RBI issues Master Directions on hedging of commodity price and freight risk in Overseas Markets
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- Last Updated on 14 December, 2022
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Circular No. RBI/2022-23/152 A. P. (DIR Series) Circular No. 20, Dated 12.12.2022
The RBI has decided to permit eligible entities (Eligible entities refers to residents other than Individuals) to hedge their exposure to the price risk of gold on exchanges in the IFSC recognised by the International Financial Services Centre’s Authority. In this regard, the RBI has issued the Master Direction on FEM (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022.
These Directions lay down the modalities for the AD Cat-I banks for facilitating hedging of commodity price risk and freight risk in overseas markets by their customers/constituents. Further, Eligible entities having exposure to the price risk of gold may hedge such exposure only on exchanges in the International Financial Services Centre (IFSC) recognised by the International Financial Services Centres Authority (IFSCA).
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