What changed
RBI issued Master Circular No. 06/2008-09 on July 1, 2008, consolidating all existing instructions on risk management and inter-bank dealings into a single document. The circular is based on earlier FEMA notifications (FEMA 1/2000-RB, FEMA 3/RB-2000, and FEMA 25/RB-2000) and their amendments. It includes a sunset clause, meaning it will be withdrawn on July 1, 2009, and replaced by an updated version.
What it means for you
Banks now have a single reference point for rules on rupee accounts of non-resident banks, inter-bank dealings, and foreign exchange derivative contracts, simplifying compliance. The one-year sunset clause signals that RBI expects to update these instructions regularly, so banks must stay alert for the next version. This consolidation reduces the need to track multiple circulars, but banks should verify they are using the latest version after July 2009.
What you must do
- Review the master circular to ensure your bank's policies align with the consolidated instructions on risk management and inter-bank dealings.
- Update internal compliance checklists to reference this master circular instead of older individual circulars.
- Prepare for the sunset clause by planning to adopt the updated master circular expected after July 1, 2009.
- Train relevant staff on the consolidated rules, especially for non-resident bank accounts and forex derivative contracts.
Who it affects
All Authorised Dealers - Category I banks, Bank treasury and risk management teams, Compliance departments handling forex and inter-bank transactions
What is the sunset clause in this master circular?
The circular includes a sunset clause stating it will stand withdrawn on July 1, 2009, and will be replaced by an updated master circular on the same subject.
Which earlier regulations form the basis of this master circular?
The circular is based on FEMA Notification No. 1/2000-RB, Regulation 4(2) of FEMA 3/RB-2000, and FEMA 25/RB-2000 dated May 3, 2000, along with their subsequent amendments.
Does this circular introduce new rules or just consolidate existing ones?
It consolidates existing instructions on risk management and inter-bank dealings into one place; it does not introduce new rules.