Current · Source: Reserve Bank of India · RBI/2010-11/538 · issued 20 May 2011 · ~1 min read
Quick answerRBI has increased the limit for FIIs to cancel and rebook forward contracts from 2% to 10% of the market value of their portfolio as at the beginning of the financial year, effective immediately. Other operational guidelines remain unchanged.
The rule, in the simplest words
FIIs can now cancel and rebook forward contracts up to 10% of their portfolio's market value, not 2%.
This change is effective immediately and only affects the rebooking limit, not other operational guidelines.
AD Category-I banks must update their systems and inform clients about the new limit.
How it plays out — a real example
As a forex & trade-finance officer in Indore, Rohan helps a Foreign Institutional Investor (FII) client manage their currency exposure. With the new 10% rebooking limit, Rohan can now assist the client in cancelling and rebooking forward contracts more easily, reducing their hedging costs and encouraging more active portfolio management.
What changed
The existing limit of 2% for FIIs to cancel and rebook forward contracts has been enhanced to 10% of the market value of the portfolio as at the beginning of the financial year. This change is effective immediately, while all other operational guidelines and terms remain the same.
What it means for you
This gives FIIs greater flexibility to manage their currency exposure, potentially reducing hedging costs and encouraging more active portfolio management. For AD Category-I banks, it means increased transaction volumes and the need to update internal systems and client advisories to reflect the new limit.
What you must do
Update internal systems and procedures to reflect the new 10% rebooking limit for FII forward contracts.
Communicate the revised limit to all relevant constituents and customers, especially FII clients.
Ensure compliance with all other unchanged operational guidelines from the December 28, 2010 circular.
Monitor FII transactions to prevent exceeding the enhanced limit.
Who it affects
AD Category-I banks, Foreign Institutional Investors (FIIs), Treasury and forex operations teams, Compliance departments
❓ Common questions
What is the new limit for FII forward contract rebooking?
The limit has been increased from 2% to 10% of the market value of the FII's portfolio as at the beginning of the financial year.
When does this change take effect?
The enhancement is effective immediately from the date of the circular, May 20, 2011.
Are any other guidelines changing?
No, all other operational guidelines and terms and conditions from the earlier circular remain unchanged.
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/538
A. P. (DIR Series) Circular No. 67
May 20, 2011
To,
All Category - I Authorised Dealer Banks
Madam / Sir,
Forward cover for Foreign Institutional Investors –
Rebooking of cancelled contracts
Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to Regulation 5 of Notification No.FEMA.25/RB-2000 dated May 3, 2000 , as amended from time to time regarding the permission to a person resident outside India to enter into a foreign exchange derivative contract, read with A. P. (DIR Series) Circular No.32 dated December 28, 2010 in the matter .
2. Currently, in terms of Section C (i) (d) of the A. P. (DIR Series) Circular No. 32 dated December 28, 2010 , Foreign Institutional Investors (FIIs) are permitted to cancel and rebook upto two percent of the market value of the portfolio as at the beginning of the financial year. On a review, it has been decided to enhance the existing limit of two per cent as above to ten per cent with immediate effect. Other operational guidelines as also terms and conditions of the circular shall remain unchanged.
3. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Meena Hemchandra)
Chief General Manager-In-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/538 · issued 20 May 2011. The plain-English explanation above is BankPulse’s own independent summary.
Update internal systems and procedures to reflect the new 10% rebooking limit for FII forward contracts.
📜 Compliance
Communicate the revised limit to all relevant constituents and customers, especially FII clients.
Ensure compliance with all other unchanged operational guidelines from the December 28, 2010 circular.
Monitor FII transactions to prevent exceeding the enhanced limit.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (AD Category-I banks, Foreign Institutional Investors (FIIs), Treasury and forex operations teams, Compliance departments), your first concrete step on “FII Forward Cover Rebooking Limit Raised to 10%” is: “Update internal systems and procedures to reflect the new 10% rebooking limit for FII forward contracts.” (RBI issued this 20 May 2011).
Action required: Update internal systems and procedures to reflect the new 10% rebooking limit for FII forward contracts.
Action required: Communicate the revised limit to all relevant constituents and customers, especially FII clients.
Action required: Ensure compliance with all other unchanged operational guidelines from the December 28, 2010 circular.
Action required: Monitor FII transactions to prevent exceeding the enhanced limit.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6425&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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