Regulatory Alerts2021-04-25 | Banking Act Directions No. 07 of 2021Added · Updated
Forward Sales and Purchases of Foreign Exchange by Licensed Commercial Banks
Licensed commercial banks are prohibited from entering into foreign exchange forward contracts with a value date beyond the spot date, except for specific authorized transactions. Permitted activities include forward purchases from customers, facilitating swap arrangements for foreign currency borrowings of licensed specialized banks, licensed finance companies, and corporate clients, and amending or extending existing contracts at historical rates upon client request. Additionally, banks may engage in inter-bank forward and swap transactions with a single counterparty and enter into forward cross-currency transactions. These restrictions apply until further notice.
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