What changed
Previously, only exporters could cancel and rebook forward contracts up to 25% of their booked contracts in a financial year. Now, exporters can cancel and rebook up to 50% of such contracts, and importers are allowed to cancel and rebook up to 25% of their booked forward contracts for hedging import exposures.
What it means for you
This provides greater operational flexibility for both exporters and importers to manage foreign exchange risk. Banks need to update their hedging product offerings and advisory services to reflect the higher limits, which may increase customer engagement and hedging activity.
What you must do
- Update internal systems and customer advisories to reflect the new 50% cancellation and rebooking limit for exporters.
- Implement the new 25% cancellation and rebooking limit for importers in your hedging processes.
- Train relationship managers and treasury staff on the revised limits to ensure accurate customer guidance.
- Communicate the changes to all relevant constituents and customers as directed by RBI.
Who it affects
Category-I Authorised Dealer Banks, Exporters with forward contract hedging, Importers with forward contract hedging
What is the new cancellation and rebooking limit for exporters?
Exporters can now cancel and rebook forward contracts up to 50% of the contracts booked in a financial year, increased from the earlier 25%.
Are importers now allowed to cancel and rebook forward contracts?
Yes, for the first time, importers are permitted to cancel and rebook forward contracts up to 25% of the contracts booked in a financial year for hedging their import exposures.
Does this circular apply to all forward contracts involving rupees?
Yes, the circular applies to forward contracts involving the rupee as one of the currencies, booked by residents to hedge current and capital account transactions, but only for contracted export or import exposures.