What changed
The Rupee value of the Special Currency Basket, used for deferred payment transactions under the 1981 and 1985 protocols with the erstwhile USSR, was revised from Rs.75.037184 (effective September 27, 2012) to Rs.75.570411, effective October 25, 2012. This revision was communicated via a circular dated November 20, 2012.
What it means for you
Banks handling legacy trade settlements under these protocols must use the new basket value for all transactions from October 25, 2012. This impacts the conversion rates for outstanding payments and may affect the rupee liability of counterparties. Accurate application is essential to avoid discrepancies in settlement amounts.
What you must do
- Update internal systems and reference rates to reflect the new Special Currency Basket value of Rs.75.570411 from October 25, 2012.
- Notify all concerned constituents, including corporate clients with exposure to these protocols, about the revised rate.
- Ensure all deferred payment transactions under the 1981 and 1985 protocols are processed using the updated basket value.
- Maintain records of the circular and confirm compliance with FEMA sections 10(4) and 11(1).
Who it affects
AD Category-I banks handling deferred payment transactions under Indo-USSR protocols, Corporate clients with legacy trade settlements under these protocols
What is the Special Currency Basket and why does its value change?
The Special Currency Basket is a reference rate used for settling deferred payments under the 1981 and 1985 protocols between India and the erstwhile USSR. Its Rupee value is periodically revised by RBI to reflect currency fluctuations, ensuring accurate settlement amounts.
Which transactions are affected by this circular?
All deferred payment transactions under the April 30, 1981 and December 23, 1985 protocols with the erstwhile USSR, effective from October 25, 2012. Banks must use the new rate of Rs.75.570411 for such settlements.
What are the legal implications of non-compliance?
The circular is issued under FEMA sections 10(4) and 11(1). Non-compliance may lead to regulatory action, including penalties. Banks must ensure accurate application and inform all relevant parties.