’ credit.

Buyers’ credit and suppliers’ credit for three years and above come under the category of External Commercial Borrowings (ECB) which are governed by ECB guidelines.


Amount and Maturity

Transaction Amount permitted per

import transaction

Maturity Period

Import transaction for imports permissible under the current Foreign Trade Policy of the DGFT

USD 20 Million One year or less

Import of capital goods as classified by DGFT

USD 20 Million More than one year and less

than three years



Average Maturity Period All in Cost ceiling over 6 months LIBOR*

Upto One year 200 basis points

More than one year but less than three years

The all-in-cost ceilings include arranger fee, upfront fee, management fee, handling/ processing charges, out of pocket and legal expenses, if any


Guarantees

AD banks permitted to issue Letters of Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) in favour of overseas supplier, bank and financial institution up to USD 20 million for

Up to one year for import of all non-capital goods permissible under FTP (except gold, palladium, platinum, Rodium, silver etc.) and

Up to three years for import of capital goods.

The period of guarantees has to be co-terminus with the period of credit, reckoned from the date of shipment.

ADR / GDR / Foreign Currency Convertible Bonds (FCCB)


Regulatory framework

Indian companies can raise foreign currency resources abroad through the issue of FCCB/DR (ADRs/GDRs), in accordance with the :

Scheme for issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism)

Scheme, 1993 and guidelines issued by the Government of India there under from time to time.


ADR / GDR

A company can issue ADRs / GDRs if it is eligible to issue shares to persons resident outside India under the FDI Policy.

However, an Indian listed company, which is not eligible to raise funds from the Indian Capital Market including a company which has been restrained from accessing the securities market by the Securities and Exchange Board of India (SEBI) will not be eligible to issue ADRs/GDRs.


ADR / GDR

Unlisted companies, which have not yet accessed the ADR/GDR route for raising capital in the international market require prior or simultaneous listing in the domestic market.

The proceeds raised through ADR / GDRs have to be kept abroad till actually required in India.

Pending repatriation or utilization of the proceeds, the Indian company can invest the funds in:-

Deposits, Certificate of Deposits or other instruments offered by banks

Deposits with branch/es of Indian Authorized Dealers outside India; and


ADR / GDR

Treasury bills and other monetary instruments with a maturity or unexpired maturity of one year or less.

There are no end-use restrictions except for a ban on deployment / investment of such funds in real estate or the stock market.

There is no monetary limit up to which an Indian company can raise ADRs / GDRs.

The proceeds can be utilized for first stage acquisition of shares in the disinvestment process of Public Sector Undertakings / Enterprises and also in the mandatory second stage offer to the public in view of their strategic importance.


ADR / GDR

Two-way Fungibility Scheme:

The SEBI registered stock broker in India can purchase shares of an Indian company from the market for conversion into ADRs/GDRs based on instructions received from overseas investors.

Reissuance of ADRs / GDRs would be permitted to the extent of ADRs / GDRs which have been redeemed into underlying shares and sold in the Indian market.


ADR / GDR

Sponsored ADR/GDR issue

An Indian company can also sponsor an issue of ADR / GDR.

The company offers its resident shareholders a choice to submit their shares back to the company so that on the basis of such shares, ADRs / GDRs can be issued abroad.

The proceeds of the ADR / GDR issue are remitted back to India and distributed among the resident investors who had offered their Rupee denominated shares for conversion. These proceeds can be kept in Resident Foreign Currency (Domestic) accounts in India by the resident shareholders who have tendered such shares for conversion into ADRs / GDRs.


FCCB - Meaning

External Commercial Borrowing (ECB) Guidelines:

FCCB means a bond issued by an Indian company expressed in foreign currency and the principal and interest in respect of which is payable in foreign currency.


FCCB - Meaning

Issue of Foreign Currency Convertible Bonds and Ordinary Shares

(Through Depository Receipt Mechanism) Scheme, 1993:

FCCB means a bond issued in accordance with this scheme & subscribed by a non-resident in foreign currency & convertible into ordinary shares of the issuing company in any manner either in whole or in part, on the basis of any equity related warrants attached to the debt instrument.


FCCB - Salient features

Quasi debt instrument

Issued by an Indian Company

Denominated in Foreign currency

Generally unsecured & carry a fixed rate of interest

Option for either conversion into equity shares at a predetermined

price or redemption

Carry call & put options


Slide 62

Safety of guaranteed interest payments (if involved) for Bond holder

Bondholder can take advantage of the price appreciation of

company’s stock

Savings to issuer in terms of lesser debt financing costs since

interests costs are lower than other debts

Enable issuer to defer equity and voting rights dilution

Why FCCBs?


Private Placement

Legislative Framework

Public Issue

FEMA Regulations (ECB Guidelines

+ Overseas Direct Investment

Regulations)

FDI Policy

Companies Act, 1956

Income Tax Act, 1961

FEMA Regulations (ECB

Guidelines + Overseas Direct

Investment Regulations) Issue of FCCB & Ordinary Shares

(Through Depository Receipt

Mechanism) Scheme, 1993 (‘Issue

Scheme’) FDI Policy Companies Act, 1956 Income Tax Act, 1961

Applicable Regulations


Eligible Borrowers

Specific inclusions under the Approval route:

Housing finance companies min. net worth not less than Rs

500 crore during previous three years

listing on BSE and NSE min. size of FCCBs USD 100

million

Banks and Financial intermediaries participating in Textile or Steel

sector restructuring package of the Govt. or RBI (to the extent of their investment)

Regulatory Framework


Eligible Lenders Foreign equity holder ( holding

minimum 5% equity of borrower)

All-in-cost ceilings

Issue related expenses not to exceed 2% of issue size

Amount and Maturity

No exception



Listed companiesPrice not less than higher of the two averages: average of weekly high and low of

preceding two weeks average of the weekly high and

low of preceding 6 months

Relevant date – date thirty days prior to the date on which the meeting of the body of shareholders is held to consider the proposed issue

Unlisted companies CCI valuation guidelines

applicable

Conversion Pricing(at the time of issue)



End uses No exception

Approvals RBI approval Filings (LRN, Form 83) ECB Guidelines Compliance with FDI policy



Refinance / Restructuring

Refinance Very recently RBI has permitted Indian companies to refinance the outstanding FCCBs subject to compliance with the following conditions: Fresh ECBs/ FCCBs shall be raised with the stipulated average

maturity period and applicable all-in-cost being as per the extant ECB guidelines.

The amount of fresh ECB/FCCB shall not exceed the

outstanding redemption value at maturity of the outstanding FCCBs;



The fresh ECB/FCCB shall not be raised six months prior to the maturity date of the outstanding FCCBs.

The purpose of ECB/FCCB shall be clearly mentioned as

‘Redemption of outstanding FCCBs’ in Form 83 at the time of obtaining Loan Registration Number from the Reserve Bank.

ECB / FCCB beyond USD 500 million for the purpose of redemption of the existing FCCB will be considered under the approval route; and

ECB / FCCB availed of for the purpose of refinancing the existing outstanding FCCB will be reckoned as part of the limit of USD 500 million available under the automatic route as per the extant norms.



Restructuring

Restructuring of FCCBs involving change in the existing conversion price is not permissible. Proposals for restructuring of FCCBs not involving change in conversion price are considered by RBI under the approval route.

Heading of Foreign Exchange



FOREIGN EXCHANGE MANAGEMENT (FOREIGN EXCHANGE DERIVATIVE (CONTRACTS) REGULATIONS, 2000

Foreign exchange derivative contract defined as a financial transaction or an arrangement in whatever form and by whatever name called, whose value is derived from price movement in one or more underlying assets, and includes,

a transaction which involves at least one foreign currency other than currency of Nepal or Bhutan, or

a transaction which involves at least one interest rate applicable to a foreign currency not being a currency of Nepal or Bhutan, or

a forward contract,

but does not include foreign exchange transaction for Cash or Tom or Spot deliveries.es


Derivatives in India

Financial Commodity

Options- Call- Put

Futures Futures

Derivatives in India


Concepts

• Concept same as Forward contract, except:

o Standardized contractso Exchange takes the

risk of any defaulto Regulatedo Reversal possibleo Currently, delivery not

permitted• Index Futures and Stock

Futures• Exposure is unlimited for

both parties

Forward

• Agreement to buy /

sell at a future date at

an agreed price

• Not standardized

• Risk Prone

• Un regulated

• Illiquid

Futures Options

• Right but not an obligation

to buy/sell at a future date

at an agreed price

• Call Option / Put Option

• Initial cost in form of

premium to option writer

• Exposure is limited for

buyer / Exposure unlimited

for Option writer

• Complex pricing

methodology of Options


Traditionally, long history of derivatives in OTC

Market

Options of various kinds (called Teji, Mandi,

Fatak) in unorganized markets traded in

early 1900’s in Mumbai

Powers delegated to SEBI for regulation of financial derivatives market

• SC(R)A banned all kinds of options in 1956

• Prohibition removed on options in 1995

• “Derivatives” treated as “securities” pursuant to SC(R)A amendment in 1999

Evolution of products


Instrument which derives its value from one or more than

one underlying assets

• Commodities, currency, securities, index, interest rate,

etc.

Independent existence

Requires no / minimal initial investment

Tool for transfer of risk at a cost

Settled at a future date

Standardised contracts

• Traded on Stock Exchange / OTCs

Derivatives enable transfer of risk between two parties having different risk / future perceptions

Features

http://shutterstock.com/pic.mhtml?&id=171800&searchterm=&searchtermx=&anyorall=&attr=&value=


• Market efficiency

• Risk sharing and transfer

• Low transaction costs

• Capital intermediation

• Liquidity enhancement

• Price discovery

• Cash market development

• Hedging tools

Derivatives – A dynamic financial tool

Benefits


Facilities to residents

Forward contract A person resident in India is permitted to enter into a forward contract with an AD Bank to hedge an exposure to exchange risk in respect of a transaction for which sale and/or purchase of foreign exchange is permitted subject to compliance with the following conditions:

AD Bank is satisfied about the genuineness of the underlying exposure through verification of documentary evidence.

The maturity of the hedge does not exceed the maturity of the underlying transaction.



If the exact amount of the underlying transaction is not ascertainable, the contract is booked on the basis of a reasonable estimate.

Foreign currency loans/bonds can be hedge only after final approval is accorded by the RBI, if required.

In case of GDRs issue price must be finalized.

Balances in the EEFC accounts sold forward by the account holders shall remain earmarked for delivery and such contracts shall not be cancelled. They may be, however, be rolled-over,



Contracts involving the rupee as one of the currencies, once cancelled, shall not be rebooked except that they can be rolled over at on-going rates on or before maturity.

Such contracts booked by residents to hedge current account transactions, regardless of tenor, not being those booked on past performance basis without documents or booked to hedge transactions denominated in foreign currency but settled in Indian Rupee, may be cancelled and rebooked freely at on-going rates.

Contracts covering export transactions may also be cancelled, rebooked or rolled over at on-going rates without any restriction.



Loan Contracts

Resident Indians who have borrowed ECB may enter into an Interest rate swap or Currency swap or Coupon Swap or Foreign Currency Option or Interest rate cap or collar (purchases) or Forward Rate Agreement (FRA) contract with an AD bank in India or with a branch outside India of an AD Bank for hedging his loan exposure and unwinding from such hedges subject to the following conditions:

The contract does not involve rupee transactions

The Reserve Bank has accorded final approval for borrowing in foreign currency.



The notional principal amount of the hedge does not exceed the outstanding amount of the foreign currency loan, and

The maturity of the hedge does not exceed the unexpired maturity of the underlying loan.

A person resident in India, who owes a foreign exchange or rupee liability can enter into a contract for foreign currency-rupee swap with an AD Bank in India to hedge long-term exposure. However, if such contract is cancelled it shall not be rebooked or re-entered, by whatever name called



Foreign currency options Foreign currency option contract not involving the rupee as one of the currencies can be hedged with an AD Bank for mitigating foreign exchange exposure arising out of trade subject to the condition that in respect of cost effective risk reduction strategies like range forwards, ratio-range forwards or any other variable by whatever name called there shall not be any net inflow of premium. The transactions are freely booked and/or cancelled. Foreign currency-rupee option contract can be hedged with an AD Bank to hedge an exposure to exchange risk in respect of a transaction for which sale and/or purchase of foreign currency is permitted on the same terms and conditions applicable to forward contracts.


Facilities to Non Residents

Foreign Institutional Investor (FII) Registered FII can execute a forward contract with rupee as one of the currencies with an AD Bank to hedge its exposure in India: subject to the following conditions: the value of the hedge does not exceed the market value of the

underlying debt or equity instruments, provided forward contracts once booked shall be allowed to continue to the original maturity even if the value of the underlying portfolio shrinks, for reasons other than sale of securities,

Forward contracts may be cancelled and rebooked or may be rolled over on or before maturity.



The cost of hedging is met out of repatriable funds and/or inward remittance through normal banking channel,

All outward remittances incidental to hedge are net of applicable

Indian taxes.



Non Resident Indian (NRI) An NRI can enter into forward contract with rupee as one of the currencies, with an AD Bank to hedge : the amount of dividend due to him/it on shares held in an Indian

company;

the balances held in Foreign Currency Non-Resident (FCNR) account or Non-Resident External Rupee (NRE) account;

the amount of investment made under PIS or under FDI.



Person Resident Outside India A person resident outside India is permitted to enter into a forward sale contract with an authorized dealer in India to hedge the currency risk arising out of his proposed foreign direct investment in India. A person resident outside India having Foreign Direct Investments in India may, subject to the condition that forward cover shall be taken only after the rate has been approved by the Board, enter into forward contracts with rupee as one of the currencies to hedge the currency risk on dividend receivable by him from the Indian company.



FIIs, NRIs or a Person Resident outside India having FDI in India, may enter into a foreign currency-rupee option contract with the AD Bank in India, under the same terms and conditions applicable to forward contracts.



Thank you

Manish Tyagi

Ernst & Young India

[email protected]

[email protected]

+91. 98101 87833 (M)

Date post:	30-Mar-2015
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External Commercial Borrowings ADR/ GDR FCCB Hedging of Foreign Exchange Manish Tyagi Ernst & Young.

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